-----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, IscV5MlDMC5HJcOqvtUdmTfVEGNcO2fE69JAxplRd8dU7aVVTPNMGMXarsawSyU/ a/omn4V0Yy3eZzYA6WAv+Q== 0000040704-94-000020.txt : 19940824 0000040704-94-000020.hdr.sgml : 19940824 ACCESSION NUMBER: 0000040704-94-000020 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19940529 FILED AS OF DATE: 19940823 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01185 FILM NUMBER: 94545615 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 EX-3.2 1 BY-LAWS EXHIBIT 3.2 BY-LAWS of GENERAL MILLS, INC. as amended through December 13, 1993 INDEX OF BY-LAWS Page ARTICLE I. STOCKHOLDERS 1 Section 1. Place of Holding Meeting 1 Section 2. Quorum 1 Section 3. Adjournment of Meetings 1 Section 4. Annual Election of Directors 2 Section 5. Special Meetings: How Called 2 Section 6. Voting at Stockholders' Meetings 2 Section 7. Notice of Stockholders' Meetings 3 ARTICLE II. DIRECTORS. 3 Section 1. Organization 3 Section 2. Election of Officers 3 Section 3. Regular Meetings 3 Section 4. Special Meetings: How Called: Notice 3 Section 5. Number: Qualifications: Quorum: Term 4 Section 6. Place of Meetings 4 Section 7. Powers of Directors 4 Section 8. Vacancies. 4 Section 9. Resignation and Removal of Directors 4 Section 10. Compensation of Directors 5 Section 11. Executive Committee 5 Section 12. Executive Committee: Powers 5 Section 13. Executive Committee:Organization: Meetings, Etc. 6 Section 14. Resignation and Removal of Member of Executive Committee 6 Section 15. Vacancies in the Executive Committee 6 ARTICLE III. OFFICERS 6 Section 1. Titles. 6 Section 2. Chairman 7 Section 3. Vice Chairman 7 Section 4. President 7 Section 5. Vice President(s) 7 Section 6. Secretary 7 Section 7. Assistant Secretary 8 Section 8. Senior Vice President, Corporate Finance 8 Section 9. Director of Finance 8 Section 10. Senior Vice President, Financial Operations 8 Section 11. Resignation and Removal of Officers 9 Section 12. Salaries 9 ARTICLE IV. CAPITAL STOCK 9 Section 1. Issue of Certificates of Stock 9 Section 2. Transfer of Shares 9 Section 3. Dividends 10 Section 4. Lost Certificates 10 Section 5. Rules as to Issue of Certificates 10 Section 6. Holder of Record Deemed Holder in Fact 10 Section 7. Closing of Transfer Books or Fixing Record Date 10 ARTICLE V. CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC 11 Section 1. Contracts, Etc.: How Executed 11 Section 2. Loans 11 Section 3. Deposits 11 Section 4. Checks, Drafts, Etc 11 Section 5. Transaction of Business 12 ARTICLE VI. MISCELLANEOUS PROVISIONS 12 Section 1(a) Fiscal Year 12 Section 1(b) Staff and Divisional Titles. 12 Section 2. Notice and Waiver of Notice 12 Section 3. Inspection of Books 13 Section 4. Construction 13 Section 5. Adjournment of Meetings.. 13 Section 6. Indemnification 13 Section 7. Resolution of Board of Directors Providing for Issuance of Cumulative Preference Stock 15 ARTICLE VII. AMENDMENTS 15 Section 1. Amendment of By-Laws 15 BY-LAWS of GENERAL MILLS, INC. ARTICLE I STOCKHOLDERS SECTION 1. Place of Holding Meeting: Meetings of stockholders may be held within or without the State of Delaware, and, unless otherwise determined by the board of directors or the stockholders, all meetings of the stockholders shall be held at the principal office of the corporation in the City of Minneapolis in the State of Minnesota. The place of meeting of the stockholders for the election of directors shall not be changed within sixty (60) days next before the day on which the election is to be held. A notice of any change shall be given to each stockholder entitled to vote, at least twenty (20) days before the election is held, in person or by letter mailed to him at his last-known post office address. SECTION 2. Quorum: Any number of stockholders together holding one-half (1/2) in amount of the stock issued and outstanding entitled to vote, who shall be present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of business, except as may be otherwise provided by law, by the certificate of incorporation, or by these by-laws. At any meeting of stockholders for the election of directors at which any class or classes of stock or any one or more series of any class or classes of stock shall have a separate vote as such class or series for the election of directors by such class or series, the absence of a quorum of any other class of stock or of any other series of any class of stock shall not prevent the election of the directors to be elected by such class or series. SECTION 3. Adjournment of Meetings: If less than a quorum shall be in attendance at the time for which the meeting shall have been called, the meeting may be adjourned from time to time by a majority vote of the stockholders present or represented, without any notice other than by announcement at the meeting, until a quorum shall attend. Any meeting at which a quorum is present may also be adjourned, in like manner, for such time, or upon such call, as may be determined by vote. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. In the absence of a quorum of any class or classes of stock or any one or more series of any class or classes of stock at any meeting of stockholders at which more than one class or series of stock shall be entitled to vote separately as a class or series for the election of directors, a majority in interest of the stockholders present in person or by proxy of the class or classes or one or more series of stock which lack a quorum shall also have the power to adjourn the meeting for the election of directors which they are entitled to elect, from time to time, without notice other than by announcement at the meeting, until a quorum of such class or classes or one or more series of stock shall be present. SECTION 4. Annual Election of Directors: The annual meeting of stockholders for the election of directors and the transaction of other business shall be held on the fourth Monday of September in each year at 1:00 o'clock in the afternoon, standard time, unless, by a resolution adopted not later than sixty (60) days before such date, the board of directors fixes another date or time in the months of September or October for the holding of such annual meeting. If the election of directors shall not be had on the day designated herein for the annual meeting or at an adjournment thereof, the board of directors shall cause a meeting of the stockholders for the election of a board of directors to be held as soon thereafter as conveniently may be. At such meeting the stockholders may elect the directors and transact other business with the same force and effect as at an annual meeting duly called and held. After the first election of directors no stock shall be voted on at any election which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election, except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of the stockholders entitled to vote, as hereinafter in article IV, section 7 of these by-laws provided. The directors elected annually shall hold office until the next annual election and until their successors are respectively elected and qualified; provided, however, in the event that the holders of any class or classes of stock or any one or more series of any class or classes of stock have the right to elect directors separately as a class or series and such right shall have vested, such right may be exercised as provided in the certificate of incorporation of the corporation. The secretary shall prepare, or cause to be prepared, at least ten (10) days before every election, a complete list of stockholders entitled to vote, arranged in alphabetical order, and such list shall be open at the place where the election is to be held, for such ten (10) days, to the examination of any stockholder, and shall be produced and kept at the time and place of election during the whole time thereof, subject to the inspection of any stockholder who may be present. SECTION 5. Special Meetings: How Called: Special meetings of the stockholders for any purpose or purposes may be called by the chairman of the board of directors or by any three (3) directors or by the holders of not less than one-third (1/3) in interest of the stock of the corporation entitled to vote, or by resolution of the board of directors. Special meetings of the holders of any class or classes of stock or any one or more series of any class or classes of stock for the purpose of electing directors in accordance with a special right as a class or series shall be called as provided in the certificate of incorporation of the corporation. SECTION 6. Voting at Stockholders' Meetings: The board of directors shall determine the voting power of any cumulative preference stock in accordance with article IV of the certificate of incorporation. Each stockholder entitled to vote shall have one (1) vote for each share of voting stock registered in his name on the books of the corporation. At all meetings of stockholders all questions, except as otherwise provided by law or the certificate of incorporation, shall be determined by a majority vote in interest of the stockholders entitled to vote present in person or represented by proxy; provided, however, that any qualified voter may demand a stock vote, and in that case, such stock vote shall immediately be taken. A stock vote shall be by ballot and each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. Shares of its own capital stock belonging to the corporation shall not be voted upon directly or indirectly. The vote on stock of the corporation may be given by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized, and delivered to the secretary of the meeting. No proxy shall be voted on after three (3) years from its date, unless said proxy provides for a longer period. SECTION 7. Notice of Stockholders' Meetings: Written notice, stating the time and place of the meeting and, in case of a special meeting, stating also the general nature of the business to be considered, shall be given by the secretary by mailing, or causing to be mailed, such notice, postage prepaid, to each stockholder entitled to vote, at his post office address as the same appears on the stock books of the corporation, or by delivering such notice to him personally, at least ten (10) days before the meeting. ARTICLE II DIRECTORS SECTION 1. Organization: The board of directors may hold a meeting for the purpose of organization and the transaction of other business, if a quorum be present, immediately before or after the annual meeting of the stockholders and immediately before or after any special meeting at which directors are elected. Notice of such meeting need not be given. Such organizational meeting may be held at any other time or place, which shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or in a consent and waiver of notice thereof signed by all the directors. SECTION 2. Election of Officers: At such meeting the board of directors may elect from among its number a chairman of the board of directors, one or more persons to serve as a vice chairman; a president and one or more corporate and company vice presidents, a secretary, a treasurer, a controller, one or more assistant secretaries, and one or more assistant treasurers who need not be directors. Such officers shall hold office until the next annual election of officers and until their successors are respectively elected and qualified, unless removed by the board of directors as provided in section 11 of article III. SECTION 3. Regular Meetings: Regular meetings of the board of directors shall be held on such dates as are designated, from time to time, by resolutions of the board, and shall be held at the principal office of the corporation, or at such other location as the board selects. Each regular meeting shall commence at the time designated by the Chairman of the Board on at least five (5) days' written notice to each director when sent by mail and on at least three (3) days' notice when sent by private express carrier or transmitted by telex, facsimile or similar means. SECTION 4. Special Meetings: How Called: Notice: Special meetings of the board of directors may be called by the chairman of the board, a vice chairman of the board, the president or by any three (3) directors who are not salaried officers or salaried employees of the corporation. Written notice of the time, place and purposes of each special meeting shall be sent by private express carrier or transmitted by telex, facsimile or similar means to each director at least twenty-four (24) hours prior to such meeting. Notwith-standing the preceding, any meeting of the board of directors shall be a legal meeting without any notice thereof if all the members of the board shall be present, or if all absent members waive notice thereof. SECTION 5. Number: Qualifications: Quorum: Term: (a) The Board of Directors shall consist of fourteen (14) members. (b) No person shall be eligible to become or to remain a director of the corporation unless he shall be a stockholder in the corporation. Not more than six (6) of the members of the board of directors shall be officers or employees of the corporation, but the chairman of the board shall not be deemed such an officer or employee. (c) Subject to the provisions of the certificate of incorporation, as amended, one-third (1/3) of the total number of the directors (but in no event less than two (2)) shall constitute a quorum for the transaction of business. The affirmative vote of the majority of the directors present at a meeting at which a quorum is constituted shall be the act of the board of directors, unless the certificate of incorporation shall require a vote of a greater number. (d) Except as otherwise provided in these by-laws, directors shall hold office until the next succeeding annual stockholders' meeting and thereafter until their successors are respectively elected and qualified. (e) Except as otherwise provided in the certificate of incorporation or these by-laws, the number of directors may by altered from time to time by amendment to the above sub- section (a). SECTION 6. Place of Meetings: The board of directors may hold its meetings and keep the books of the corporation outside of the State of Delaware, at any office or offices of the corporation, or at any other place, as it may from time to time by resolution determine. SECTION 7. Powers of Directors: The board of directors shall have the management of the business of the corporation, and, subject to the restrictions imposed by law, by the certificate of incorporation or by these by-laws, may exercise all the powers of the corporation. SECTION 8. Vacancies: Except as otherwise provided in the certificate of incorporation, any vacancy in the board of directors because of death, resignation, disqualification, increase in number of directors, or any other cause may be filled by a majority of the remaining directors, though less than a quorum, at any regular or special meeting of the directors; or any such vacancy resulting from any cause whatsoever may be filled by the stockholders at the first annual meeting held after such vacancy shall occur or at a special meeting thereof called for the purpose. SECTION 9. Resignation and Removal of Directors: Any director of the corporation may resign at any time by giving written notice to the chairman of the board or to the secretary of the corporation. Such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise provided in the certificate of incorporation, any director may be removed, either with or without cause, at any time, by the affirmative vote of a majority in interest of the stockholders of the corporation entitled to vote, given at a special meeting of the stockholders called for the purpose; and the vacancy in the board caused by any such removal may be filled by the stockholders at such meeting. SECTION 10. Compensation of Directors: The board of directors shall have the authority to fix the compensation of directors. In addition, each director shall be entitled to be reimbursed by the corporation for his expenses incurred in attending meetings of the board of directors or of any committee of which he is a member. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation for such services from the corporation; provided, however, that any person who is receiving a stated compensation as an officer of the corporation for his services as such officer shall not receive any additional compensation for services as a director during such period. A director entitled to receive stated compensation for his services as director, who shall serve for only a portion of a year, shall be entitled to receive only that portion of his annual stated compensation on which the period of his service during the year bears to the entire year. The annual compensation of directors shall be paid at such times and in such installments as the board of directors may determine. SECTION 11. Executive Committee: (a) The board of directors may appoint from its number an executive committee of not less than eight (8) members. (b) Not more than four (4) members shall be officers or employees of the corporation but the chairman of the board shall not be deemed such an officer or employee. (c) A majority shall constitute a quorum, and in every case the affirmative vote of a majority of all the members of the committee shall be necessary for the adoption of any motion, provided that in order to procure and maintain a quorum at any meeting of the executive committee in the absence or disqualification of any member of such committee, the member or members thereof present at such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors (subject always to the limitations of subsection (b) above) to act at the meeting in the place of any such absent or disqualified member. (d) Each member of the executive committee, if appointed, shall hold office until the election at the next succeeding annual meeting of the stockholders of the corporation of a new board of directors; subject to the provisions of section 14 of this article. SECTION 12. Executive Committee: Powers: During the intervals between the meetings of the board of directors, the executive committee shall have and may exercise all the powers of the board of directors in the management of the business and affairs of the corporation, including power to authorize the execution of any papers and to authorize the seal of the corporation to be affixed to all papers which may require it, in such manner as such committee shall deem best for the interests of the corporation, in all cases in which specific directions shall not have been given by the board of directors. SECTION 13. Executive Committee: Organization: Meetings, Etc.: The chairman of the executive committee shall preside at all meetings of the executive committee and the secretary of the corporation shall act as secretary of the executive committee. In the absence of the chairman of the executive committee the committee shall appoint another member thereof to act as chairman of the meeting, and in the absence of the secretary, an assistant secretary of the corporation shall act as secretary of the meeting. In the absence of all of such persons, the committee shall appoint a chairman or a secretary of the meeting, as the case may be. If an executive committee shall be appointed it shall hold regular meetings without notice on each day excepting only Sundays and holidays at 9:00 o'clock in the forenoon and at 2:30 o'clock in the afternoon. Failure of such committee to meet at such hours on any day or for a series of days shall not invalidate any subsequent meeting of the committee held on any day at an hour herein specified. Such regular meetings of such committee shall be held at the principal office of the corporation, or at such other office of the corporation as such committee by resolution may from time to time designate as the place for the holding of such regular meetings, in which latter event the place so designated shall constitute the place at which such meetings shall be held until such committee shall by resolution designate a different place for the holding of such regular meetings. A special meeting of the executive committee may be called by the chairman of the board, the chairman of the executive committee or the secretary of the corporation upon such notice as may be given for special meetings of the board of directors. Any meeting of the executive committee shall be a legal meeting without notice thereof if all the members of the committee shall be present or if all absent members waive notice thereof. The committee shall keep a record of its acts and proceedings and report thereon to the board of directors at the regular meeting thereof held next after they shall have been taken. SECTION 14. Resignation and Removal of Member of Executive Committee: Any member of the executive committee may resign at any time or may be removed at any time either with or without cause by resolution adopted by a majority of the whole board of directors at any meeting of the board of directors at which a quorum is present. SECTION 15. Vacancies in the Executive Committee: Any vacancy in the executive committee shall be filled in the manner prescribed by these by-laws for the original appointment of such committee. ARTICLE III OFFICERS SECTION 1. Titles: The corporate and company officers to be elected by the board of directors shall be a chairman of the board of directors and one or more persons to serve as a vice chairman, and a president, who shall be directors, and one or more corporate or company vice presidents, a secretary, a senior vice president, corporate finance, a senior vice president, financial operations, one or more assistant secretaries, and one or more directors of finance who need not be directors. The board shall designate one of the corporate officers to serve as chief executive officer. SECTION 2. Chairman: The chairman of the board of directors shall preside at all meetings of the board, all meetings of the stockholders, as well as all meetings of the executive committee. The chairman, upon being designated the chief executive officer, shall have supervisory authority over the policies of the corporation as well as the management and control of the business and affairs of the corporation. He shall also exercise such other powers as the board of directors may from time to time direct or which may be required by law. SECTION 3. Vice Chairman: The officer or officers serving as vice chairman shall have such duties and responsibilities relating to the management of the corporation as may be defined and designated by the chief executive officer or the board of directors. SECTION 4. President: The president shall have responsibility for the management of the operating businesses of the corporation and shall do and perform all acts incident to the office of president or which are authorized by the chief executive officer, the board of directors or as may be required by law. SECTION 5. Vice President(s): Each corporate vice president shall have such designations and such powers and shall perform such duties as may be assigned by the board of directors or the chief executive officer. The board of directors may designate one or more corporate vice presidents to be a senior executive vice president, executive vice president, senior vice president, or group vice president. Each company vice president shall have such designations and such powers, and shall perform such duties as may be assigned to him by the board of directors, the chief executive officer or by a corporate vice president. SECTION 6. Secretary: The secretary shall: (a) keep the minutes of the meetings of the stockholders, of the board of directors and of the executive committee in books provided for the purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the records and have charge of the seal of the corporation and see that it is affixed to all stock certificates prior to their issuance and to all documents the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these by-laws; (d) have charge of the stock books of the corporation and keep or cause to be kept the stock and transfer books in such manner as to show at any time the amount of the stock of the corporation issued and outstanding, the manner in which and the time when such stock was paid for, the names, alphabetically arranged, and the addresses of the holders of record thereof, the number of shares held by each, and the time when each became such holder of record; exhibit or cause to be exhibited at all reasonable times to any director, upon application, the original or duplicate stock ledger; (e) see that the books, reports, statements, certificates and all other documents and records required by law are properly kept, executed and filed; and (f) in general, perform all duties incident to the office of secretary, and such other duties as from time to time may be assigned to him by the board of directors. SECTION 7. Assistant Secretary: The board of directors may elect an assistant secretary or more than one assistant secretary. At the request of the secretary, or in his absence or disability, an assistant secretary may perform all the duties of the secretary, and, when so acting, he shall have all the powers of, and be subject to all the restrictions upon, the secretary. Each assistant secretary shall have such other powers and shall perform such other duties as may be assigned to him by the board of directors. SECTION 8. Senior Vice President, Corporate Finance: The senior vice president, corporate finance, if required so to do by the board of directors, shall give a bond for the faithful discharge of his duties in such sum, and with such sureties, as the board of directors shall require. The senior vice president, corporate finance shall: (a) have charge and custody of, and be responsible for, all funds and securities of the corporation coming into his hands (until he has deposited the same to the credit or account of the corporation with an authorized depositary) and deposit all such funds in the name of the corporation in such banks, banking firms, trust companies or other depositaries as shall be selected in accordance with the provisions of article V of these by-laws; (b) exhibit at all reasonable times his books of account and records to any of the directors of the corporation upon application during business hours at the office of the corporation where such books and records are kept; (c) receive, and give receipt for, moneys due and payable to the corporation from any source whatsoever; and (d) in general, perform all the duties incident to the office of senior vice president, corporate finance and such other duties as from time to time may be assigned to him by the board of directors. SECTION 9. Director of Finance: The board of directors may elect a director of finance or more than one director of finance. At the request of the senior vice president, corporate finance, or in his absence or disability, a director of finance may perform all the duties of the senior vice president, corporate finance, and, when so acting, he shall have all the powers of, and be subject to all the restrictions upon, the senior vice president, corporate finance. Each director of finance shall have such other powers and shall perform such other duties as may be assigned to him by the board of directors. SECTION 10. Senior Vice President, Financial Operations: The senior vice president, financial operations shall perform all of the duties incident to the office of senior vice president, financial operations, as such duties may from time to time be designated or approved by the board of directors. Included in such duties shall be the establishment and maintenance of sound accounting and auditing policies and practices, in respect to which duties he shall be responsible directly to the board of directors through its chairman. SECTION 11. Resignation and Removal of Officers: Any officer of the corporation may resign at any time by giving written notice to the chairman of the board or to the secretary. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. Any officer may be removed for cause at any time by a majority of the board of directors and any officer may be removed summarily without cause by such vote. SECTION 12. Salaries: The salaries of officers shall be fixed from time to time by the board of directors or the executive committee or other committee appointed by the board. The board of directors or the executive committee of the board may authorize and empower the chief executive officer, any vice chairman, or any vice president of the corporation designated by the board of directors or by the executive committee to fix the salaries of all officers of the corporation who are not directors of the corporation. No officer shall be prevented from receiving a salary by reason of the fact that he is also a director of the corporation. ARTICLE IV CAPITAL STOCK SECTION 1. Issue of Certificates of Stock: Certificates for the shares of the capital stock of the corporation shall be in such forms as shall be approved by the board of directors. Each stockholder shall be entitled to a certificate for his shares of stock under the seal of the corporation, signed by the chairman, a vice chairman or a vice president and also by the secretary or an assistant secretary or by the senior vice president, corporate finance or a director of finance; provided, however, that where a certificate is countersigned by a transfer agent, other than the corporation or its employee, or by a registrar, other than the corporation or its employee, the corporate seal and any other signature on such certificate may be a facsimile, engraved, stamped or printed. In case any officer, transfer agent or registrar of the corporation who shall have signed, or whose facsimile signature shall have been used on any such certificate, shall cease to be such officer, transfer agent or registrar, whether because of death, resignation, or otherwise, before such certificate shall have been delivered by the corporation, such certificate shall nevertheless be deemed to have been adopted by the corporation and may be issued and delivered as though the person who signed such certificate or whose facsimile signature shall have been used thereon had not ceased to be such officer, transfer agent or registrar. SECTION 2. Transfer of Shares: The shares of stock of the corporation shall be transferable upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the board of directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued for the shares so transferred to the person entitled thereto. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 3. Dividends: The board of directors may declare lawful dividends as and when it deems expedient. Before declaring any dividend, there may be reserved out of the accumulated profits such sum or sums as the board of directors from time to time, in its discretion, thinks proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends, or for such other purposes as the board of directors shall think conducive to the interests of the corporation. SECTION 4. Lost Certificates: Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact, and if requested to do so by the board of directors of the corporation shall advertise such fact in such manner as the board of directors may require, and shall give to the corporation, its transfer agent and registrar, if any, a bond of indemnity in such sum as the board of directors may direct, but not less than double the value of stock represented by such certificate, in form satisfactory to the board of directors and to the transfer agent and registrar of the corporation, if any, and with or without sureties as the board of directors with the approval of the transfer agent and registrar, if any, may prescribe; whereupon the chairman, a vice chairman or a vice president and the senior vice president, corporate finance or a director of finance or the secretary or an assistant secretary may cause to be issued a new certificate of the same tenor and for the same number of shares as the one alleged to have been lost or destroyed. The issuance of such new certificates shall be under the control of the board of directors. SECTION 5. Rules as to Issue of Certificates: The board of directors may make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock of the corporation. It may appoint one or more transfer agents and/or registrars of transfers, and may require all certificates of stock to bear the signature of either or both. Each and every person accepting from the corporation certificates of stock therein shall furnish the corporation with a written statement of his or her residence or post office address, and in the event of changing such residence shall advise the corporation of such new address. SECTION 6. Holder of Record Deemed Holder in Fact: The board of directors shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and accordingly shall not be bound to recognize any equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by law. SECTION 7. Closing of Transfer Books or Fixing Record Date: The board of directors shall have the power to close the stock transfer books of the corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the board of directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. ARTICLE V CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. Contracts, Etc.: How Executed: The board of directors or such officer or person to whom such power shall be delegated by the board of directors by resolution, except as in these by-laws otherwise provided, may authorize any officer or officers, agent or agents, either by name or by designation of their respective offices, positions or class, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances; and, unless so authorized, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement, or to pledge its credit or to render it liable pecuniarily for any purpose or in any amount. SECTION 2. Loans: No loans shall be contracted on behalf of the corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the vote of the board of directors or by such officer or person to whom such power shall be delegated by the board of directors by resolution. When so authorized by the board of directors or by such officer or person to whom such power shall be delegated by the board of directors by resolution, any officer or agent of the corporation may obtain loans and advances at any time for the corporation from any bank, banking firm, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the corporation, and, when authorized as aforesaid to give security for the payment of any loan, advance, indebtedness or liability of the corporation, may pledge, hypothecate or transfer any and all stocks, securities and other personal property at any time held by the corporation, and to that end endorse, assign and deliver the same, but only to the extent and in the manner authorized by the board of directors. Such authority may be general or confined to specific instances. SECTION 3. Deposits: All funds of the corporation shall be deposited from time to time to the credit of the corporation with such banks, banking firms, trust companies or other depositaries as the board of directors may select or as may be selected by any officer or officers, agent or agents of the corporation to whom such power may be delegated from time to time by the board of directors. SECTION 4. Checks, Drafts, Etc.: All checks, drafts or other orders for the payment of money, notes, acceptances, or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall be determined from time to time by resolution of the board of directors or by such officer or person to whom such power of determination shall be delegated by the board of directors by resolution. Endorsements for deposit to the credit of the corporation in any of its authorized depositaries may be made, without any countersignature, by the chairman of the board, a vice chairman, or any vice president, or the senior vice president, corporate finance or any director of finance, or by any other officer or agent of the corporation appointed by any officer of the corporation to whom the board of directors, by resolution, shall have delegated such power of appointment, or by hand-stamped impression in the name of the corporation. SECTION 5. Transaction of Business: The corporation, or any division or department into which any of the business or operations of the corporation may have been divided, may transact business and execute contracts under its own corporate name, its division or department name, a trademark or a trade name. ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 1. (a) Fiscal Year: The fiscal year of the corporation shall end with the last Sunday of May of each year. (b) Staff and Divisional Titles: The chief executive officer may appoint at his discretion such persons to hold the title of staff vice president, divisional president or divisional vice president or other similar designation. Such persons shall not be officers of the corporation and shall retain such title at the sole discretion of the chief executive officer who may at his will and from time to time make or revoke such designation. SECTION 2. Notice and Waiver of Notice: Whenever any notice is required by these by-laws to be given, personal notice to the person is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office or post box in a sealed postpaid wrapper, addressed to the person entitled thereto at his post office address as shown on the stock books of the corporation, in case of a stockholder, and at his last known post office address in case of an officer or director who is not a stockholder; and such notice shall be deemed to have been given on the day of such deposit. In the case of notice by private express carrier, telex, facsimile or similar means, notice shall be deemed to be sufficient if transmitted or sent to the person entitled to notice or to any person at the residence or usual place of business of the person entitled to notice who it is reasonably believed will convey such notice to the person entitled thereto; and notice shall be deemed to have been given at the time of receipt at such residence or place of business. Any notice required by these by-laws may be given to the person entitled thereto personally and attendance of a person at a meeting shall constitute a waiver of notice of such meeting. Whenever notice is required to be given under these by- laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. SECTION 3. Inspection of Books: The board of directors shall determine from time to time whether and, if allowed, when and under what conditions and regulations the accounts, records and books of the corporation (except such as may, by statute, be specifically open to inspection), or any of them, shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. SECTION 4. Construction: All references herein (i) in the plural shall be construed to include the singular, (ii) in the singular shall be construed to include the plural and (iii) in the masculine gender shall be construed to include the feminine gender, if the context so requires. SECTION 5. Adjournment of Meetings: If less than a quorum shall be present at any meeting of the board of directors of the corporation, or of the executive committee of the board, or other committee, the meeting may be adjourned from time to time by a majority vote of members present, without any notice other than by announcement at the meeting, until a quorum shall attend. Any meeting at which a quorum is present may also be adjourned in like manner, for such time or upon such call, as may be determined by vote. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting originally held if a quorum had been present thereat. SECTION 6. Indemnification: (a) The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b), or in defense of any claim, issue or matter therein, he shall be indemnified or reimbursed against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under sub-sections (a) and (b) (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in sub-sections (a) and (b) of this section. Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending a civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to am employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 7. Resolution of Board of Directors Providing for Issuance of Cumulative Preference Stock: For purposes of these by-laws the certificate of incorporation shall be deemed to include any certificate filed and recorded in accordance with section 151(g) of the Delaware Corporation Law which, in accordance with said section, sets forth the resolution or resolutions adopted by the board of directors providing for the issuance of cumulative preference stock or any series thereof. ARTICLE VII AMENDMENTS SECTION 1. Amendment of By-Laws: All by-laws of the corporation shall be subject to alteration or repeal, and new by- laws may be made, either by the stockholders at an annual meeting or at any special meeting, provided notice of the proposed alteration or repeal or of the proposed new by-laws be included in the notice of any such special meeting, or by the affirmative vote of a majority of the whole board of directors of the corporation at any regular meeting or at any special meeting of the board of directors, provided that notice of the proposed alteration or repeal or of the proposed new by-laws be included in the notice of any such special meeting; but the time and place for the election of directors shall not be changed within sixty (60) days next before the day on which the election is to be held, as in these by-laws provided; and provided further that no by-law shall be adopted which shall be in conflict with the provisions of the certificate of incorporation or any amendment thereto. By-laws made or altered by the stockholders or by the board of directors shall be subject to alteration or repeal either by the stockholders or by the board of directors; provided, however, that the board of directors shall have no power or authority to alter or repeal sub-section (b) of section 5 or sub-section (b) of section 11 of article II of these by-laws respecting eligibility of officers or employees of the corporation as members of the board of directors and of the executive committee of the board, or to make any alteration in sub-section (a) of section 5 or in sub-section (a) of section 11 of said article II which would reduce the number composing the board of directors below twelve (12) or the number composing the executive committee below eight (8); the sole right to make any such change being reserved to the stockholders. So long as any class or classes of stock or any one or more series of any class or classes of stock which have a separate vote as such class or series for the election of directors by such class or series shall be outstanding, no alteration, amendment, or repeal of the provisions of sections 2, 3, 4, 5 and 6 of article I, sections 1, 5, 8 and 9 of article II, section 7 of article VI, and article VII of these by-laws which affects adversely the rights or preferences of any such outstanding class or series of stock shall be made without the consent or affirmative vote of the holders of at least two-thirds (2/3) of each such class or series entitled to vote; provided, however, that any increase or decrease in the number of directors set forth in the first sentence of sub-section (a) of section 5 of article II shall not be deemed adversely to affect such rights or preferences. EX-10.1 2 STOCK OPTION & L-T INCENTIVE PLAN 1988 EXHIBIT 10.1 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1988 As Amended Through June 27, 1994 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1988 1. PURPOSE OF THE PLAN The purpose of the General Mills, Inc. Stock Option and Long-Term Incentive Plan of 1988 (the "Plan") is to attract and retain strong management employees by rewarding certain officers and key employees of General Mills, Inc. (the "Corporation") and its subsidiaries who are primarily responsible for the management, growth and sound development of the business of the Corporation. 2. EFFECTIVE DATE OF PLAN This Plan shall become effective as of September 26, 1988, subject to the approval of the stockholders of the Corporation at the Annual Meeting on September 26, 1988. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Compensation Committee (the "Committee"). The Committee shall be made up of non-management members of the Board of Directors (the "Board") appointed in accordance with the Corporation's Certificate of Incorporation. The Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom grants will be made, the number of shares to be optioned or awarded and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), so permits without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate the administration of the Plan in whole or in part, on such terms and conditions, and to such person or persons as it may determine in its discretion, as it relates to persons not subject to Section 16 of the 1934 Act, or any successor provision. Decisions of the Committee (or its delegate as permitted herein) shall be final, conclusive and binding upon all parties, including the Corporation, stockholders and optionees. 4. COMMON STOCK SUBJECT TO THE PLAN The shares of Common Stock of the Corporation ($.10 par value) to be issued upon exercise of a Stock Option, as Restricted Stock, or upon expiration of the restricted period for Restricted Stock Units, may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise. Approval of the Plan by the stockholders of the Corporation shall constitute authorization to use such shares for the Plan, subject to the discretion of the Board or as such discretion may be delegated to the Committee. The Committee, in its discretion, may require as a condition to the grant of Stock Options, Restricted Stock or Restricted Stock Units, the deposit of Common Stock ("Deposit Shares") by the person receiving such grant, and the forfeiture of such Stock Options, Restricted Stock or Restricted Stock Units, if such deposit is not made or maintained during the option period or the applicable restricted period. Such shares of deposited Common Stock may not be otherwise sold, exchanged, transferred, pledged or disposed of during the applicable option period or restricted period. The Committee may also determine whether any shares issued in respect of a Stock Option shall be restricted in any manner. Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares originally authorized under the Plan for which Stock Options, Restricted Stock and Restricted Stock Units could be granted under the Plan was 6,000,000 shares. As of September 20, 1993, and subject to the provisions of the next succeeding paragraph, there remain 798,050 shares authorized to be issued under the Plan (as adjusted for stock splits). If a Stock Option granted under the Plan is terminated without having been exercised in full, the unpurchased shares shall become available for grant to other employees, except when a Non- Qualified Stock Option is terminated as a result of a withdrawal from an optionee's Performance Unit Account. The number of shares subject to the Plan, the outstanding options, the outstanding Restricted Stock, the outstanding Restricted Stock Units and the exercise price per share of outstanding options may be appropriately adjusted by the Committee in the event that: (i) the number of outstanding shares of Common Stock of the Corporation shall be changed by reason of split-ups, combinations or reclassifications of shares; (ii) any stock dividends are distributed to the holders of Common Stock of the Corporation; or (iii) the Common Stock of the Corporation is converted into or exchanged for other shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization. 5. ELIGIBLE PERSONS Only persons who are officers or key employees of the Corporation or a subsidiary shall be eligible to receive grants under the Plan. No grant shall be made to any member of the Committee or any other non-employee Director. 6. PURCHASE PRICE OF STOCK OPTIONS The purchase price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the shares of Common Stock of the Corporation subject to such option on the date of grant. "Fair Market Value" as used in the Plan shall equal the mean of the high and low price of shares of the Common Stock on the New York Stock Exchange on the applicable date. 7. STOCK OPTION TERM The term of any Stock Option grant as determined by the Committee shall not exceed 10 years and 1 month from the date of that grant and shall expire as of the last day of the designated term, unless terminated earlier under the provisions of the Plan. 8. STOCK OPTION TYPE The Committee shall determine whether stock option grants will be Non-Qualified Stock Options governed by section 83 of the Internal Revenue Code of 1986, as amended (the "Code") or Incentive Stock Options governed by section 422A of the Code or stock options governed by any other newly enacted provision of the Code. 9. INCENTIVE STOCK OPTIONS No optionee may be granted an Incentive Stock Option, under this or any other stock option plan of the Corporation, with respect to which the Fair Market Value of shares subject to such Incentive Stock Option and which first become exercisable in a specified calendar year exceed $100,000. For purposes of this Section, the Fair Market Value of such shares shall be determined on the date of the grant. 10. PERFORMANCE UNITS At the time of the granting of Non-Qualified Stock Options, the Corporation may grant corresponding Performance Units to the optionee, less than or equal in number to the shares covered by the option grant. In each fiscal year of the Corporation in which Performance Units may be granted, the Committee shall establish goals for (i) the compound growth in earnings per share ("EPS") for the Corporation over 3 fiscal years (the "Performance Period"); and (ii) the after-tax return on average stockholder equity ("ROE") for the Corporation for the final fiscal year of the Performance Period. The Committee shall specify the Performance Unit values to be earned at various actual rates of EPS growth and ROE. "EPS" means the Corporation's earnings from continuing operations per common share and common share equivalent (before extraordinary items) as reported in the Corporation's financial statements included in the Corporation's annual report for the final fiscal year of the Performance Period. The compound growth rate in EPS shall be calculated by comparing the EPS for the final fiscal year of the Performance Period and the EPS for the fiscal year immediately preceding the Performance Period. "ROE" means the Corporation's after-tax earnings, divided by its average equity, which is the sum of beginning and ending total stockholders' equity for such fiscal year divided by 2. EPS and ROE shall be subject to such adjustments as may be determined by the Committee. An optionee shall have no vested right to the value of a Performance Unit until the end of the Performance Period, except as set forth below. A Performance Unit Account shall be established for each optionee for each fiscal year in which Performance Unit grants are made under the Plan. The value of the Performance Units when determined shall be credited to the optionee's Performance Unit Account, and such amount shall thereafter earn interest at an annual rate determined by the Committee; provided, that no such interest rate shall exceed two-thirds of the Corporation's "return on average capital structure," defined as earnings after-tax plus after-tax interest expense, divided by average capital structure. "Average capital structure" is the sum of beginning and ending stockholders' equity and interest bearing obligations, both current and long-term, divided by 2. The optionee's Performance Unit Account shall be credited with such interest on such Performance Units at the end of each fiscal quarter of the Corporation until: (i) such Performance Units are withdrawn from the Account by the optionee; or (ii) the corresponding Non-Qualified Stock Options have been exercised, provided that no interest shall be paid beyond the term of the corresponding Non-Qualified Stock Option. In the event of a Change of Control as described in Section 15, Performance Units which have not been valued shall be immediately valued at the maximum amount specified by the Committee for the pro-rata portion of the Performance Period completed to the date of the Change of Control, and credited to each optionee's Performance Unit Account. Performance Units may be granted commencing in fiscal year 1989, and each fiscal year thereafter until the termination of the Plan. Accruals of the Performance Units (but not the accumulating interest) shall be charged annually against the Corporation's profit sharing fund established in accordance with the resolution approved by the stockholders in 1933, as amended in 1953 and 1968. 11. RESTRICTED STOCK AND RESTRICTED STOCK UNITS A. Grant of Awards With respect to awards of Restricted Stock and Restricted Stock Units, the Committee shall: (i) select those employees to whom awards will be made ("the Participants"), provided that Restricted Stock Units may only be awarded to those officers or key employees of the Corporation or a subsidiary who are employed in a country other than the United States; (ii) determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded; (iii) determine the length of the restricted period; (iv) determine the purchase price, if any, to be paid by the Participant for (a) shares of Restricted Stock at the time of the award, or (b) Restricted Stock Units at the expiration of the applicable restricted period; and (v) determine any restrictions other than those set forth in this Section 11. Each Participant who receives shares of Restricted Stock shall deliver to the Corporation a stock power endorsed in blank relating to the Restricted Stock prior to issuance of Restricted Stock. A certificate for the shares of Restricted Stock shall be issued and registered in the name of the Participant and shall bear an appropriate restrictive legend. Such certificates shall be held in the custody of the Corporation until the restricted period expires or until all restrictions thereon otherwise lapse. Subject to the restrictions set forth in this Section 11, each Participant who receives Restricted Stock shall have all rights as a shareholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions. Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded pursuant thereto, and the Corporation shall issue to and register in the name of each such Participant a certificate for that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as shareholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Corporation shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Corporation on that number of shares of Common Stock during the prior quarter. B. Termination of Employment Except when specified otherwise in this Section 11, if a Participant's employment by the Corporation or a subsidiary terminates before the expiration of the applicable restricted period for Restricted Stock or Restricted Stock Units for any reason other than disability, retirement, death, "Change of Control" (as defined in Section 15), or termination for the convenience of the Corporation, all shares of Restricted Stock and all Restricted Stock Units which are subject to restriction as of said termination date shall be forfeited by the Participant to the Corporation. For those shares of Restricted Stock or Restricted Stock Units which have a deposit requirement, subject to the provisions of this Section 11, a Participant will be eligible to vest only in those shares of Restricted Stock or Restricted Stock Units for which Deposit Shares are on deposit with the Corporation as of the date the Participant's employment with the Corporation terminates. (i) Early Retirement A Participant who takes early retirement (after age 55, but prior to age 65) during any applicable restricted period may elect either of the following alternatives with respect to Restricted Stock or Restricted Stock Units (unless any award provides otherwise): (a) Leave Deposit Shares on deposit with the Corporation and vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the earlier of the date the participant attains age 65 or the termination date of the applicable restricted period; (b) Withdraw Deposit Shares and vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date the Deposit Shares are withdrawn. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of early retirement, as a percentage of the applicable restricted period. (ii) Retirement A Participant who retires on or after the date he or she attains age 65 shall fully vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the date of retirement (unless any such award specifically provides otherwise). (iii) Disability A Participant who becomes permanently disabled and unable to work (as determined by the Corporation's Director of Health and Human Services) during any applicable restricted period shall vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date of disability. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of disability, as a percentage of the applicable restricted period. (iv) Death A Participant who dies during any applicable restricted period shall vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of death, as a percentage of the applicable restricted period. (v) Change of Control In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control. (vi) Termination for Convenience of the Corporation In the event a Participant's employment with the Corporation is terminated for the convenience of the Corporation during any applicable restricted period, the Committee, in its sole discretion, may vest such Participant in all or any portion of shares of Restricted Stock or Restricted Stock Units, effective as of the date of such termination. C. Non-Transferability Except as otherwise provided in Section 11, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged, or otherwise disposed of during the restricted period. D. Withholding Taxes Upon the vesting of Restricted Stock or Restricted Stock Units, the Participant shall deliver to the Corporation (or foreign subsidiary) cash in an amount equal to all federal, state, and local or foreign withholding taxes required to be collected by the Corporation (or foreign subsidiary), and the Corporation (or foreign subsidiary) may, in its discretion, retain all or a portion of the shares to be delivered until such payment is made. Notwithstanding the foregoing, in the event the number of shares to be issued equals or exceeds 500 and to the extent permitted by law and pursuant to such rules as the Committee may adopt, a Participant may authorize the Corporation to satisfy any such withholding requirement by directing the Corporation to withhold from any shares to be issued, such number of shares as shall be sufficient to satisfy the withholding obligation. 12. NON-TRANSFERABILITY OF STOCK OPTIONS AND PERFORMANCE UNITS No Stock Option or Performance Unit granted under this Plan shall be transferable by the optionee otherwise than by the optionee's Last Will and Testament or by the laws of descent and distribution, and such Stock Option shall be exercised and Performance Units withdrawn during the optionee's lifetime only by the optionee or his or her guardian or legal representative. 13. EXERCISE OF STOCK OPTIONS Except as provided in Sections 15, 18 and 19 (Change of Control, termination or death), each Stock Option may be exercised only: (i) after 1 year of continued employment with the Corporation or a subsidiary (as defined in section 425(f) of the Code) immediately following the date the Stock Option is granted; (ii) during the optionee's employment with the Corporation or such subsidiary; and (iii) in such cumulative annual installments as determined by the Committee at the time of grant. Subject to the provisions of this Section 13, each Non- Qualified Stock Option may be exercised in whole or, from time to time, in part with respect to the number of then exercisable shares in any sequence desired by the optionee without regard to the date of grant of other Stock Options. An optionee exercising a Stock Option shall give notice to the Corporation of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Corporation. At the time of purchase, the optionee shall tender the full purchase price of the shares purchased. Until such payment has been made and a certificate or certificates for the shares purchased has been issued in the optionee's name, the optionee shall possess no stockholder rights with respect to such shares. Payment of such purchase price shall be made to the Corporation, subject to any applicable rule or regulation adopted by the Committee: (i) in cash (including check, draft, money order or wire transfer made payable to the order of the Corporation); (ii) through the delivery of shares of Common Stock owned by the optionee; or (iii) by a combination of (i) and (ii) above. For determining the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise. 14. WITHHOLDING TAXES ON STOCK OPTION EXERCISE Each optionee shall deliver to the Corporation cash in an amount equal to all federal, state and local withholding taxes required to be collected by the Corporation in respect of the exercise of a Stock Option, and until such payment is made, the Corporation may, in its discretion, retain all or a portion of the shares to be issued. Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, an optionee may authorize the Corporation to satisfy any such withholding requirement by directing the Corporation to withhold from any shares to be issued, such number of shares as shall be sufficient to satisfy the withholding obligation. 15. EXERCISE OF STOCK OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL Each outstanding Stock Option shall become immediately and fully exercisable for a period of 6 months following the date of the following occurrences, each constituting a "Change of Control": (i) if any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becomes, directly or indirectly, the beneficial owner of 20% or more of the shares of the Corporation entitled to vote for the election of directors; (ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were Directors of the Corporation just prior to such event cease to constitute a majority of the Corporation's Board of Directors; or (iii) the stockholders of the Corporation approve an agreement providing for a transaction in which the Corporation will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Corporation occurs. After such 6 month period the normal option exercise provisions of the Plan shall govern. In the event an optionee is terminated as an employee of the Corporation or a subsidiary within 2 years of any of the events specified in (i), (ii) or (iii), all outstanding Stock Options at that date of termination shall become immediately exercisable for a period of 3 months. With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of optionee-owned Common Stock as a condition to obtaining rights: (a) said deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the optionee; and (b) any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse. 16. WITHDRAWAL OF PERFORMANCE UNITS Performance Units (plus accrued interest) may be withdrawn only after the completion of the Performance Period, except as described in Section 10, and provided the optionee has remained in the employment of the Corporation during said Performance Period, except as provided in Sections 18 and 19 (termination or death). An optionee may subsequently withdraw Performance Units, without regard to the date of the grant of the Performance Units. Withdrawals must be made in whole units, including accrued interest. To withdraw Performance Units, the optionee shall give notice to the Corporation. Upon receipt of such notice, the Committee shall determine whether the withdrawal is to be paid in cash or by the delivery of Common Stock with a Fair Market Value on the date of withdrawal equal to the amount being withdrawn. 17. RELATIONSHIP OF PERFORMANCE UNITS AND NON-QUALIFIED STOCK OPTIONS Upon a withdrawal of Performance Units (including accrued interest), the corresponding Non-Qualified Stock Options shall terminate on a "one-for-one" basis. Upon the exercise of Non-Qualified Stock Options, the optionee's corresponding Performance Unit Account shall be decreased on a "one-for-one" basis by the value of the Performance Units, including accrued interest, on the date of such exercise. In the event Non-Qualified Stock Options are exercised prior to the completion of the Performance Period, the corresponding Performance Units shall not be valued and shall lapse on a "one-for-one" basis as of the date of such exercise. 18. TERMINATION OF EMPLOYMENT OR LEAVE OF ABSENCE OF AN OPTIONEE A. Normal Termination If the optionee's employment by the Corporation or a subsidiary terminates for any reason other than as specified in subsections B, C, D or E, the optionee's Stock Options and right to withdraw Performance Units shall terminate 3 months after such termination, and all Performance Units granted but not valued at the termination of employment shall expire on that date. If the employment by the Corporation or a subsidiary of an optionee, other than an optionee subject to Section 16 of the 1934 Act, is terminated for the convenience of the Corporation, as determined by the Committee, and, at the time of termination the sum of the optionee's age and service with the Corporation equals or exceeds 70, the Committee, in its sole discretion, may permit any Stock Option previously granted to the optionee under the Plan to be exercised to the full extent that such Stock Option could have been exercised by such optionee immediately prior to the optionee's termination and may permit such Stock Option to remain exercisable until the earlier of (i) 5 years after the date of termination, or (ii) the expiration of the Stock Option in accordance with its original term. B. Death If the termination of employment is due to the optionee's death, the Stock Options may be exercised or Performance Units withdrawn as provided in Section 19. C. Retirement If the termination of employment is due to the optionee's retirement, the optionee may exercise a Stock Option, subject to the original term of the Stock Option, within 5 years after the date of retirement, including any Stock Option granted under the Plan within the 12 months preceding such retirement and, provided further, with respect to Stock Option grants which require the deposit by the optionee of optionee-owned Common Stock as a condition to obtaining rights, any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse. Performance Units granted but not valued at the date of retirement shall be valued at the end of the Performance Period as provided in Section 10 with such value being reduced by the percentage of the Performance Period not completed at the date of such retirement. In the event of such retirement, the optionee may withdraw Performance Units within such time period as the corresponding Non-Qualified Stock Option could have been exercised after the optionee's retirement. D. Spin-offs If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Corporation, the Committee, in its sole discretion, may determine that all outstanding Stock Options granted more than 1 year prior to the date of such termination shall immediately become exercisable for a period of 2 years after the date of such termination, subject to the provisions of Section 7. E. Leave of Absence Unless the Committee shall otherwise determine, if an optionee is placed on an unpaid leave of absence, such optionee's Stock Options and right to withdraw Performance Units shall terminate at the expiration of 3 months from the inception of said leave of absence and all Performance Units granted, but not valued, at the inception of said leave of absence shall expire on such date. If an optionee is placed on an unpaid leave of absence, retires during such leave, and the Committee had decided not to terminate the optionee's right to exercise a Stock Option, right to withdraw Performance Units or the right to Performance Units granted, but not valued, at the date of the inception of said leave of absence, then such optionee may exercise a Stock Option or withdraw Performance Units in accordance with subsection C. Performance Units granted but not valued at the date of such retirement shall be valued at the end of the Performance Period as provided in Section 10 with such value being reduced by the percentage of the Performance Period not completed at the date the optionee was placed on the unpaid leave of absence. 19. DEATH OF OPTIONEE If an optionee should die while employed by the Corporation or a subsidiary, any Stock Option previously granted to the optionee under this Plan may be exercised or Performance Units withdrawn by the person designated in such optionee's Last Will and Testament or, in the absence of such designation, by the optionee's estate, to the full extent that such Stock Option could have been exercised or Performance Units withdrawn by such optionee immediately prior to the optionee's death, provided that the Stock Option is exercised or corresponding Performance Units which have been valued are withdrawn within 2 years of the optionee's death. Performance Units granted but not valued at the date of the optionee's death shall be valued at the end of the applicable Performance Period with such value being reduced by the percentage of the Performance Period not completed at the date of death. Such amounts must be withdrawn within the later of (i) 2 years of the optionee's death or (ii) 3 months of such valuation. With respect to Stock Option grants which require the deposit by the optionee of optionee-owned Common Stock as a condition to obtaining rights, in the event an optionee should die while in the employment of the Corporation or a subsidiary, said Stock Options may be exercised as provided in the first paragraph of this Section, subject to the following special conditions: (i) any restrictions on the sale of shares issued in respect of any such Stock Option shall cease; (ii) any optionee-owned Common Stock deposited by the optionee pursuant to said grant shall be promptly returned to the person designated in such optionee's Last Will and Testament or, in the absence of such designation, to the optionee's estate, and all requirements regarding deposit by the optionee shall be terminated; and (iii) the amount of the Stock Options deemed to be exercisable immediately prior to the optionee's death shall be as follows: (a) None, if the date of death is less than 1 year after the date of the grant; (b) 1/3, if the date of death is 1 year after the date of the grant; (c) 2/3, if the date of death is 2 years after the date of the grant; and (d) total amount, if the date of death is 3 years after the date of the grant. 20. AMENDMENTS OF THE PLAN The Plan may be terminated, modified, or amended by the Board of Directors of the Corporation. The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, the Committee may at any time terminate, modify, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or Committee without the approval of the stockholders of the Corporation which would: (i) materially increase the number of shares which may be issued under the Plan; (ii) materially increase the benefits accruing to optionees and Participants under the Plan; or (iii) materially modify the requirements as to eligibility for participating in the Plan. The Board of Directors shall have authority to cause the Corporation to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Corporation. No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any optionee or Participant pursuant to a prior grant, without the consent of the optionee or Participant. 21. FOREIGN JURISDICTIONS The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of laws of any foreign jurisdiction, to key employees of the Corporation who are subject to such laws and who receive grants under the Plan. 22. DURATION OF THE PLAN Grants may be made under the Plan until July 1, 1994. 23. NOTICE All notices to the Corporation shall be in writing, effective as of actual receipt by the Corporation, and shall be sent to: General Mills, Inc. Number One General Mills Boulevard Minneapolis, Minnesota 55426 Attention: Corporate Compensation If by Telex: 170360 Gen Mills If by Facsimile: (612) 540-4925 24. SECTION 16 OFFICERS With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Adopted by the Board of Directors on July 25, 1988 Adopted by the Shareholders on September 26, 1988 Effective as of September 26, 1988 As amended effective March 1, 1989 As amended effective April 23, 1990 As amended effective April 22, 1991 As amended effective June 1, 1992 As amended effective September 20, 1993 As amended effective June 27, 1994 EX-10.2 3 STOCK OPTION & L-T INCENTIVE PLAN 1984 EXHIBIT 10.2 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1984 As Amended Through June 27, 1994 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1984, AS AMENDED 1. ADMINISTRATION OF THE PLAN The Stock Option and Long-Term Incentive Plan of 1984 (the "Plan") shall be administered by the Compensation Committee (the "Committee") as from time to time appointed by the Board of Directors (the "Board") from members of the Board in accordance with the Certificate of Incorporation of General Mills, Inc. (the "Corporation"). Subject to such authority being granted to the Committee by the Board, the Committee shall have full power and authority in the name of and on behalf of the Corporation to construe and interpret the Plan and the terms and conditions thereof, and to adopt such rules and regulations for carrying out the purpose of the Plan as it deems appropriate. Decisions of the Board and/or Committee shall be final, conclusive and binding upon all parties, including the Corporation, the stockholders and the optionees. 2. PURPOSE OF THE PLAN The purpose of this Plan is to attract and retain strong management employees by rewarding certain officers and key employees of the Corporation and its subsidiaries who are primarily responsible for the management, growth and sound development of the business of the Corporation. 3. COMMON STOCK SUBJECT TO THE PLAN The shares of Common Stock to be issued upon the exercise of a Stock Option shall be made available at the discretion of the Board (or as such discretion may be delegated to the Committee) from the authorized but unissued Common Stock of the Corporation, from shares of Common Stock held in the treasury of the Corporation, or from shares purchased on the open market or otherwise. Subject to the provisions of the next succeeding paragraph, the aggregate number of shares for which Stock Options may be granted under this Plan shall not exceed 2,000,000 shares, the aggregate number of shares for which Stock Options may be granted in each fiscal year of the Corporation under this Plan shall not exceed 750,000 shares, and the aggregate number of shares for which Stock Options may be granted to any one employee under this Plan shall not exceed 36,000 shares in any fiscal year nor exceed 90,000 shares in total. If, prior to September 30, 1988, a Stock Option granted under this Plan shall have terminated without having been exercised in full (except where Non-Qualified Stock Options are terminated as a result of a withdrawal from an optionee's Performance Unit Account), the unpurchased shares shall (unless this Plan shall have terminated) become available for Stock Options to other employees. No Stock Options may be granted under the Plan after September 30, 1988. The number of shares for which Stock Options may be granted (in the aggregate, in any fiscal year, and as to any individual), the number of shares subject to outstanding Stock Options, and the price per share to be paid upon the exercise of outstanding Stock Options shall be appropriately adjusted by the Committee in the event that (i) the number of outstanding shares of Common Stock of the Corporation shall be changed by reason of split-ups, combinations or reclassifications of shares, or (ii) any stock dividends are distributed to the holders of Common Stock of the Corporation, or (iii) the Common Stock of the Corporation is converted into or exchanged for other shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization. 4. STOCK OPTION PRICE The purchase price under each Stock Option shall be determined by the Committee, but shall not be less than one hundred percent of the fair market value of the shares of Common Stock of the Corporation subject to such Stock Option on the date the Stock Option is granted. The fair market value shall be determined in accordance with procedures established by the Committee. 5. STOCK OPTION TERM AND TYPE Stock Options may be granted for such terms as may be determined by the Committee, but must expire no later than the date the optionee leaves the employment of the Corporation, subject to the provisions of Sections 14 and 15 hereof; provided, that Stock Options may not be granted for a term exceeding ten (10) years and one (1) month. The Committee shall determine whether stock option grants will be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code or Incentive Stock Options governed by Section 422A of the Internal Revenue Code. 6. INCENTIVE STOCK OPTIONS No optionee may be granted an Incentive Stock Option in any calendar year to purchase more than $100,000 of stock of the Corporation (determined by the fair market value of the Corporation's Common Stock on the date of grant) provided, that one-half of any unused portion of such amount may be carried over for Incentive Stock Option grants to such participant in any of the three succeeding years. 7. PERFORMANCE UNITS At the time of the granting of Non-Qualified Stock Options, the Corporation may grant corresponding Performance Units to the optionee, up to a number of Performance Units equal to the number of shares covered by the option. In each fiscal year of the Corporation in which Performance Units may be granted, the Committee shall establish goals for (i) the compound growth in earnings per share ("EPS") for the Corporation over three fiscal years (the "Performance Period"), and (ii) the after-tax return on average stockholder equity ("ROE") for the Corporation for the final fiscal year of the Performance Period. The Committee shall specify the Performance Unit values to be earned at various actual rates of EPS growth and ROE. "EPS" shall mean the Corporation's earnings from continuing operations per common share and common share equivalent (before extraordinary items) as reported in the Corporation's financial statements included in the Corporation's annual report for the final fiscal year of the Performance Period. The compound growth rate in EPS shall be calculated by comparing the EPS for the final fiscal year of the Performance Period and the EPS for the fiscal year immediately preceding the Performance Period. "ROE" shall mean the Corporation's after-tax earnings, divided by its average equity, which is the sum of beginning and ending total stockholders' equity for such fiscal year divided by two. EPS and ROE shall be subject to such adjustments as may be determined by the Committee. An optionee shall have no vested right to the value of a Performance Unit until the end of the Performance Period. A Performance Unit Account shall be established for each optionee for each fiscal year in which Performance Unit grants are made under the Plan. The value of the Performance Units when determined shall be credited to the optionee's Performance Unit Account, and such amount shall thereafter earn interest at an annual rate determined by the Committee; provided, that such interest rate shall not exceed two-thirds of the Corporation's return on average capital structure, defined as earnings after-tax plus after- tax interest expense, divided by average capital structure. "Average capital structure" is the sum of beginning and ending stockholders' equity and interest bearing obligations, both current and long-term, divided by two. The optionee's Performance Unit Account shall be credited with such interest at the end of each fiscal quarter of the Corporation until (i) the amounts in the Performance Unit Account are withdrawn by the optionee, or (ii) the corresponding Non-Qualified Stock Options have been exercised, and the value of such exercise (in accordance with Section 13 hereof) has equaled or exceeded the amount in the optionee's Performance Unit Account; provided, that no interest shall be paid beyond the term of the corresponding Non-Qualified Stock Option. Performance Units may be granted for fiscal years commencing May 28, 1984, and thereafter until September 30, 1988. Accruals of the Performance Units (but not the accumulating interest) shall be charged annually against the Corporation's profit sharing fund established in accordance with the resolution approved by the shareholders in 1933, as amended in 1953 and 1968. 8. ELIGIBILITY OF OPTIONEES Only persons who are officers or key employees of the Corporation or a subsidiary shall be eligible to receive Stock Options and Performance Units under this Plan. Directors who are also active employees are eligible. Neither the members of the Committee nor any member of the Board who is not an active employee shall be eligible to receive Stock Options or Performance Units under this Plan. Subject to the terms, limitations, provisions and conditions of the Plan, the Committee shall: (i) select the employees to be granted Stock Options; (ii) determine whether Stock Option grants will be Non-Qualified Stock Options or Incentive Stock Options; (iii) determine the number of shares covered by each Stock Option, subject to the limit on the number of shares specified in Section 3 hereof that may be granted to any one person; (iv) determine whether Performance Units shall be granted with a Non-Qualified Stock Option; (v) determine the time or times when Stock Option grants will be made; (vi) determine the option price of the shares subject to each Stock Option; (vii) determine the time when each Stock Option may be exercised; (viii) determine whether any of the shares issued in respect of any Stock Option are to be restricted in any manner; (ix) determine if any corresponding deposit of stock is required, specifying the terms and conditions of such deposit and any forfeiture of rights in the event of failure to make or maintain such deposit; and (x) prescribe the form, which shall be consistent with this Plan, of the instruments evidencing any Stock Option or Performance Unit granted under this Plan. 9. NON-TRANSFERABILITY OF STOCK OPTIONS AND PERFORMANCE UNITS No Stock Option or Performance Unit granted under this Plan shall be transferable by the optionee otherwise than by the optionee's Last Will and Testament or by the laws of descent and distribution, and such Stock Option shall be exercised and amounts in the Performance Unit Account withdrawn during the optionee's lifetime only by the optionee. 10. EXERCISE OF STOCK OPTIONS Except as provided in Sections 14, and 15, each Stock Option granted under this Plan may be exercised only after one year of continued employment with the Corporation or a subsidiary (as defined in section 425(f) of the Internal Revenue Code) immediately following the date the Stock Option is granted and only during the continuance of the optionee's employment with the Corporation or such subsidiary, and may be exercised, subject to such overall limitations, only in such annual installments, which shall be cumulative, as may be determined by the Committee at the time of grant. Subject to the provision of this Section 10, each Non- Qualified Stock Option may be exercised in whole or, from time to time, in part with respect to the number of shares as to which it is then exercisable in any sequence desired by the optionee without regard to the date of grant of other Stock Options. No Incentive Stock Option shall be exercisable by the optionee while there is outstanding, within the meaning of section 422A(c)(7) of the Internal Revenue Code, any Incentive Stock Option previously granted to such optionee to purchase stock in the Corporation. A person exercising a Stock Option shall give written notice to the Corporation at its main executive offices of such exercise and of the number of shares the optionee has elected to purchase, and shall at the time of purchase tender the full purchase price of the shares the optionee has elected to purchase. Until the optionee has made such payment and has had issued in the optionee's name a certificate or certificates for the shares so purchased, the optionee shall possess no stockholder rights with respect to any such shares. Subject to any applicable rule or regulation adopted by the Committee, payment of such purchase price shall be made to the Corporation (i) in cash (including check, draft or money order made payable to the order of the Corporation); (ii) through the delivery of shares of Common Stock owned by the optionee; or (iii) by a combination of (i) and (ii) above. The Common Stock so delivered shall have a value for determining payment equal to the mean of the high and low price of shares of the Common Stock on the New York Stock Exchange on the date of exercise. Upon the exercise of a Stock Option, the Corporation may, in its discretion, retain all or a portion of the shares until such time as the optionee delivers cash, a check, or a draft or money order to the Corporation in an amount equal to all Federal or State withholding taxes required to be collected by the Corporation. Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, an optionee may authorize the Corporation to satisfy any such withholding requirement by directing the Corporation to withhold from any shares to be issued, such number of shares as shall be sufficient to satisfy the withholding obligation. 11. EXERCISE OF STOCK OPTIONS IN CERTAIN EVENTS Each outstanding Stock Option shall, except as provided in the following clauses, become immediately and fully exercisable if (i) any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becomes, directly or indirectly, the beneficial owner of twenty percent (20%) or more of the shares of the Corporation entitled to vote for the election of directors; (ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Corporation just prior to such event shall cease to constitute a majority of the Corporation's Board of Directors; or (iii) the stockholders of the Corporation approve an agreement providing for a transaction in which the Corporation will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Corporation occurs. If any of the foregoing events specified in clauses (i), (ii), or (iii) above occur, each outstanding Stock Option shall be exercisable in full for a period of six months following the date of occurrence of such event, and after such period the normal provisions of the Plan pertaining to vesting of Stock Options shall govern, or in the event any optionee is terminated as an employee of the Corporation or a subsidiary within two years of any of the events specified in the foregoing clauses, any outstanding Stock Options at the date of termination shall immediately vest and become exercisable for a period of three months, provided, however, that no Stock Option may become exercisable as a result of such acceleration within one year of the date of its grant. 12. WITHDRAWAL OF AMOUNTS IN PERFORMANCE UNIT ACCOUNTS The amount in an optionee's Performance Unit Account (plus accrued interest) may be withdrawn only after the completion of the Performance Period, provided the optionee has remained in the employment of the Corporation for such time period except as provided in Sections 14 and 15 hereof. An optionee may thereafter withdraw amounts, which shall be paid in cash, from the optionee's Performance Unit Account, without regard to the date of the grant of the Performance Units. An optionee withdrawing an amount from a Performance Unit Account shall give written notice of such intent to withdraw to the Corporation at its main executive offices. For withdrawals related to Stock Options granted before July 27, 1987, an optionee may give notice of a withdrawal only during a period commencing with the beginning of the third business day following the date of release by the Corporation of quarterly or annual summary statements of sales and earnings, and ending on the close of business on the twelfth business day following such date. For withdrawals related to Stock Options granted on or after July 27, 1987 or withdrawals made pursuant to Sections 14 and 15, an optionee may give notice of a withdrawal on any business day of the executive offices of the Corporation. Subject to the approval of the Committee and any applicable rule or regulation adopted by the Committee, an optionee may elect to defer receipt until January 4, 1988 of any and all cash withdrawals from his Performance Unit Account which the optionee may make during calendar year 1987 in accordance with the preceding paragraph by executing and filing a deferred distribution agreement (in the form as provided by the Corporation) with the Corporation. No further interest on any such unpaid amounts shall accrue after the date of receipt by the Corporation of the notice of an intended withdrawal in accordance with the second paragraph of this Section 12. If a withdrawal from an optionee's Performance Unit Account relating to Performance Units granted prior to July 27, 1987 results in less than twenty percent (20%) of the original number of such optionee's corresponding Non-Qualified Stock Options remaining outstanding, such optionee shall be required to withdraw at the same time the full amount in his Performance Unit Account, including accrued interest, corresponding to such Non-Qualified Stock Options. 13. PERFORMANCE UNITS AND CORRESPONDING NON-QUALIFIED STOCK OPTIONS Upon a withdrawal from an optionee's Performance Unit Account, the corresponding Non-Qualified Stock Options shall terminate as to a number of shares of which the "appreciated value" is equal to the amount withdrawn from the Performance Unit Account. In the event the "appreciated value" equals a fractional number of shares, the corresponding Non-Qualified Stock Options shall terminate as to the next lower whole number of shares. "Appreciated value" means the excess of the fair market value of the Common Stock over the option price. Upon the exercise of a Non-Qualified Stock Option, the optionee's corresponding Performance Unit Account shall be decreased by the "appreciated value" on the date of such exercise. However, neither of the preceding conditions relating to the withdrawal from a Performance Unit Account nor the exercise of a Non-Qualified Stock Option shall be a limit to such withdrawal or exercise in the event either exceeds the value of the other. In the event a Non-Qualified Stock Option is exercised prior to the completion of the Performance Period, the amount of the "appreciated value" for the options exercised shall be deducted at the end of the Performance Period from the optionee's Performance Unit Account. For Performance Units granted on or after July 27, 1987, upon a withdrawal from an optionee's Performance Unit Account consisting of any or all such Performance Units and accrued interest thereon, the corresponding Non-Qualified Stock Options shall terminate on a "one-for-one" basis. Upon the exercise of Non-Qualified Stock Options granted on or after July 27, 1987, the optionee's corresponding Performance Unit Account shall be decreased on a "one-for-one" basis by the value of the Performance Units, including accrued interest, on the date of such exercise. In the event Non-Qualified Stock Options granted on or after July 27, 1987 are exercised prior to the completion of the Performance Period, the corresponding Performance Units shall not be valued and shall lapse on a "one-for-one" basis as of the date of such exercise. 14. TERMINATION OF EMPLOYMENT If an optionee ceases to be an employee of the Corporation or a subsidiary, the optionee's Stock Options and right to withdraw amounts in the Performance Unit Account shall terminate after three (3) months, and all Performance Units granted but not valued at the termination of employment shall expire on the date of termination; provided that if the optionee's employment with the Corporation or a subsidiary, other than the employment of an optionee subject to Section 16 of the Securities Exchange Act of 1934, is terminated for the convenience of the Corporation, as determined by the Committee, and, at the time of termination the sum of the optionee's age and service with the Corporation equals or exceeds 70, the Committee, in its sole discretion, may permit any Stock Option previously granted to any such optionee under the Plan to be exercised to the full extent that such Stock Option could have been exercised by such optionee immediately prior to the optionee's termination and may permit such Stock Option to remain exercisable until the earlier of (i) five years after the date of termination or (ii) the expiration of the Stock Option in accordance with its original term. Notwithstanding the foregoing, (i) if the cessation of employment is due to the optionee's death, the Stock Options may be exercised or amounts in the Performance Unit Account withdrawn to the extent and in the manner provided in Section 15; (ii) if the cessation of employment is due to the optionee's retirement with the consent of the Corporation, the optionee may exercise a Stock Option subject to the original term of the Stock Option, within five years after the optionee shall so cease to be an employee, including any Stock Option granted under the Plan within the twelve (12) months preceding such retirement and, provided further, with respect to Stock Option grants which require the deposit by the optionee of optionee owned Corporate Common Stock as a condition to obtaining rights, any restrictions on the sale of shares issued in respect of any such Stock Option shall cease; and (iii) if the cessation of employment occurs within a twelve-month period from the date a Stock Option was vested in the optionee by the Committee at the date of grant for purposes of this subsection, and is due to termination of the optionee's employment by the Corporation after a change of control as described in Section 11 hereof, any Stock Option which was so vested shall become exercisable one year after the date of grant for a period of three months and, provided further, that with respect to Stock Option grants which require the deposit by the optionee of optionee owned Corporation Common Stock as a condition to obtaining rights, (a) said deposit requirement shall be terminated as of the date of cessation of employment and any such deposited stock shall be promptly returned to the optionee, (b) the total amount of the grant not previously forfeited or exercised shall be exercisable as set forth in this subsection (iii), and (c) any restrictions on the sale of shares issued in respect of any such Stock Option shall cease. Performance Units granted but not valued at the date of such retirement shall be valued at the end of the Performance Period as provided in Section 7. Such Performance Units may then be withdrawn in a proportionate amount equal to the percentage of the Performance Period completed to the date of such retirement. In the event of such a retirement, the optionee may withdraw amounts in the Performance Unit Account within such time period as the corresponding Non-Qualified Stock Option could have been exercised after the optionee's retirement. If an optionee ceases to be an employee of the Corporation or a subsidiary and the cessation of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Corporation, the Committee, in its sole discretion, may determine that (i) outstanding Stock Options of such optionee shall immediately vest and become exercisable, provided that no Stock Options may become exercisable as a result of such acceleration within one year of the date of grant; and (ii) the optionee may exercise a Stock Option, subject to the original term of the Stock Option, within two years after such optionee shall cease to be an employee. In the event an optionee is placed on an unpaid leave of absence, such optionee's Stock Option and right to withdraw amounts in the Performance Unit Account shall terminate, unless the Committee shall otherwise determine, at the expiration of three (3) months from the inception of the said leave of absence and all Performance Units granted but not valued at the inception of said leave of absence shall expire on such date. In the event an optionee is placed on an unpaid leave of absence and retires with the consent of the Corporation during such leave, and the Committee has determined not to terminate, in accordance with the preceding paragraph, the optionee's right to exercise a Stock Option, right to withdraw amounts in the Performance Unit Account, or the right to Performance Units granted but not valued at the date of the inception of said leave of absence, such optionee may exercise a Stock Option, subject to the original term of the Stock Option, within five years after the date of such retirement, including any Stock Option granted under the Plan within the twelve (12) months preceding such retirement, or withdraw amounts in the Performance Unit Account within such time period as the corresponding Stock Option could have been exercised after the optionee's retirement. Performance Units granted but not valued at the date of such retirement shall be valued at the end of the Performance Period as provided in Section 7. Such Performance Units may then be withdrawn in a proportionate amount equal to the percentage of the Performance Period completed to the date the optionee was placed on the unpaid leave of absence. Any question as to whether and when there has been a cessation of employment or a retirement with the consent of the Corporation shall be determined by the Committee, and its determination of such questions shall be final. 15. DEATH OF OPTIONEE If an optionee should die while in the employment of the Corporation or a subsidiary, any Stock Option theretofore granted to the optionee under this Plan may be exercised or amounts in the Performance Unit Account withdrawn by the person designated in such optionee's Last Will and Testament or, in the absence of such designation, by the optionee's estate, to the full extent that such Stock Option could have been exercised or amounts in the Performance Unit Account withdrawn by such optionee immediately prior to the optionee's death, provided the Stock Option is so exercised within two years of the optionee's death, and the amounts in the Performance Unit Account are withdrawn within three (3) months of the optionee's death. Performance Units granted but not valued at the date of the optionee's death shall be valued at the end of the Performance Period as provided in Section 7. Such Performance Units may then be withdrawn in a proportionate amount equal to the percentage of the Performance Period completed to the date of the optionee's death. Such amounts must be withdrawn by the designated person or estate from the Performance Unit Account within three (3) months of such valuation. With respect to Stock Option grants which require the deposit by the optionee of optionee owned Corporation Common Stock as a condition to obtaining rights, in the event an optionee should die while in the employment of the Corporation or a subsidiary, said Stock Options may be exercised as provided in the first paragraph of this Section 15, subject to the following special conditions: (i) any restrictions on the sale of shares issued in respect of any such Stock Option shall cease, (ii) any optionee owned Corporation Common Stock deposited by the optionee pursuant to said grant shall be promptly returned to the person designated in such optionee's Last Will and Testament or, in the absence of such designation, to the optionee's estate, and all requirements regarding deposit by the optionee shall be terminated, and (iii) the amounts of the Stock deemed to be exercisable immediately prior to the optionee's death shall be as follows: (a) zero, if the date of death is less than one year after the date of the grant; (b) one-third, if the date of death is one year after the date of the grant; (c) two-thirds, if the date of death is two years after the date of the grant; and (d) total amount, if the date of death is three years after the date of the grant. 16. AMENDMENTS TO PLAN The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan and, subject to the approval of the Board, may at any time terminate, modify or suspend the operation of the Plan; provided that no such modification shall, without the approval of the stockholders: (i) increase the maximum number of shares as to which Stock Options may be granted under this Plan either in the aggregate, for any fiscal year or to any one person, except as permitted by Section 3; (ii) permit the granting of any Stock Option under this Plan at a purchase price less than one hundred percent of the fair market value (determined as provided in Section 4) of the shares of common stock subject to such Stock Option at the date of the grant; (iii) shorten the period which must elapse between the granting of a Stock Option and the first accrual of rights to exercise such Stock Option; (iv) permit the exercise of a Stock Option unless full payment for the shares as to which the Stock Option is exercised is made at the time of exercise; (v) extend the term of a Stock Option after the grant of such Stock Option; or (vi) expand the class of employees eligible to receive Stock Options. The Board of Directors shall have authority to cause the Corporation at its expense to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations prescribed by the Securities and Exchange Commission. 17. EFFECTIVE DATE This Plan shall become effective as of October 1, 1983, subject to the approval of the shareholders of the Corporation at the Annual Meeting on September 26, 1983, and shall expire (unless terminated earlier) as of September 30, 1988. 18. SECTION 16 OFFICERS With respect to persons subject to Section 16 of the Securities Exchange Act of 1934 ("1934 Act"), transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Adopted by the shareholders on September 26, 1983 Amended June 25, 1984, July 22, 1985, October 28, 1985, June 23, 1986, February 23, 1987, March 1, 1987, July 27, 1987, December 14, 1987, and July 25, 1988, June 1, 1992 and June 27, 1994 EX-10.5 4 MANAGEMENT CONTINUITY AGREEMENT EXHIBIT 10.5 MANAGEMENT CONTINUITY AGREEMENT THIS MANAGEMENT CONTINUITY AGREEMENT, previously referred to as an "Executive Protection Agreement" (the "Agreement") between General Mills, Inc., a Delaware corporation (the "Corporation"), and (the "Executive"), originally entered into as of June 24, 1986 (the "date hereof") is hereby amended as of April 24, 1989. WITNESSETH: WHEREAS, the Corporation wishes to attract and retain well- qualified executive and key personnel and to assure both itself and the Executive of continuity of management in the event of any Change of Control (as defined in Section 2) of the Corporation; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Operation of Agreement. The "Effective Date" of this Agreement shall be the date during the Contract Period (as defined in Section 3) on which a Change of Control occurs. 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean an event during the Contract Period required to be reported in response to Item 1(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 (the "Exchange Act"); provided that, without limitation, such a "Change of Control" shall be deemed to have occurred if: (i) a third person, including a "group" as defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, directly or indirectly, of 20% or more of the combined voting power of the Corporation's outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; or (ii) individuals who constitute the Board of Directors of the Corporation as of the date hereof (the "Incumbent Board") cease for any reason to constitute at least two-thirds thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall be, for purposes of this clause (ii), considered as though such persons were a member of the Incumbent Board. 3. Contract Period. The "Contract Period" is the period commencing on the date hereof and ending on the earlier to occur of (i) the second anniversary of such date, or (ii) the first day of the month next following the Executive's 65th birthday; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (the date one year after the date hereof, and each annual anniversary of such date, is hereinafter referred to as the "Renewal Date"), the Contract Period shall be automatically extended so as to terminate on the earlier of (i) two years from such Renewal Date or (ii) the first day of the month next following the Executive's 65th birthday, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Contract Period shall not be so extended subject however that any failure of the Corporation to extend the Contract Period shall not limit or reduce in any manner the rights and benefits of the Executive contained in this Agreement if a Change of Control has occurred during a Contract Period and, in such event, the rights and benefits of the Executive shall continue in full force and effect notwithstanding that a Contract Period may have ended. 4. Certain Definitions. (a) Cause. The Executive's employment may be terminated for Cause if a majority of the Board of Directors, after the Executive shall have been afforded a reasonable opportunity to appear in person before the Board of Directors and to present such evidence as the Executive deems appropriate, determines that Cause exists. For purposes of this Agreement, "Cause" means (i) an act or acts of fraud or misappropriation on the Executive's part which result in or are intended to result in his personal enrichment at the expense of the Corporation, (ii) conviction of a felony, or (iii) a physical or mental disability which materially interferes with the capacity of the Executive in fulfilling his or her responsibilities and which will qualify the Executive for disability benefits from a company-sponsored plan. (b) Good Reason. For purposes of this Agreement, "Good Reason" means (i) without the express written consent of the Executive (A) the assignment to the Executive of any duties inconsistent in any substantial respect with the Executive's position, authority or responsibilities as in effect during the 90-day period immediately preceding the Effective Date of this Agreement, or (B) any other substantial adverse change in such position (including titles), authority, or responsibilities; (ii) any failure by the Corporation to furnish the Executive with compensation and benefits at a level equal to or exceeding those received by the Executive from the Corporation during the 90-day period preceding the Effective Date of this Agreement, including a failure by the Corporation to maintain its policy of paying retirement and supplemental savings plan benefits which would be payable under the General Mills Retirement Plan but for the limits imposed by the Employee Retirement Income Security Act of 1974, as may be amended ("ERISA"), other than an insubstantial and inadvertent failure remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based or to perform services at any office or location other than that at which the Executive is based at the Effective Date of this Agreement, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any failure by the Corporation to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 10(b); or (v) any failure by the Corporation to deposit amounts which may become payable to the Executive to the Trustee as contemplated by Section 8. For purposes of this Section 4(b), any determination of "Good Reason" made by the Executive shall be conclusive. (c) Notice of Termination. Any termination by the Corporation for Cause or by the Executive for Good Reason or otherwise shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relief upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated (provided, however, that any Notice of Termination given by (i) the Executive at least six months but no more than two years after the Effective Date, or (ii) by the Corporation more than two years after the Effective Date, need not set forth any such basis for termination) and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice). (d) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. 5. Obligations of the Corporation upon Termination. (a) Good Reason and other than for Cause Subject to the limitations of Section 5(c), if: (i) within two years after the Effective Date of this Agreement, the Corporation shall terminate the Executive's employment for any reason other than for Cause; or (ii) at least six months but no more than two years after the Effective Date of this Agreement, the Executive shall terminate employment for any reason in his sole discretion; or (iii) within two years after the Effective Date of this Agreement, the Executive shall terminate his employment for Good Reason: (I) the Corporation shall pay to the Executive in a lump sum in cash within 20 days after the Date of Termination the aggregate of the amounts determined pursuant to the following clauses (A), (B) and (C) inclusive plus the continuation of the benefits specified in Clause (D), as follows: (A) if not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect at the time the Notice of Termination was given, plus a bonus, determined in accordance with the provisions of the following clause (B)(ii), for that fraction of the fiscal year completed as of the date the Notice of Termination was given; and (B) three times the sum of (i) the Executive's annual base salary at the rate in effect at the time the Notice of Termination was given and (ii) an amount equal to the highest bonus paid to the Executive in any of the preceding three fiscal years; and (C) In the event that the Executive becomes entitled to any or all of the specified payments under clauses (A), (B) or (D) of this Section 5(a)(I) or under Section 5(b), if any of such payments or benefits will be subject to the tax imposed by section 4999 of the Internal Revenue Code of 1986, as may be amended (the "Code"), and/or any similar tax that may hereafter be imposed by the federal or any state or local government (the "Excise Tax"), the Corporation shall pay to the Executive, at the time of receipt of such payments or benefits, an additional amount (the "Gross-Up Payment") so that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the payment provided for by this clause, shall be equal to the Total Payments. For purposes of determining whether any of such payments or benefits will be subject to the Excise Tax and the amount of such Excise Tax: (x) Any other payments or benefits received or to be received by the Executive in connection with a Change of Control of the Corporation or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, stock option, restricted stock, stock performance units, or any other benefits or arrangement or agreement with the Corporation, or any person whose actions result in a Change of Control of the Corporation, or any person affiliated with the Corporation or such person) (which together with the payments or benefits under Section 5(a)I or Section 5(b) constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of tax counsel selected by the Corporation and reasonably acceptable to the Executive, such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of section 280G(b)(4) of the Code in excess of the base amount within the meaning of section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax; (y) The amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total Payments, or (2) the amount of excess parachute payments within the meaning of section 280G(b)(1) (after applying subclause (x) above; and (z) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Corporation's independent public accountants in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment, the Executive shall repay to the Corporation at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Corporation shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined. (D) until the earlier to occur of (i) the date three years following the Date of Termination,or (ii) the first day of the first month next following the Executive's 65th birthday (the period of time from the Date of Termination until the earlier of (i) or (ii) is hereinafter referred to as the "Unexpired Period," the Corporation shall continue to provide all benefits which the Executive and/or his spouse is or would have been entitled to receive under all present and post-retirement medical, dental, vision, disability, executive life, group life, accidental death and other programs of the Corporation, including additional benefit service under the applicable General Mills retirement plan equal to the "Unexpired Period," in each case on a basis providing the Executive or his spouse with benefits at least equal to those provided by the Corporation for the Executive under such plans and programs in effect at any time during the 90-day period immediately preceding the Effective Date of this Agreement, subject that if an Executive is terminated under the provisions of Section 5(a) or Section 5(b), and at the Date of Termination the Executive would not qualify for post-retirement benefits under the plans and programs then in effect during such 90-day period for the reason that the Executive has not reached his 55th birthday, the Executive shall nevertheless be entitled to such benefits equal to the benefits such Executive would have received if the Executive was of the age of 55 at the Date of Termination; and (ii) the Executive and/or his spouse, as the case may be, shall receive supplemental periodic payments equal to retirement and savings plan benefits which would be payable under the applicable General Mills retirement plan but for limits imposed by ERISA, calculated as if the Executive (a) had been employed to the end of the Unexpired Period; (b) had retired at the age he would have attained at the end of the Unexpired Period; and (c) had earnings to the end of the Unexpired Period at a rate equal to the rate of Executive's total compensation for the calendar year prior to the effective date of this Agreement. (b) By the Corporation more than two years after the Effective Date. If the Corporation shall terminate the Executive's employment for any reason other than Cause at any date which is more than two years after the Effective Date, the Executive shall be entitled to receive the benefits specified under Clauses (A), (B), (C) and (D) of Section 5(a)(I) except that the words "three times" in Clause (B), "three years" and "thirty-six" in Clause (B) shall be substituted by "one times", "one year" and "twelve" respectively. 6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive deferred compensation or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any employment, stock option, performance units or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 7. Full Settlement. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others or by any amounts received by Executive from others. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under any provision of this Agreement or any guarantee of performance thereof, in each case plus interest, compounded monthly, on the total unpaid amount determined to be payable under this Agreement, such interest to be calculated on the basis of the "Prime Rate" as reported in the WALL STREET JOURNAL during the period of such nonpayment plus 5%. 8. Trustee. The Corporation has established a Supplemental Benefits Trust with Norwest Bank Minnesota, N.A. as Trustee to hold assets of the Corporation under certain circumstances as a reserve for the discharge of the Corporation's obligations under this Agreement and certain plans of deferred compensation of the Corporation. In the event of a Change of Control as defined in Section 2 hereof, the Corporation shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund all benefits payable under the Agreement. Executives shall have the right to demand and secure specific performance of this provision. All assets held in the Trust remain subject only to the claims of the Corporation's general creditors whose claims against the Corporation are not satisfied because of the Corporation's bankruptcy or insolvency (as those terms are defined in the Trust Agreement). The Executive does not have any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Executive and all rights created under the Trust, as under this Agreement, are unsecured contractual claims of the Executive against the Corporation. In the event the funding of the Trust described in the preceding paragraph does not occur, upon written demand by the Executive given at any time after a Change of Control occurs, the Corporation shall deposit in trust with an institutional trustee (the "Trustee") designated by the Executive in such demand amounts which may become payable to the Executive pursuant to Section 5(a) or Section 5(b) with irrevocable instructions to pay amounts to the Executive when due in accordance with the terms of this Agreement. All charges of the Trustee shall be paid by the Corporation. The Trustee shall be entitled to rely conclusively on the Executive's written statement as to the fact that payments are due under this Agreement and the amount of such payments. If the Trustee is not notified that payments are due under this Agreement within two years and 60 days after receipt of a deposit hereunder, all amounts deposited with the Trustees and earnings with respect thereto shall be delivered to the Corporation on demand. 9. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives, heirs and legatees. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place. 10. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Any dispute, disagreement or controversy shall be arbitrated in Minneapolis, Minnesota as provided for in Minnesota Statutes 572.08 et seq. under the rules, regulations and procedures of the American Arbitration Association. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: If to the Corporation: General Mills, Inc. Number One General Mills Boulevard Minneapolis, Minnesota 55426 Attn: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall be severable and not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) This Agreement contains the entire understanding with the Executive with respect to the subject matter hereof. (f) The employment of Executive by the Corporation may be terminated by either the Executive or the Corporation at any time and for any reason. Nothing contained in the Agreement shall affect such rights to terminate, provided, however, that nothing in this Section 10(f) shall prevent the Executive from receiving any amounts payable pursuant to Section 5(a) or Section 5(b) of this Agreement in the event of a termination described in such Section 5(a) or 5(b). IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, and its corporate seal to be hereunder affixed and attested by its secretary or assistant secretary, all as of the day and year first above written. GENERAL MILLS, INC. ______________________________ By____________________________ Executive Its___________________________ ATTEST: ______________________________ _______________ Secretary (Seal) EX-10.6 5 SUPPLEMENTAL RETIREMENT PLAN EXHIBIT 10.6 SUPPLEMENTAL RETIREMENT PLAN OF GENERAL MILLS, INC. As Amended Effective January, 1991, November, 1991, December, 1992 and May, 1994 SUPPLEMENTAL RETIREMENT PLAN OF GENERAL MILLS, INC. Effective as of January 1, 1991, General Mills, Inc. hereby amends and restates the Supplemental Retirement Plan of General Mills, Inc. for the exclusive benefit of its employees, pursuant to authorization of the Board of Directors of General Mills, Inc. Additional amendments have been made since the date of the last restatement. ARTICLE I INTRODUCTION Section 1.1 Name of Plan. The name of the Plan is the "Supplemental Retirement Plan of General Mills, Inc." It is also referred to as the "Supplemental Plan" or the "Plan." Section 1.2 Effective Date. The effective date of the Plan is January 1, 1976. This Plan, except as may otherwise be specifically provided herein, shall not apply to Participants who separated from active service prior to January 1, 1991. ARTICLE II DEFINITIONS Section 2.1 Base Plan shall mean a defined benefit pension plan sponsored by the Company, which is qualified under the provisions of Code Section 401. With respect to any Participant in this Plan where, as of June 1, 1991, the sum of such individual's age and length of Company service equals or exceeds 65, Base Plan shall mean the provisions of such plan as were in effect on December 31, 1988, and benefits under this Plan shall be determined as if such provisions had continued in effect until the date of the Participant's termination or retirement from the Company. With respect to any Participant in this Plan where, as of June 1, 1991, the sum of such individual's age and Company service is less than 65, Base Plan shall mean the provisions of such Plan as are in effect on the date of such Participant's termination or retirement from the Company. Section 2.2 Board shall mean the Board of Directors of General Mills, Inc. Section 2.3 Change in Control shall mean the occurrence of any of the following events: (a) any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becoming, directly or indirectly, the beneficial owner of twenty percent (20%) or more of the shares of stock of General Mills, Inc. entitled to vote for the election of directors. (b) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease to constitute a majority of the Company's Board of Directors; or (c) the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs. Section 2.4 Code shall mean the Internal Revenue Code of 1986, as it may be amended from time to time. Section 2.5 Company shall mean General Mills, Inc. and any of its subsidiaries or affiliated business entities as shall be authorized to participate in the Plan by the Board, or its delegate. Section 2.6 Compensation Committee shall mean the Compensation Committee of the Board. Section 2.7 Deferred Cash Award shall mean the cash amount deferred by an individual under any formal plan of deferred compensation sponsored by the Company. A Deferred Cash Award shall not include: (a) any base salary which was deferred during calendar year 1986; (b) any interest or investment increment applied to the amount of the cash award which is deferred; or (c) any cash amount deferred by any person under any individual contract or arrangement with the Company or any of its subsidiaries or affiliated business entities. Section 2.8 ERISA shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. Section 2.9 Minor Amendment Committee shall mean the Minor Amendment Committee appointed by the Compensation Committee. Section 2.10 "Maximum Benefit" shall mean the maximum annual benefit payable in dollars permitted to be either accrued or paid to a participant of any Base Plan, as determined under all applicable provisions of the Code and ERISA, specifically taking into account the limitations of Code Sections 401(a)17 and 415, and any applicable regulations thereunder. It is specifically intended that the Maximum Benefit, as defined herein, shall take into account changes in the dollar limits under Code Sections 401(a)17 and 415, and benefits payable from this Plan and the Base Plan shall be adjusted accordingly. In addition, if a Base Plan limits the accrued benefits of any Participant by restricting the application of future changes in such dollar limits with respect to such Participant, benefits payable under this Plan shall nevertheless be determined on the full amount that would have been permissible absent such restrictions under the Base Plan. Section 2.11 Participant shall mean an individual who is a participant in the Company's Executive Incentive Plan or who is eligible to defer compensation under a formal deferred compensation program maintained by the Company, and who is: (a) an active participant in one or more Base Plans on and after January 1, 1976 and whose accrued benefits, determined on the basis of the provisions of such Base Plans without regard to the Maximum Benefit, would exceed the Maximum Benefit; (b) An individual with a Deferred Cash Award, which, if included as compensation under any Base Plans in which such individual is a participant, would result in a greater accrued benefit under the provisions of such Base Plans; (c) An active participant of the General Mills, Inc. Executive Incentive Plan who is entitled to a vested Pension under a Base Plan and who is involuntarily terminated prior to attainment of age 55, if the sum of such individual's age and length of company service at the date of termination equals or exceeds 75; or (d) An individual who participates in the Retirement Income Plan of General Mills, Inc., where the sum of such individual's age and length of Company service as of June 1, 1991 equals or exceeds 65, and who would have been entitled to a greater benefit under the provisions of the RIP at the time of his or her retirement from the Company had he or she not been considered a "highly compensated employee" for any period on or after January 1, 1989. An eligible individual shall remain a Participant under this Supplemental Plan until all amounts payable on his or her behalf from this Plan have been paid. Section 2.12 Defined Terms. Capitalized terms which are not defined herein shall have the meaning ascribed to them in the relevant Base Plan. ARTICLE III BENEFITS Section 3.1 Effect of Retirement. Upon the Normal, Early, Late or Disability Retirement of a Participant, as provided under a Base Plan, such Participant shall be entitled to a benefit equal to the amount determined in accordance with the provisions of the Base Plan without regard to the limitations of the Maximum Benefit, including as compensation for purposes of such calculation any Deferred Cash Award (as if actually paid at the time of the award), reduced by the lesser of the Participant's actual accrued benefit under such Base Plan or the Maximum Benefit. In the event a Participant has accrued benefits under more than one Base Plan, the provisions of the Base Plan from which the Participant retires as an Active Participant shall be used to determine the total benefits payable without regard to the Maximum Benefit. If the Participant received a partial prepayment as described in Section 3.10, benefits payable under this Section shall be adjusted as provided in Section 3.11. Section 3.2 Spouse's Pension. Upon the death of a Participant whose surviving spouse is eligible for a Spouse's Pension under a Base Plan, such surviving spouse shall be entitled to a benefit under this Supplemental Plan, determined in accordance with the provisions of the Base Plan without regard to the limitations of the Maximum Benefit, and including as compensation for purposes of such calculation any Deferred Cash Award (as if actually paid at the time of the award), reduced by the lesser of the actual Spouse's Pension payable under such Base Plan or the Maximum Benefit. In the event a Participant had accrued benefits under more than one Base Plan, the provisions of the Base Plan under which the Participant was accruing benefits as an Active Participant shall be used to determine the total benefits payable without regard to the Maximum Benefit. If the Participant received a partial prepayment as described in Section 3.10, benefits payable under this Section shall be adjusted as provided in Section 3.11. Section 3.3 Effect of Termination Prior to Retirement Eligibility. If a Participant terminates employment with the Company and is entitled to a Vested Deferred Pension under a Base Plan, such Participant shall be entitled to a benefit equal to the amount determined in accordance with the provisions of the Base Plan without regard to the limitations of the Maximum Benefit, including as compensation for purposes of such calculation any Deferred Cash Award (as if actually paid at the time of the award), reduced by the lesser of the Participant's actual accrued benefit under such Base Plan or the Maximum Benefit. In the event a Participant has participated in more than one Base Plan, the provisions of the Base Plan under which the Participant was accruing benefits as an Active Participant at the time of such separation from service shall be used to determined the total amount of benefit payable without regard to the Maximum Benefit. If the Participant received a partial prepayment as described in Section 3.10, benefits payable under this Section shall be adjusted as provided in Section 3.11. Section 3.4 Benefits Prior to Separation from Service. Prior to a Participant's separation from service due to Retirement, termination or death, benefits shall accrue under this Supplemental Plan, based on the Participant's actual accrued benefit under a Base Plan or Plans, the Maximum Benefit and Deferred Cash Awards, if any. A Participant's benefit under this Supplemental Plan may increase or decrease, before or after Retirement or termination, as a result of changes in the formula under any Base Plan, the Maximum Benefit, or changes in the earnings used to calculate benefits under a Base Plan formula. Any benefit accrued under this Supplemental Plan as a result of a Participant's Deferred Cash Award shall be payable only if, and to the extent that on the date of his or her termination of employment, both of the following conditions are satisfied: (a) The Participant has a vested accrued benefit under the applicable Base Plan; and (b) A Deferred Cash Award was made during a year which is used in the calculation of Final Average Earnings under this Supplemental Plan on the date of termination. If the Participant received a partial prepayment as described in Section 3.10, benefits payable under this Section shall be adjusted as provided in Section 3.11. Section 3.5 Effect of Involuntary Termination of EIP Participants Prior to Retirement Eligibility. In the event of the involuntary termination of an active Participant of the General Mills, Inc. Executive Incentive Plan, where the sum of such Participant's age and years of service with the Company equals or exceeds 75 at the date of termination, and who is entitled to a Vested Deferred Pension under a Base Plan, the provisions of this Section shall apply. Subject to the aggregate limits of Section 4.4, such Participant shall be entitled to receive benefits determined under this Section, in addition to any benefit provided under Section 3.3. Such additional benefits shall be in the form of a retirement supplement, calculated as the difference between an Early Retirement Pension under the provisions of such Base Plan and a Vested Deferred Pension under such Base Plan. If the Participant received a partial prepayment as described in Section 3.10, benefits payable under this Section shall be adjusted as provided in Section 3.11. Section 3.6 Effect of Termination of the Retirement Income Plan of General Mills, Inc. In the event of the termination of the Retirement Income Plan of General Mills, Inc. (RIP) within five years after a Change in Control each Participant of the RIP whose benefits would then exceed the Maximum Benefit as a result of the changes required under Section 12.4 of the RIP shall be entitled to receive such excess benefits under the Supplemental Plan. Section 3.7 Form of Payment. Any benefit amount payable under the Supplemental Plan to a married Participant shall be adjusted and paid in the form of a joint and 100% to survivor annuity. Any benefit amount payable under the Supplemental Plan to an unmarried Participant shall be paid in the form of a single life annuity. Notwithstanding the above, a married Participant may request, subject to the approval of the Minor Amendment Committee, to have such benefit amounts adjusted and paid as a joint and 50% to survivor annuity or as a single life annuity. Further, any Participant may request, subject to the approval of the Minor Amendment Committee, that any benefit amount be paid in a single sum payment in cash, effective as of the first day monthly benefits would otherwise begin. Any request for an alternate form of benefit that is granted may be made at any time before benefits would otherwise begin. The Minor Amendment Committee may approve or reject any such request in its sole discretion. Any joint and survivor annuity shall be the actuarial equivalent of a single life annuity based on the following factors, determined using the ages of the Participant and spouse on the effective date of the payment: (a) For benefits commencing after January 1, 1989. The formula for the joint and 100% to survivor factor is: .868 + .005 (65 - X) + .005 (Y - X), where X is equal to the Participant's age and Y is equal to the age of the spouse. The formula for the joint and 50% to survivor factor is: .928 + .003 (65 - X) + .003 (Y - X), where X is equal to the Participant's age and Y is equal to the age of the spouse. (b) For benefits commencing on or before January 1, 1989. The formula for the joint and 100% to survivor factor is: .815 + .007 (63 - X) + .007 (Y - X), where X is equal to the Participant's age and Y is equal to the age of the spouse. The formula for the joint and 50% to survivor factor is: .898 + .004 (63 - X) + .004 (Y - X), where X is equal to the Participant's age and Y is equal to the age of the spouse. For the purpose of calculating any lump sum payment, the interest rate used shall be the immediate annuity interest rate determined by the Pension Benefit Guaranty Corporation as in effect on the first day of the year in which a distribution is to be made. Section 3.8 Time of Payment. The payment of benefits determined under the provisions of the Supplemental Plan shall commence on the first day of the month coincident with or next following the date upon which a Participant (or surviving spouse) first becomes eligible to commence receiving benefits under the Base Plan or Plans, regardless of the time benefits actually commence under the Base Plan. Notwithstanding any other provisions of the Supplemental Plan to the contrary, the Minor Amendment Committee may, in its sole discretion, direct that payments be made before such payments are otherwise due, if, for any reason (including but not limited to, a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Participant or Beneficiary), it believes that a Participant or Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable under the Supplemental Plan before they are to be paid. In making this determination, the Minor Amendment Committee shall take into account the hardship that would be imposed on the Participant or Beneficiary by the payment of federal income taxes under such circumstances. Section 3.9 Effect of Changes in the Maximum Benefit. In the event the dollar amount of the Maximum Benefit increases as a result of federal legislation, the benefits of any Participant payable under the Supplemental Plan, whether or not in pay status, shall be recalculated to take into account the higher Maximum Benefit payable from the applicable Base Plan. If payments have already commenced under the provisions of the applicable Base Plan and the Supplemental Plan, benefit amounts under both Plans shall be adjusted to reflect the higher Maximum Benefit, by increasing the amount paid under the Base Plan and decreasing the amount paid under the Supplemental Plan, as soon as administratively possible after such a change. Notwithstanding the above, if a Base Plan is terminated, no adjustments shall be made to benefits payable under the Supplemental Plan with respect to changes in the Maximum Benefit after the date of termination of the Base Plan. Section 3.10 Partial Prepayment. Notwithstanding any other provisions of this Supplemental Plan, partial prepayment of benefits due under this Supplemental Plan may be made from time to time, pursuant to amendments to this Section. Prepayments so authorized are described as follows: (a) (1) The first prepayment was authorized to be made in January, 1988 to those active Participants who, on December 31, 1987, had earned vested accrued benefits under one or more Base Plans equal to the Maximum Benefit then in effect, payable at December 31, 1987, or age 55, if later. (2) The second prepayment was authorized to be made on or after October, 1988 and before December 31, 1988, to those active Participants who had earned vested accrued benefits under one or more Base Plans, when projected to December 31, 1988, equal to the Maximum Benefit then if effect, payable at December 31, 1988, or age 55, if later. (3) The third prepayment was authorized to be made in December, 1989, to those active Participants who, if the Base Plans had continued in effect through December 31, 1989 as in effect on December 31, 1988, would have earned vested accrued benefits under such Base Plans equal to the Maximum Benefit then in effect, payable at January 1, 1990, or at age 55 if later. (4) The fourth prepayment was authorized to be made in October, 1990, to those active Participants who, if the Base Plans had continued in effect through December 31, 1990, as in effect on December 31, 1988, would have earned vested accrued benefits under such Base Plans equal to the Maximum Benefit then if effect, payable at January 1, 1991, or at age 55 if later. (5) The fifth prepayment was authorized to be made in December, 1991, to those active Participants who had earned vested accrued benefits under one or more Base Plans, when projected to December 31, 1991, equal to the Maximum Benefit then in effect, payable at December 31, 1991, or age 55, if later, but only to the extent that, when estimated benefits payable at each Participant's normal retirement age were projected, the Participant's additional benefits payable from this Plan at such normal retirement date were equal to or greater than zero. (6) The sixth prepayment was authorized to be made in December, 1992, to those active Participants who had earned vested accrued benefits under one or more Base Plans, when projected to December 31, 1992, equal to the Maximum Benefit then in effect, payable at December 31, 1992, but only to the extent that, when estimated benefits payable at each Participant's normal retirement age (or announced early retirement age, if earlier) were projected, the Participant's additional benefits payable from this Plan at such retirement date were equal to or greater than zero. (b) For such Participants identified in (a) above, who were eligible for a Normal or Early Retirement under the applicable Base Plans as of the stated dates, a monthly benefit payable under this Supplemental Plan is calculated as if (i) retirement actually occurred on the stated date, and (ii) the benefits payable under the applicable Base Plans were paid under the normal form of payment provided in such Base Plans. The resulting benefit payable under the provisions of this Supplemental Plan shall be calculated as if payable in the form of an annuity for the life of such Participant. (c) For such Participants who are participating in the Company's Executive Incentive Plan but are not eligible for a Normal or Early Retirement under the applicable Base Plans as of the stated date, a monthly benefit payable under this Supplemental Plan is calculated under the provisions of Section 3.5 as if (i) such a Participant's involuntary termination occurred as of the stated date, and (ii) the benefit payable under the applicable Base Plans is paid under the normal form of payment provided in such Base Plans. The resulting benefit payable under the provisions of this Supplemental Plan shall be calculated as if payable in the form of an annuity payable for the life of such Participant. (d) The present value of the monthly benefits payable under this Supplemental Plan as calculated above shall be based on the immediate annuity interest rates determined by the Pension Benefit Guaranty Corporation as in effect on the January 1 of the year of any such authorized prepayment. (e) In the event the Compensation Committee, or its delegate, believes that payment of the entire present value of any amounts calculated pursuant to this Section may result in an overpayment of amounts that would have been payable under this Supplemental Plan upon the actual retirement or separation from service of any of such Participants, without regard to the provisions of this Section, the Compensation Committee, or its delegate, shall reduce the amount of the single sum payment as the Compensation Committee, or its delegate, in its sole discretion, deems appropriate. Section 3.11 Adjustment for Prepayment. With respect to any Participant who received a prepayment of benefits under Section 3.10 above, the benefits due upon Retirement, separation or death under Sections 3.1, 3.2, 3.3, 3.4 or 3.5, or a subsequent prepayment of benefits due under Section 3.10, shall be adjusted to reflect the prepayment of benefits in the following manner: (a) The monthly benefit payable under the applicable section shall be calculated first without regard to prepayment, under a life only form of payment. (b) The offset for each prepayment shall be calculated based on a lump sum future value of the amount of the prepayment. Such amount will be calculated using the time period from the stated date as of which the prepayment was calculated to the date of the Participant's retirement, separation, subsequent payment date, or death, and an annual interest rate equal to 66.2% of the immediate annuity interest rate used to calculate the lump sum value of such prepayment, on the after-tax value of the prepayment. The after-tax value of the prepayment shall be based on an effective annual tax rate of 33.8%. This same rate shall be used to compute a before-tax value for offset purposes. The resulting lump sum future value is to be converted to a life annuity figure using the 1983 Group Annuity Mortality table for males. (c) The result in (b) above shall be subtracted from (a) above after both figures have been adjusted for the appropriate form of benefit selected by the Participant (or spouse, in the event of the Participant's death). The result shall be the additional benefit remaining, if any, to be paid from this Supplemental Plan. In the event of multiple prepayments for such a Participant, the offset for each prepayment shall be calculated separately and applied to the benefit in (a) above in the order in which paid. In the event the amount (or amounts in the event of multiple payments) determined in (b) above is equal to the amount determined in (a) above, no additional benefits shall be payable under this Supplemental Plan. If the amount (or amounts in the event of multiple payments) determined in (b) above is greater than the amount determined in (a) above, the Company shall be entitled to recover the amount of any excess prepayments from the Participant and may withhold and retain sums which would otherwise be payable to the Participant under any other nonqualified plan of the Company in satisfaction of the excess prepayment. Section 3.12 Participants Formerly on Leave to General Mills Restaurants, Inc. Participants in this Plan (i) who were active participants in the Retirement Income Plan of General Mills, Inc. ("RIP") on "leave of absence status" to General Mills Restaurants, Inc. and (ii) whose leaves were canceled effective as of May 31, 1991, may be entitled to additional benefits under this Plan as described below. In addition to any benefits that such a Participant may be entitled to under the provisions of this Article III, this Plan shall also pay the difference, if any, between the total benefits the Participant is entitled to from the Base Plan in which he or she is participating at the time of termination and this Plan, and the total benefits the Participant would have been entitled to from the RIP and this Plan, had the Participant continued to participate in the RIP until the date of the Participant's termination of employment or Retirement. Section 3.13 Presidents of General Mills Restaurants, Inc. Participants in this Plan who were employed as Presidents of a General Mills Restaurants, Inc. division as of May 31, 1994, were not eligible for any benefit accrual under the terms of the Base Plan in which they participated for the period from January 1, 1989 through May 31, 1994. Benefits shall accrued under the terms of this Plan equal to the entire benefit which would have accrued to such individuals under the applicable Base Plan for this period. The form and timing of such payments shall be subject to all provisions of this Plan. ARTICLE IV PLAN ADMINISTRATION Section 4.1 Compensation Committee. The Supplemental Plan shall be administered by the Compensation Committee, and the Compensation Committee shall have full authority to interpret the Supplemental Plan. Such interpretations of the Compensation Committee shall be final and binding on all parties, including the Participants, their beneficiaries, surviving spouses and the Company. Section 4.2 Delegated Duties. The Compensation Committee shall have the authority to delegate the duties and responsibilities of administering the Supplemental Plan, maintaining records, issuing such rules and regulations as it deems appropriate, and making the payments hereunder to such employees or agents of the Company as it deems proper. Section 4.3 Amendment and Termination. The Board, or if specifically delegated, its delegate, may amend, modify or terminate the Supplemental Plan at any time, provided, however, that no such amendment, modification or termination shall adversely affect any accrued benefit under the Supplemental Plan to which a Participant, or the Participant's Beneficiary, is entitled under Article III prior to the date of such amendment or termination, and in which such Participant, or the Participant's Beneficiary, would have been vested if such benefit had been provided under the applicable Base Plan, unless the Participant, or the Participant's Beneficiary, becomes entitled to an amount equal to the cash value of such benefit under another plan, program or practice adopted by the Company. Notwithstanding the above, no amendment, modification, or termination which would affect benefits accrued under this Supplemental Plan prior to such amendment, modification or termination may occur after a Change in Control without the written consent of a majority of the Participants determined as of the day before such Change in Control. Each year the Compensation Committee shall notify, in writing, those individuals who have any accrued benefits under the Supplemental Plan. Section 4.4 Payments. The Company will pay all benefits arising under this Supplemental Plan and all costs, charges and expenses relating thereto. The benefits payable under this Supplemental Plan to each Participant shall not be greater that what would have been paid in the aggregate under the Base Plan (i) in the absence of federal limitations on benefit amounts, (ii) if amounts deferred had been paid to the Participant when earned, and (iii) with respect to Section 3.5, the Participant had actually been eligible for Early Retirement under the Base Plan. Section 4.5 Arbitration. (a) Any controversy or claim arising out of or relating to this Plan, or any alleged breach of the terms or conditions contained herein, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "AAA") as such rules may be modified herein. (b) An award rendered in connection with an arbitration pursuant to this Section shall be final and binding and, judgment upon such an award may be entered and enforced in any court of competent jurisdiction. (c) The forum for arbitration under this Plan shall be Minneapolis, Minnesota and the governing law for such arbitration shall be laws of the State of Minnesota. (d) Arbitration under this Section shall be conducted by a single arbitrator selected jointly by the Company and the Participant (the "Complainant"). If within thirty (30) days after a demand for arbitration is made, the Company and the Complainant are unable to agree on a single arbitrator, three arbitrators shall be appointed. Each party shall select one arbitrator and those two arbitrators shall then select a third neutral arbitrator which thirty (30) days after their appointment. In connection with the selection of the third arbitrator, consideration shall be given to familiarity with executive compensation plans and experience in dispute resolution between parties, as a judge or otherwise. If the arbitrators selected by the parties cannot agree on the third arbitrator, they shall discuss the qualifications of such third arbitrator with the AAA prior to selection of such arbitrator, which selection shall be in accordance with the Commercial Arbitration Rules of the AAA. (e) If an arbitrator cannot continue to serve, a successor to an arbitrator selected by a party shall be also selected by the same party, and a successor to a neutral arbitrator shall be selected as specified in subsection (d) of this Section. A full rehearing will be held only if the neutral arbitrator is unable to continue to serve or if the remaining arbitrators unanimously agree that such a rehearing is appropriate. (f) The arbitrator or arbitrators shall be guided, but not bound, by the Federal Rules of Evidence and by the procedural rules, including discovery provisions, of the Federal Rules of Civil Procedure. Any discovery shall be limited to information directly relevant to the controversy or claim in arbitration. (g) The parties shall each be responsible for their own costs and expenses, except for the fees and expenses of the arbitrators, which shall be shared equally by the Company and the Complainant. Section 4.6 Non-Assignability of Benefits. Neither any benefit payable hereunder nor the right to receive any future benefit payable under the Supplemental Plan may be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a person eligible for any benefits becomes bankrupt, the interest under the Supplemental Plan of the person affected may be terminated by the Compensation Committee which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such person or make any other disposition of such benefits that it deems appropriate. Section 4.7 Applicable Law. All questions pertaining to the construction, validity and effect of the Supplemental Plan shall be determined in accordance with the laws of the United States and the laws of the State applicable to the Base Plan covering the Participant. Section 4.8 Supplemental Benefits Trust. The Company has established a Supplemental Benefits Trust with Norwest Bank Minneapolis, N.A. as Trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company's obligations under the Supplemental Plan and certain other plans of deferred compensation of the Company. In the event of a Change in Control as defined in Section 2.3 hereof, the Company shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund all benefits payable under the Supplemental Plan. Any Participant of the Supplemental Plan shall have the right to demand and secure specific performance of this provision. The Company may fund the Trust in the event of the occurrence of a Potential Change in Control as determined by the Finance Committee of the Board. All assets held in the Trust remain subject only to the claims of the Company's general creditors whose claims against the Company are not satisfied because of the Company's bankruptcy or insolvency (as those terms are defined in the Trust Agreement). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the Supplemental Plan, are unsecured contractual claims of the Participant against the Company. EX-10.9 6 SUPPLEMENTAL SAVINGS PLAN EXHIBIT 10.9 SUPPLEMENTAL SAVINGS PLAN OF GENERAL MILLS, INC. Restated as of January 1, 1989 With Certain Provisions Effective as of January, 1992 Further Amended as of November, 1991, December, 1992, and August, 1993 SUPPLEMENTAL SAVINGS PLAN OF GENERAL MILLS, INC. The Supplemental Savings Plan of General Mills, Inc., a non- qualified deferred compensation plan for the exclusive benefit of its employees, is hereby amended and restated as of January 1, 1989, with certain provisions effective as of January 1, 1992, pursuant to authorization of the Board of Directors of General Mills, Inc. ARTICLE I INTRODUCTION Section 1.1 Name of Plan. The name of the Plan is the "Supplemental Savings Plan of General Mills, Inc." It is also referred to as the "Supplemental Savings Plan" or the "Plan." Section 1.2 Effective Date. The effective date of the Plan is July 25, 1983. Section 1.3 Purpose. The purposes of the Supplemental Savings Plan are to: (i) provide a means by which a Participant may, under certain circumstances, be credited with benefits which, in the absence of restrictions imposed by Code Sections 401(a)(17), 401(k), 401(m) or 415, would be provided as Company Contributions under a Base Plan; and (ii) provide a means by which certain individuals, who are otherwise eligible to participate in this Plan, may be credited with amounts set forth under individual arrangements which the Minor Amendment Committee has approved for inclusion in this Plan. ARTICLE II DEFINITIONS Section 2.1 Account shall mean a Participant's individual account, as described in Section 3.2 of this Plan. Section 2.2 Base Plan shall mean a defined contribution plan sponsored by the Company, which is qualified under the provisions of Code Section 401, including the Voluntary Investment Plan of General Mills, Inc. (VIP), the Profit Sharing & Savings Plan for General Mills Restaurants, Inc. (PSSP), the General Mills, Inc. Employee Stock Ownership Plan (ESOP), the Retirement Savings Plan of General Mills, Inc. (RSP), and such other defined contribution plans as have been declared by the Board to be covered by this Plan. Section 2.3 Beneficiary shall mean the beneficiary or beneficiaries designated by the Participant in writing to receive the balance, if any, remaining in the Participant's Account upon the Participant's death. Section 2.4 Board shall mean the Board of Directors of General Mills, Inc. Section 2.5 Change in Control shall mean the occurrence of any of the following events: (a) any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becoming, directly or indirectly, the beneficial owner of twenty percent (20%) or more of the shares of stock of General Mills, Inc. entitled to vote for the election of directors; (b) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease to constitute a majority of the Company's Board of Directors; or (c) the stockholders of the Company approve an agreement providing for a transaction in which either the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs. Section 2.6 Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Section 2.7 Company shall mean General Mills, Inc., and any of its subsidiaries or affiliated business entities authorized to participate in a Base Plan by the Board, or its delegate. Section 2.8 Company Contribution shall mean any contribution or other addition to be made or allocated by the Company under a Base Plan, other than a contribution made pursuant to a Participant's election to make contributions under Code Sections 401(k) or 401(m). Section 2.9 ERISA shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. Section 2.10 Limitation Year shall mean the calendar year. Section 2.11 Minor Amendment Committee shall mean the Minor Amendment Committee appointed by the Compensation Committee of the Board. Section 2.12 Participant shall mean an employee who is eligible to participate in a formal non-qualified deferred compensation program adopted by the Company and who participates in this Supplemental Savings Plan pursuant to Article III. Section 2.13 Defined Terms. Capitalized terms which are not defined herein shall have the meaning ascribed to them in the relevant Base Plan. ARTICLE III PARTICIPATION Section 3.1 Participation. An employee described in Section 2.12 will participate in this Plan if: (a) as a result of the application of Code Section 415, no additional contributions can be made to the Base Plan for the remainder of the applicable Limitation Year, or as a result of the application of Code Section 401(a)(17), or the application of the nondiscrimination testing limitations imposed by Code Sections 401(k) and 401(m), he or she cannot make any further Participant contributions to the Base Plan for the remainder of the Plan Year for the Base Plan; or (b) an individual deferred compensation agreement exists with respect to the employee, and the Minor Amendment Committee approves the inclusion of the amounts to be credited under such agreement as "Company Contributions" under the terms of this Plan. Once credited under this Plan, such amounts shall be subject to all provisions of this Plan. Section 3.2 Establishment of Supplemental Savings Plan Accounts. The Company shall establish an Account for each Participant to which amounts shall be credited in accordance with Section 3.3. Such amounts shall be credited to Participants' Accounts under this Plan as bookkeeping entries only. Section 3.3 Crediting of Company Contributions. Company Contributions may be credited to a Participant's Account under the following circumstances: (a) A Participant shall be credited with amounts under this Plan equal to the additional Company Contributions that would have been made to the Base Plan with respect to such Participant for the remainder of the Plan Year or Limitation Year, as appropriate, as if the restrictions described in Section 3.1 did not apply. Such amounts shall be credited to such Participant's Account under this Plan as of the last day of the month coincident with or next following the date the additional Company Contributions would have been made to the Base Plan if the restrictions described in Section 3.1 did not apply. Such credits shall be based on the rate of total contributions elected by the Participant under the Base Plan as in effect for the period in which the applicable restriction first applies, but not more than the maximum percentage of Earnable Compensation with respect to which Company Contributions may be made pursuant to the Base Plan as in effect for the period without regard to any limitations on Company Contributions which may be imposed under the Base Plan in order to comply with the applicable limitations. In no event will amounts be credited under this Plan with respect to any Participant if the Participant is able to make any additional contributions under the Base Plan without violating: (a) the limitations of Code Section 401(a)(17); (b) the limitations of Code Section 415; or (c) the application of the nondiscrimination limitations under Code Sections 401(k) and 401(m). In no event shall a Participant be credited with Contributions under a Base Plan and this Plan during a given period that would exceed the Contributions that would have been made to the Base Plan in the absence of the restrictions imposed by Code Sections 401(a)(17), 401(k), 401(m) and 415. (b) Under the terms of an individual agreement, the amount of Company Contributions shall be determined at the time the Minor Amendment Committee approves the inclusion of such amounts as Company Contributions under this Plan. Section 3.4 Changes in Amounts Credited to a Supplemental Savings Plan Account. Amounts credited to a Participant's Supplemental Savings Plan Account shall be treated as if invested in the Fixed Income Fund of the VIP, unless the Participant has specifically requested, in writing, that the contribution be attributed to a different fund, or combination of funds otherwise available from time to time under the VIP. Effective as of January 1, 1992, the fund elections available for Accounts under this Plan shall be the Fixed Income Fund, the Equity Fund, the International Fund and the U. S. Treasury Fund of the VIP. Participants who had previously elected to have a portion of their Account under this Plan credited as if in the Company Stock Fund shall be given an opportunity to make a written election to have such amounts credited as if in any combination of the Fixed Fund, Equity Fund, U. S. Treasury Fund or International Fund for periods beginning January 1, 1992. In the absence of a written election from a Participant with amounts credited under the Company Stock Fund as of December 31, 1991, such amounts shall be credited under this Plan as if the Participant elected to have such amounts credited in the Fixed Income Fund for periods beginning on and after January 1, 1992. Transfers of amounts already credited to a Participant's Supplemental Savings Plan Account shall be permitted as of the first day of any month, provided a written request is received by the Minor Amendment Committee, or its delegate, on or before the last business day of the preceding month. Section 3.5 Distribution of Amounts Credited to a Supplemental Savings Plan Account. Amounts credited to a Participant's Supplemental Savings Plan Account shall be available for distribution only at such times as set forth in this Section. (a) Hardship Withdrawals. If an active Participant withdraws 100% of the account balance available for withdrawal under all Base Plans in which he or she participates, such Participant may request a hardship withdrawal under this Plan, by filing such a request in writing with the Minor Amendment Committee. The Minor Amendment Committee, in its sole discretion, may approve such a request if it finds that the Participant has incurred a severe financial hardship occasioned by an emergency, including, but not limited to, illness, disability or personal injury sustained by the Participant or a member of the Participant's immediate family. If such a request is approved, the Participant shall receive amounts reasonably necessary to alleviate the financial hardship from the value of such Participant's Supplemental Savings Plan Account, effective as of the first day of the month following the approval of such hardship withdrawal by the Minor Amendment Committee. (b) Death. In the event of the death of a Participant prior to the date a full distribution has been made from the Participant's Supplemental Savings Plan Account, the Company shall make distribution of the balance in such Account to the Participant's Beneficiary, effective as of the January 1 coincident with or next following the date of the Participant's death. (c) Termination and Retirement. Unless an effective "Participant Election," described below, has been filed with the Minor Amendment Committee, the Company shall make distribution of the amount credited to a Participant's Supplemental Savings Plan Account to the Participant, in a single sum, as soon as practical after the January 1 coincident with or next following the Participant's last day of employment with the Company. A Participant may elect a later distribution date and/or distribution in installments by filing a Participant Election with the Minor Amendment Committee, specifying the date and form of distribution of his or her Supplemental Savings Plan Account. Such election shall be effective provided all of the following requirements are met: (1) the Participant Election is filed with the Minor Amendment Committee at least one year prior to the date the distribution would otherwise be made; (2) unless the date of the initial distribution from this Plan pursuant to the Participant Election is during the same calendar year as the date of distribution would otherwise have been made in the absence of such Participant election, the date of the initial distribution from this Plan pursuant to the Participant Election is at least one year after the date the distribution would otherwise have been made in the absence of such Participant Election; and (3) the form of distribution is specified as either a single sum payment, or annual installment payments, for a specified period of time, not to exceed ten years. A retired or terminated Participant (or Beneficiary of a deceased Participant) may, at any time prior or subsequent to the commencement of payments under this Plan, elect in writing to have his or her form of payment of all amounts due under this Plan changed to an immediate single sum distribution which shall be paid within one (1) business day of receipt by the Company of such request; provided that the amount of any such single sum distribution shall be reduced by an amount equal to the product of (X) the total single sum distribution otherwise payable (based on the value of the account as of the first day of the month in which the lump-sum amount is paid, adjusted by a pro-rata portion of the rate of return for the month in which the lump-sum is paid, determined by multiplying the actual rate of return for such month by a fraction, the numerator of which is the number of days in the month prior to the date of payment, and the denominator of which is the number of days in the month), and (Y) the rate set forth in Statistical Release H.15(519), or any successor publication, as published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading "Treasury Constant Maturities" for the first day of the calendar month in which the request for a single sum distribution is received by the Company. Notwithstanding any other provisions of this Plan to the contrary, the Minor Amendment Committee, may, in its sole discretion, direct that payments be made before such payments are otherwise due if, for any reason (including, but not limited to, a change in the tax or revenue laws of the United States of America, a published revenue ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Participant or Beneficiary), it believes that a Participant or Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable under the Plan before they are to be paid. In making this determination, the Minor Amendment Committee shall take into account the hardship that would be imposed on the Participant or Beneficiary by the payment of federal income taxes under such circumstances. All distributions under this Plan shall be in cash paid by check. Section 3.6 No Forfeitures of Amounts in a Supplemental Savings Plan Account. All credited amounts in the Plan shall be fully vested. The Participant shall not forfeit any amount credited to his or her Supplemental Savings Plan Account even though such amount would have been forfeited if such amount had been a Company Contribution under the Base Plan to which it was attributable. Section 3.7 Non-Assignability of Interests. The interests herein and the right to receive distributions under this Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a Participant becomes bankrupt, the interests of the Participant under the Plan may be terminated by the Minor Amendment Committee, which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such Participant or make any other disposition of such interests that it deems appropriate. Notwithstanding the foregoing, in the event a Participant has received an overpayment from the Supplemental Retirement Plan of General Mills, Inc. and had failed to repay such amounts upon written demand of the Company, the Company shall be authorized and empowered, at the discretion of the Company, to deduct such amount from the Participant's Deferred Accounts. Section 3.8 Supplemental Benefits Trust. The Company has established a Supplemental Benefits Trust with Norwest Bank Minneapolis, N.A. as Trustee to hold assets of the Company under certain circumstances as a reserve for the discharge of the Company's obligations under the Plan and certain other plans of deferred compensation of the Company. In the event of a Change in Control as defined in Section 2.5 hereof, the Company shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund all benefits payable under the Plan. Any Participant of the Plan shall have the right to demand and secure specific performance of this provision. The Company may fund the Trust in the event of the occurrence of a Potential Change in Control as determined by the Finance Committee of the Board. All assets held in the Trust remain subject only to the claims of the Company's general creditors whose claims against the Company are not satisfied because of the Company's bankruptcy or insolvency (as those terms are defined in the Trust Agreement). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the Plan, are unsecured contractual claims of the Participant against the Company. ARTICLE IV PLAN ADMINISTRATION Section 4.1 Administration. The Plan shall be administered by the Minor Amendment Committee. The Minor Amendment Committee shall have the authority to interpret the Plan and any such interpretation shall be final and binding on all parties. The Minor Amendment Committee shall have the authority to delegate the duties and responsibilities of maintaining records, issuing such regulations as it deems appropriate, and making distributions hereunder. The Board, or if specifically delegated, its delegate, may amend or terminate the Plan at any time, provided that no such amendment or termination shall adversely affect the amounts credited to a Supplemental Savings Plan Account before the time of such amendment or termination unless the Participant becomes entitled to a benefit equal in value to such amount under another plan or practice adopted by the Company, and provided, further, that the Plan may not be amended with respect to benefits accrued under this Plan prior to such amendment after a Change in Control without the written consent of a majority of Participants determined as of the day before such Change in Control. The Company will pay for all distributions made pursuant to the Plan and for all costs, charges and expenses relating to the administration of the Plan. Section 4.2 Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States of America and the laws of the State applicable to the Base Plan covering the Participant. Section 4.3 Arbitration. (a) Any controversy or claim arising out of or relating to this Plan, or any alleged breach of the terms or conditions contained herein, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "AAA") as such rules may be modified herein. (b) An award rendered in connection with an arbitration pursuant to this Section shall be final and binding and, judgment upon such an award may be entered and enforced in any court of competent jurisdiction. (c) The forum for arbitration under this Plan shall be Minneapolis, Minnesota and the governing law for such arbitration shall be laws of the State of Minnesota. (d) Arbitration under this Section shall be conducted by a single arbitrator selected jointly by the Company and the Participant or Beneficiary, as applicable (the "Complainant"). If within thirty (30) days after a demand for arbitration is made, the Company and the Complainant are unable to agree on a single arbitrator, three arbitrators shall be appointed. Each party shall select one arbitrator and those two arbitrators shall then select a third neutral arbitrator which thirty (30) days after their appointment. In connection with the selection of the third arbitrator, consideration shall be given to familiarity with executive compensation plans and experience in dispute resolution between parties, as a judge or otherwise. If the arbitrators selected by the parties cannot agree on the third arbitrator, they shall discuss the qualifications of such third arbitrator with the AAA prior to selection of such arbitrator, which selection shall be in accordance with the Commercial Arbitration Rules of the AAA. (e) If an arbitrator cannot continue to serve, a successor to an arbitrator selected by a party shall be also selected by the same party, and a successor to a neutral arbitrator shall be selected as specified in subsection (d) of this Section. A full rehearing will be held only if the neutral arbitrator is unable to continue to serve or if the remaining arbitrators unanimously agree that such a rehearing is appropriate. (f) The arbitrator or arbitrators shall be guided, but not bound, by the Federal Rules of Evidence and by the procedural rules, including discovery provisions, of the Federal Rules of Civil Procedure. Any discovery shall be limited to information directly relevant to the controversy or claim in arbitration. (g) The parties shall each be responsible for their own costs and expenses, except for the fees and expenses of the arbitrators, which shall be shared equally by the Company and the Complainant. EX-10.13 7 SUPPLEMENTAL BENEFITS TRUST AGMT 2-9-87 EXHIBIT 10.13 GENERAL MILLS, INC. SUPPLEMENTAL BENEFITS TRUST TRUST AGREEMENT This TRUST AGREEMENT, amended and restated as of September 26, 1988, is between General Mills, Inc. (the "Grantor") and Norwest Bank Minnesota, N.A. (formerly known as Norwest Bank Minneapolis, N.A.) (the "Trustee"). 1. Purpose. The purpose of this trust (the "Trust"), originally established on February 9, 1987, is to provide a vehicle to (a) hold assets of the Grantor as a reserve for the discharge of the Grantor's obligations to certain individuals (the "Beneficiaries") entitled to receive benefits under the Supplemental Savings Plan of General Mills, Inc., amended and restated as of January 1, 1986, and any other plan of deferred compensation that the Grantor so designates in writing to the Trustee, including those plans designated in Exhibit A attached hereto and made a part hereof (the "Plans"), and (b) invest, reinvest, disburse and distribute those assets and the earnings thereon as provided hereunder and in the Plans. 2. Trust Corpus. The Grantor hereby transfers to the Trustee and the Trustee hereby accepts and agrees to hold, in trust, the sum of Ten Dollars ($10.00) plus such cash and/or property, if any, transferred to the Trustee by the Grantor or on behalf of the Grantor pursuant to obligations incurred under any or all of the Plans and the earnings thereon, and such cash and/or property, together with the earnings thereon and together with any other cash or property received by the Trustee pursuant to Section 8(a) of this Trust Agreement, shall constitute the trust estate and shall be held, managed and distributed as hereinafter provided. The Grantor shall execute any and all instruments necessary to vest the Trustee with full title to the property hereby transferred. 3. Grantor Trust. The Trust is intended to be a trust of which the Grantor is treated as the owner for federal income tax purposes in accordance with the provisions of Sections 671 through 679 of the Internal Revenue Code of 1986, as amended (the "Code"). If the Trustee, in its sole discretion, deems it necessary or advisable for the Grantor and/or the Trustee to undertake or refrain from undertaking any actions (including, but not limited to, making or refraining from making any elections or filings) in order to ensure that the Grantor is at all times treated as the owner of the Trust for federal income tax purposes, the Grantor and/or the Trustee will undertake or refrain from undertaking (as the case may be) such actions. The Grantor hereby irrevocably authorizes the Trustee to be its attorney-in-fact for the purpose of performing any act which the Trustee, in its sole discretion, deems necessary or advisable in order to accomplish the purposes and the intent of this Section 3. The Trustee shall be fully protected in acting or refraining from acting in accordance with the provisions of this Section 3. 4. Irrevocability of Trust. The Trust shall be irrevocable and may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor in whole or in part, without the express written consent of a majority of the Beneficiaries of the Trust; provided, however, that the Trust may be amended, as may be necessary either (i) to obtain a favorable ruling from the Internal Revenue Service with respect to the tax consequences of the establishment and settlement of the Trust, or (ii) to make nonsubstantive changes, which have no effect upon the amount of any Beneficiary's benefits, the time of receipt of benefits, the identity of any recipient of benefits, or the reversion of any assets to the Grantor prior to the Trustee's satisfaction of all the Trustee's obligations hereunder; provided, further, that in the event of a "Change of Control" as defined in Section 12.4 of the Retirement Income Plan of General Mills, Inc. (hereinafter referred to as a "Change in Control"), the Trust may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor's successor unless a majority of the Beneficiaries, determined as of the day before such Change in Control, agree in writing to such an alteration, amendment, revocation or termination. 5. Investment of Trust Assets. (a) Subject to the provisions of paragraph (b) below, until the Trustee has distributed all of the assets of the Trust in accordance with the terms hereof, the Trustee shall invest and reinvest such assets (without regard to any state law limiting the investment powers of fiduciaries) in such securities and other property as the Trustee deems advisable, considering the probable income (including capital appreciation potential) from any such investment, the probable safety of the assets of the Trust and, where appropriate, the rate of return at which the assets would have been invested on behalf of each Beneficiary under any applicable qualified defined contribution plan maintained by the Grantor. Within the limitations of the foregoing, the Trustee is specifically authorized to acquire, for cash or on credit, every kind of property, real, personal or mixed, and to make every kind of investment, specifically including, but not limited to, corporate and governmental obligations of every kind, preferred or common stocks, securities of any regulated investment company or trust, interests in common trust funds now or hereafter established by a corporate trustee, and property in which the Trustee owns an undivided interest in any other trust capacity. The Trustee is expressly authorized and empowered to purchase such insurance in its own name (and with itself as the beneficiary) as it shall determine to be necessary or advisable to advance best the purposes of the Trust and the interests of the Beneficiaries. (b) The Trustee shall invest and reinvest the assets of the Trust in accordance with such investment objectives, guidelines, restrictions or directions as the Grantor may furnish to the Trustee at the time of the execution of the Trust or at any later date; provided, however, that if there is a Change in Control the Trust's investment objectives, guidelines, restrictions or directions may not be changed by the Grantor's successor unless a majority of the Beneficiaries, determined as of the day before such Change in Control, agree, in writing, to such a change. 6. Distribution of Trust Assets. (a) Subject to the provisions of paragraph (b) below, at such time as a Beneficiary is entitled to a payment under any of the Plans, he shall be entitled to receive from the Trust (i) an amount in cash equal to the amount to which he is entitled under the Plan or Plans at such time, less (ii) any payments previously made to him by the Grantor with respect to such amount pursuant to the terms of the Plans. The commencement of payments from the Trust shall be conditioned on the Trustee's prior receipt of a written instrument from the Beneficiary in a form satisfactory to the Trustee containing representations as to (A) the amount to which the Beneficiary is entitled under the Plans, (B) the fact that he has requested the payment of such amount from the Grantor pursuant to the terms of the Plans, (C) the amount, if any, he has received from the Grantor under the Plans with respect to such amount, and (D) the amount to be paid him by the Trust (i.e., the difference between (A) and (C) above). All payments to a Beneficiary from the Trust shall be made in accordance with the provisions of the applicable Plan. The Trustee shall be fully protected in making any payment in accordance with the provisions of this paragraph. (b) The Trustee shall make or commence payment to the Beneficiary in accordance with his representations not later than 30 business days after its receipt thereof; provided, however, that before the Trustee makes or commences any such payment and not later than 7 business days after its receipt of the Beneficiary's representations, the Trustee shall request in writing the Grantor's agreement that the Beneficiary's representations are accurate with respect to the amount, fact, and time of payment to him. The Trustee shall enclose with such request a copy of the Beneficiary's representations and written advice to the Grantor that it must respond to the Trustee's request on or before the 20th business day (which date shall be set forth in such written advice) after the Beneficiary furnished such representations to the Trustee. If the Grantor, in a writing delivered to the Trustee, agrees with the Beneficiary's representations in all respects, or if the Grantor does not respond to the Trustee's request by the 20th day deadline, the Trustee shall make payment in accordance with the Beneficiary's representations. If the Grantor advises the Trustee in writing on or before the 20th day deadline that it does not agree with any or all of the Beneficiary's representations, the Trustee immediately shall take whatever steps it in its sole discretion, deems appropriate, including, but not limited to, a review of any notice furnished by the Grantor pursuant to paragraph (e) hereof, to attempt to resolve the difference(s) between the Grantor and the Beneficiary. If, however, the Trustee is unable to resolve such difference(s) to its satisfaction within 60 business days after its receipt of the Beneficiary's representations, the Trustee shall make payment at such time and in such form and manner as is allowed under the Plans as of the date first stated above and as the Trustee, in its sole discretion, selects. The Trustee shall be fully protected in making or refraining from making any payment in accordance with the provisions of this paragraph. (c) Notwithstanding any other provision of the Trust Agreement to the contrary, the Trustee shall make payments hereunder before such payments are otherwise due if it determines, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Beneficiary, or a closing agreement made under Code Section 7121 that is approved by the Internal Revenue Service and involves a Beneficiary, that a Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to him under the Plans before they are paid to him. (d) Unless (contemporaneously with his submission of the written instrument referred to in paragraph (a) hereof) a Beneficiary furnishes documentation in form and substance satisfactory to the Trustee that no withholding is required with respect to a payment to be made to him from the Trust, the Trustee may deduct from any such payment any federal, state or local taxes required by law to be withheld by the Trustee. (e) The Trustee shall provide the Grantor with written confirmation of the fact and time of any commencement of payments hereunder within 10 business days after any payments commence to a beneficiary. The Grantor shall notify the Trustee in the same manner of any payments it commences to make to a Beneficiary pursuant to the Plans. (f) The Trustee shall be fully protected in making or refraining from making any payment or any calculations in accordance with the provisions of this Section 6. 7. Termination of the Trust and Reversion of Trust Assets. The Trust shall terminate upon the first to occur of (i) the payment by the Grantor of all amounts due the Beneficiaries under each of the Plans and the receipt by the Trustee of a valid release to that effect from each of the Beneficiaries with respect to payments made to him, or (ii) the twenty-first anniversary of the death of the last survivor of the Beneficiaries who are in being on the date of the execution of this Trust Agreement. Upon termination of the Trust, any and all assets remaining in the Trust, after the payment to the Beneficiaries of all amounts to which they are entitled and after payment of the expenses and compensation in Sections 10 and 15(i) of this Trust Agreement, shall revert to the Grantor and the Trustee shall promptly take such action as shall be necessary to transfer any such assets to the Grantor. Notwithstanding the above, the Grantor shall be obligated to take whatever steps are necessary to ensure that the Trust is not terminated for a period of five (5) years following a Change in Control as of the date of the execution of this Trust Agreement, such steps to include, but not being limited to, the transfer to the Trustee of cash or other assets pursuant to the provisions of Section 8(a) hereof. 8. Powers of the Trustee. To carry out the purposes of the Trust and subject to any limitations herein expressed, the Trustee is vested with the following powers until final distribution, in addition to any now or hereafter conferred by law affecting the trust or estate created hereunder. In exercising such powers, the Trustee shall act in a manner reasonable and equitable in view of the interests of the Beneficiaries and in a manner in which persons of ordinary prudence, diligence, discretion and judgment would act in the management of their own affairs. (a) Receive and Retain Property. To receive and retain any property received at the inception of the Trust or at any other time, whether or not such property is unproductive of income or is property in which the Trustee is personally interested or in which the Trustee owns an undivided interest in any other trust capacity. (b) Dispose of, Develop, and Abandon Assets. To dispose of an asset, for cash or on credit, at public or private sale and, in connection with any sale or disposition, to give such warranties and indemnifications as the Trustee shall determine; to manage, develop, improve, exchange, partition, change the character of or abandon a Trust asset or any interest therein. (c) Borrow and Encumber. To borrow money for any Trust purpose upon such terms and conditions as may be determined by the Trustee; to obligate the Trust or any part thereof by mortgage, deed of trust, pledge or otherwise, for a term within or extending beyond the term of the Trust. (d) Lease. To enter for any purpose into a lease as lessor or lessee, with or without an option to purchase or renew, for a term. (e) Grant or Acquire Options. To grant or acquire options and rights of first refusal involving the sale or purchase of any Trust assets, including the power to write covered call options listed on any securities exchange. (f) Powers Respecting Securities. To have all the rights, powers, privileges and responsibilities of an owner of securities, including, without limiting the foregoing, the power to vote, to give general or limited proxies, to pay calls, assessments, and other sums; to assent to, or to oppose, corporate sales or other acts; to participate in, or to oppose, any voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations, and, in connection therewith, to give warranties and indemnifications and to deposit securities with and transfer title to any protective or other committee; to exchange, exercise or sell stock subscription or conversion rights; and, regardless of any limitations elsewhere in this instrument relative to investments by the Trustee, to accept and retain as an investment hereunder any securities received through the exercise of any of the foregoing powers. (g) Use of Nominee. To hold securities or other property in the name of the Trustee, in the name of a nominee of the Trustee, or in the name of a custodian (or its nominee) selected by the Trustee, with or without disclosure of the Trust, the Trustee being responsible for the acts of such custodian or nominee affecting such property. (h) Advance Money. To advance money for the protection of the Trust, and for all expenses, losses and liabilities sustained or incurred in the administration of the Trust or because of the holding or ownership of any Trust assets, for which advances, with interest, the Trustee has a lien on the Trust assets as against the Beneficiaries. (i) Pay, Contest or Settle Claims. To pay, contest or settle any claim by or against the Trust by compromise, arbitration or otherwise; to release, in whole or in part, any claim belonging to the Trust to the extent that the claim is uncollectible. Notwithstanding the foregoing, the Trustee may only pay or settle a claim asserted against the Trust by the Grantor if it is compelled to do so by a final order of a court of competent jurisdiction. (j) Litigate. To prosecute or defend actions, claims or proceedings for the protection of Trust assets and of the Trustee in the performance of its duties. (k) Employ Advisers and Agents. To employ persons, corporations or associations, including attorneys, auditors, investment advisers or agents, even if they are associated with the Trustee, to advise or assist the Trustee in the performance of its administrative duties; to act without independent investigation upon their recommendations. (l) Use Custodian. If no bank or trust company is acting as Trustee hereunder, the Trustee shall appoint a bank or trust company to act as custodian (the "Custodian") for securities and any other Trust assets. Any such appointment shall terminate when a bank or trust company begins to serve as Trustee hereunder. The Custodian shall keep the deposited property, collect and receive the income and principal, and hold, invest, disburse or otherwise dispose of the property or its proceeds (specifically including selling and purchasing securities, and delivering securities sold and receiving securities purchased) upon the order of the Trustee. (m) Execute Documents. To execute and deliver all instruments which will accomplish or facilitate the exercise of the powers vested in the Trustee. (n) Grant of Powers Limited. The Trustee is expressly prohibited from exercising any powers vested in it primarily for the benefit of the Grantor rather than for the benefit of the Beneficiaries. The Trustee shall not have the power to purchase, exchange, or otherwise deal with or dispose of the assets of the Trust for less than adequate and full consideration in money or money's worth. (o) Deposit Assets. To deposit Trust assets in commercial, savings or savings and loan accounts (including such accounts in a corporate Trustee's banking department) and to keep such portion of the Trust assets in cash or cash balances as the Trustee may, from time to time, deem to be in the best interests of the Trust, without liability for interest thereon. 9. Resignation of Trustee and Appointment of Successor Trustee. Each Trustee shall have the right to resign upon 30 days' written notice to the Grantor, during which time the Grantor shall appoint a "Qualified Successor Trustee." If no Qualified Successor Trustee accepts such appointment, the resigning Trustee shall petition a court of competent jurisdiction for the appointment of a "Qualified Successor Trustee." For this purpose, a "Qualified Successor Trustee" may be an individual or a corporation but may not be the Grantor, any person who would be a "related or subordinate party" to the Grantor within the meaning of Section 672(c) of the Code or a corporation that would be a member of an "affiliated group" of corporations including the Grantor within the meaning of Section 1504(a) of the Code if the words "80 percent" wherever they appear in that section were replaced by the words "50 percent." Upon the written acceptance by the Qualified Successor Trustee of the trust and upon approval of the resigning Trustee's final account by those entitled thereto, the resigning Trustee shall be discharged. 10. Trustee Compensation. The Trustee shall be entitled to receive as compensation for its services hereunder the compensation (a) as negotiated and agreed to by the Grantor and the Trustee, or (b) if not negotiated or if the parties are unable to reach agreement, as allowed a trustee under the laws of the State of Minnesota in effect at the time such compensation is payable. Such compensation shall be paid by the Grantor; provided, however, that to the extent such compensation is not paid by the Grantor, subject to the provisions of Section 15(i) hereof, it shall be charged against and paid from the Trust and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment. 11. Trustee's Consent to Act and Indemnification of the Trustee. The Trustee hereby grants and consents to act as Trustee hereunder. The Grantor agrees to indemnify the Trustee and hold it harmless from and against all claims, liabilities, legal fees and expenses that may be asserted against it, otherwise than on account of the Trustee's own negligence or willful misconduct (as found by a final judgment of a court of competent jurisdiction) by reason of the Trustee's taking or refraining from taking any action in connection with the Trust, whether or not the Trustee is a party to a legal proceeding or otherwise. 12. Prohibition Against Assignment. No Beneficiary shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Trust before such assets are paid to the Beneficiary as provided in Section 6, and all rights created under the Trust and the Plans shall be unsecured contractual rights of the Beneficiary against the Grantor. No part of, or claim against, the assets of the Trust may be assigned, anticipated, alienated, encumbered, garnished, attached or in any other manner disposed of by any of the Beneficiaries, and no such part or claim shall be subject to any legal process or claims of creditors of any of the Beneficiaries. 13. Annual Accounting. The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and, within ninety days following the close of each calendar year, and within ninety days after the Trustee's resignation or termination of the Trust as provided herein, the Trustee shall render a written account of its administration of the Trust to the Grantor by submitting a record of receipts, investments, disbursements, distributions, gains, losses, assets on hand at the end of the accounting period and other pertinent information, including a description of all securities and investments purchased and sold during such calendar year. Written approval of an account shall, as to all matters shown in the account, be binding upon the Grantor and shall forever release and discharge the Trustee from any liability or accountability. The Grantor will be deemed to have given his written approval if he does not object in writing to the Trustee within one hundred and twenty days after the date of receipt of such account from the Trustee. The Trustee shall be entitled at any time to institute an action in a court of competent jurisdiction for a judicial settlement of its account. 14. Notices. Any notice or instructions required under any of the provisions of this Trust Agreement shall be deemed effectively given only if such notice is in writing and is delivered personally or by certified or registered mail, return receipt requested and postage prepaid, addressed to the addresses as set forth below of the parties hereto. The address of the parties are as follows: (i) The Grantor: General Mills, Inc. Post Office Box 1113 Number One General Mills Boulevard Minneapolis, MN 55440 Attention: Treasurer (ii) The Trustee: Norwest Bank Minnesota, N.A. 6th and Marquette Avenue Minneapolis, MN 55479-0069 Attention: Administrative Officer The Grantor or Trustee may at any time change the address to which notices are to be sent to it by giving written notice thereof in the manner provided above. 15. Miscellaneous Provisions. (a) This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota applicable to contracts made and to be performed therein and the Trustee shall not be required to account in any court other than one of the courts of such state. (b) All section headings herein have been inserted for convenience of reference only and shall in no way modify, restrict or affect the meaning or interpretation of any of the terms or provisions of this Trust Agreement. (c) This Trust Agreement is intended as a complete and exclusive statement of the agreement of the parties hereto, supersedes all previous agreements or understandings among them and may not be modified or terminated orally. (d) The term "Trustee" shall include any successor Trustee. (e) If a Trustee or Custodian hereunder is a bank or trust company, any corporation resulting from any merger, consolidation or conversion to which such bank or trust company may be a party, or any corporation otherwise succeeding generally to all or substantially all of the assets or business of such bank or trust company, shall be the successor to it as Trustee or custodian hereunder, as the case may be without the execution of any instrument or any further action on the part of any party hereto. (f) If any provision of this Trust Agreement shall be invalid and unenforceable, the remaining provisions hereof shall subsist and be carried into effect. (g) The Plans are by this reference expressly incorporated herein and made a part hereof with the same force and effect as if fully set forth at length. As of the date first stated above, the terms of the Plans are as set forth in Exhibit A attached hereto. (h) The assets of the Trust shall be subject only to the claims of the Grantor's general creditors in the event of the Grantor's bankruptcy or insolvency. The Grantor shall be considered "bankrupt" or "insolvent" if the Grantor is (A) unable to pay its debts when due or (B) engaged as a debtor in a proceeding under the Bankruptcy Code, 11 U.S.C. Section 101 et seq. The Board of Directors and the chief executive officer of the Grantor must notify the Trustee of the Grantor's bankruptcy or insolvency within three (3) days following the occurrence of such event. Upon receipt of such a notice, or, upon receipt of a written allegation from a person or entity claiming to be a creditor of the Grantor that the Grantor is bankrupt or insolvent, the Trustee shall discontinue payments to Beneficiaries. The Trustee shall, as soon as practicable after receipt of such notice or written allegation, determine whether the Grantor is bankrupt or insolvent. If the Trustee determines, based on such notice, written allegation, or such other information as it deems appropriate, that the Grantor is bankrupt or insolvent, the Trustee shall hold the assets of the Trust for the benefit of the Grantor's general creditors, and deliver any undistributed assets to satisfy the claims of such creditors as a court of competent jurisdiction may direct. The Trustee shall resume payments to Beneficiaries only after it has determined that the Grantor is not bankrupt or insolvent, is no longer bankrupt or insolvent (if the Trustee determined that the Grantor was bankrupt or insolvent), pursuant to an order of a court of competent jurisdiction. Unless the Trustee has actual knowledge of the Grantor's bankruptcy or insolvency, the Trustee shall have no duty to inquire whether the Grantor is bankrupt or insolvent. The Trustee may in all events rely on such evidence concerning the Grantor's solvency as may be furnished to the Trustee which will give the Trustee a reasonable basis for making a determination concerning the Grantor's solvency. If the Trustee discontinues payment of benefits from the Trust pursuant to this Section 15(h) and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments which would have been made to each Beneficiary (together with interest) during the period of such discontinuance, less the aggregate amount of payments made to the Beneficiary by the Grantor in lieu of the payments provided for hereunder during any such period of discontinuance. (i) Any and all taxes, expenses (including, but not limited to, the Trustee's compensation) and costs of litigation relating to or concerning the adoption, administration and termination of the Trust shall be borne and promptly paid by the Grantor; provided, however, that, to the extent such taxes, expenses and costs relating to the Trust are due and owing and (A) are not paid by the Grantor, and (B) do not in the aggregate exceed $1,000, they shall be charged against and paid from the Trust, and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment. (j) Any reference hereunder to a Beneficiary shall expressly be deemed to include, where relevant, the beneficiaries of a Beneficiary duly appointed under the terms of the Plans. A Beneficiary shall cease to have such status once any and all amounts due such Beneficiary under the Plan have been satisfied. (k) Any reference hereunder to the Grantor shall expressly be deemed to include the Grantor's successor and assigns. (l) Whenever used herein, and to the extent appropriate, the masculine, feminine or neuter gender shall include the other two genders, the singular shall include the plural and the plural shall include the singular. IN WITNESS WHEREOF, the parties hereto have executed this amended and restated TRUST AGREEMENT as of this 26th day of September, 1988. GRANTOR: GENERAL MILLS, INC. Attest: _______________________________ By:_________________________ Name: Ivy S. Bernhardson Name: C. L.Whitehill Title: Assistant Secretary Title: Senior Vice President TRUSTEE: NORWEST BANK MINNESOTA, N.A. Attest: _______________________________ By:_________________________ Name: _________________________ Name:_______________________ Title: ________________________ Title:______________________ EXHIBIT A A. Deferred Compensation Plan, Amended and Restated as of January 1, 1986. B. Executive Incentive and Estate Building Program, Amended and Restated as of June 1, 1986. C. Supplemental Retirement Plan of General Mills,Inc., Amended and Restated effective as of January 1, 1986. D. Supplemental Savings Plan of General Mills, Inc., Amended and Restated effective as of January 1, 1986. EX-10.14 8 SUPPLEMENTAL BENEFITS TRUST AGMT 9-26-88 EXHIBIT 10.14 GENERAL MILLS, INC. SUPPLEMENTAL BENEFITS TRUST TRUST AGREEMENT This TRUST AGREEMENT is made as of September 26, 1988, is between General Mills, Inc. (the "Grantor") and Norwest Bank Minnesota, N.A. (the "Trustee"). 1. Purpose. The purpose of this trust (the "Trust") is to provide a vehicle to (a) hold assets of the Grantor as a reserve for the discharge of the Grantor's obligations to certain individuals (the "Beneficiaries") entitled to receive benefits under the General Mills, Inc. Compensation Plan for Non- Employee Directors and the General Mills, Inc. Retirement Plan for Non-Employee Directors and any other plan of deferred compensation that the Grantor so designates in writing to the Trustee (the "Plans"), and (b) invest, reinvest, disburse and distribute those assets and the earnings thereon as provided hereunder and in the Plans. 2. Trust Corpus. The Grantor hereby transfers to the Trustee and the Trustee hereby accepts and agrees to hold, in trust, the sum of Ten Dollars ($10.00) plus such cash and/or property, if any, transferred to the Trustee by the Grantor or on behalf of the Grantor pursuant to obligations incurred under any or all of the Plans and the earnings thereon, and such cash and/or property, together with the earnings thereon and together with any other cash or property received by the Trustee pursuant to Section 8(a) of this Trust Agreement, shall constitute the trust estate and shall be held, managed and distributed as hereinafter provided. The Grantor shall execute any and all instruments necessary to vest the Trustee with full title to the property hereby transferred. 3. Grantor Trust. The Trust is intended to be a trust of which the Grantor is treated as the owner for federal income tax purposes in accordance with the provisions of Sections 671 through 679 of the Internal Revenue Code of 1986, as amended (the "Code"). If the Trustee, in its sole discretion, deems it necessary or advisable for the Grantor and/or the Trustee to undertake or refrain from undertaking any actions (including, but not limited to, making or refraining from making any elections or filings) in order to ensure that the Grantor is at all times treated as the owner of the Trust for federal income tax purposes, the Grantor and/or the Trustee will undertake or refrain from undertaking (as the case may be) such actions. The Grantor hereby irrevocably authorizes the Trustee to be its attorney-in-fact for the purpose of performing any act which the Trustee, in its sole discretion, deems necessary or advisable in order to accomplish the purposes and the intent of this Section 3. The Trustee shall be fully protected in acting or refraining from acting in accordance with the provisions of this Section 3. 4. Irrevocability of Trust. The Trust shall be irrevocable and may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor in whole or in part, without the express written consent of a majority of the Beneficiaries of the Trust; provided, however, that the Trust may be amended, as may be necessary either (i) to obtain a favorable ruling from the Internal Revenue Service with respect to the tax consequences of the establishment and settlement of the Trust, or (ii) to make nonsubstantive changes, which have no effect upon the amount of any Beneficiary's benefits, the time of receipt of benefits, the identity of any recipient of benefits, or the reversion of any assets to the Grantor prior to the Trustee's satisfaction of all the Trustee's obligations hereunder; provided, further, that in the event of a "Change of Control" as defined in Section 2.2 of the General Mills, Inc. Retirement Plan for Non-Employee Directors (hereinafter referred to as a "Change in Control"), the Trust may not be altered or amended in any substantive respect, or revoked or terminated by the Grantor's successor unless a majority of the Beneficiaries, determined as of the day before such Change in Control, agree in writing to such an alteration, amendment, revocation or termination. 5. Investment of Trust Assets. (a) Subject to the provisions of paragraph (b) below, until the Trustee has distributed all of the assets of the Trust in accordance with the terms hereof, the Trustee shall invest and reinvest such assets (without regard to any state law limiting the investment powers of fiduciaries) in such securities and other property as the Trustee deems advisable, considering the probable income (including capital appreciation potential) from any such investment, the probable safety of the assets of the Trust and, where appropriate, the rate of return at which the assets would have been invested on behalf of each Beneficiary under any applicable qualified defined contribution plan maintained by the Grantor. Within the limitations of the foregoing, the Trustee is specifically authorized to acquire, for cash or on credit, every kind of property, real, personal or mixed, and to make every kind of investment, specifically including, but not limited to, corporate and governmental obligations of every kind, preferred or common stocks, securities of any regulated investment company or trust, interests in common trust funds now or hereafter established by a corporate trustee, and property in which the Trustee owns an undivided interest in any other trust capacity. The Trustee is expressly authorized and empowered to purchase such insurance in its own name (and with itself as the beneficiary) as it shall determine to be necessary or advisable to advance best the purposes of the Trust and the interests of the Beneficiaries. (b) The Trustee shall invest and reinvest the assets of the Trust in accordance with such investment objectives, guidelines, restrictions or directions as the Grantor may furnish to the Trustee at the time of the execution of the Trust or at any later date; provided, however, that if there is a Change in Control the Trust's investment objectives, guidelines, restrictions or directions may not be changed by the Grantor's successor unless a majority of the Beneficiaries, determined as of the day before such Change in Control, agree, in writing, to such a change. 6. Distribution of Trust Assets. (a) Subject to the provisions of paragraph (b) below, at such time as a Beneficiary is entitled to a payment under any of the Plans, he shall be entitled to receive from the Trust (i) an amount in cash equal to the amount to which he is entitled under the Plan or Plans at such time, less (ii) any payments previously made to him by the Grantor with respect to such amount pursuant to the terms of the Plans. The commencement of payments from the Trust shall be conditioned on the Trustee's prior receipt of a written instrument from the Beneficiary in a form satisfactory to the Trustee containing representations as to (A) the amount to which the Beneficiary is entitled under the Plans, (B) the fact that he has requested the payment of such amount from the Grantor pursuant to the terms of the Plans, (C) the amount, if any, he has received from the Grantor under the Plans with respect to such amount, and (D) the amount to be paid him by the Trust (i.e., the difference between (A) and (C) above). All payments to a Beneficiary from the Trust shall be made in accordance with the provisions of the applicable Plan. The Trustee shall be fully protected in making any payment in accordance with the provisions of this paragraph. (b) The Trustee shall make or commence payment to the Beneficiary in accordance with his representations not later than 30 business days after its receipt thereof; provided, however, that before the Trustee makes or commences any such payment and not later than 7 business days after its receipt of the Beneficiary's representations, the Trustee shall request in writing the Grantor's agreement that the Beneficiary's representations are accurate with respect to the amount, fact, and time of payment to him. The Trustee shall enclose with such request a copy of the Beneficiary's representations and written advice to the Grantor that it must respond to the Trustee's request on or before the 20th business day (which date shall be set forth in such written advice) after the Beneficiary furnished such representations to the Trustee. If the Grantor, in a writing delivered to the Trustee, agrees with the Beneficiary's representations in all respects, or if the Grantor does not respond to the Trustee's request by the 20th day deadline, the Trustee shall make payment in accordance with the Beneficiary's representations. If the Grantor advises the Trustee in writing on or before the 20th day deadline that it does not agree with any or all of the Beneficiary's representations, the Trustee immediately shall take whatever steps it in its sole discretion, deems appropriate, including, but not limited to, a review of any notice furnished by the Grantor pursuant to paragraph (e) hereof, to attempt to resolve the difference(s) between the Grantor and the Beneficiary. If, however, the Trustee is unable to resolve such difference(s) to its satisfaction within 60 business days after its receipt of the Beneficiary's representations, the Trustee shall make payment at such time and in such form and manner as is allowed under the Plans as of the date first stated above and as the Trustee, in its sole discretion, selects. The Trustee shall be fully protected in making or refraining from making any payment in accordance with the provisions of this paragraph. (c) Notwithstanding any other provision of the Trust Agreement to the contrary, the Trustee shall make payments hereunder before such payments are otherwise due if it determines, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Beneficiary, or a closing agreement made under Code Section 7121 that is approved by the Internal Revenue Service and involves a Beneficiary, that a Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to him under the Plans before they are paid to him. (d) Unless (contemporaneously with his submission of the written instrument referred to in paragraph (a) hereof) a Beneficiary furnishes documentation in form and substance satisfactory to the Trustee that no withholding is required with respect to a payment to be made to him from the Trust, the Trustee may deduct from any such payment any federal, state or local taxes required by law to be withheld by the Trustee. (e) The Trustee shall provide the Grantor with written confirmation of the fact and time of any commencement of payments hereunder within 10 business days after any payments commence to a beneficiary. The Grantor shall notify the Trustee in the same manner of any payments it commences to make to a Beneficiary pursuant to the Plans. (f) The Trustee shall be fully protected in making or refraining from making any payment or any calculations in accordance with the provisions of this Section 6. 7. Termination of the Trust and Reversion of Trust Assets. The Trust shall terminate upon the first to occur of (i) the payment by the Grantor of all amounts due the Beneficiaries under each of the Plans and the receipt by the Trustee of a valid release to that effect from each of the Beneficiaries with respect to payments made to him, or (ii) the twenty-first anniversary of the death of the last survivor of the Beneficiaries who are in being on the date of the execution of this Trust Agreement. Upon termination of the Trust, any and all assets remaining in the Trust, after the payment to the Beneficiaries of all amounts to which they are entitled and after payment of the expenses and compensation in Sections 10 and 15(i) of this Trust Agreement, shall revert to the Grantor and the Trustee shall promptly take such action as shall be necessary to transfer any such assets to the Grantor. Notwithstanding the above, the Grantor shall be obligated to take whatever steps are necessary to ensure that the Trust is not terminated for a period of five (5) years following a Change in Control as of the date of the execution of this Trust Agreement, such steps to include, but not being limited to, the transfer to the Trustee of cash or other assets pursuant to the provisions of Section 8(a) hereof. 8. Powers of the Trustee. To carry out the purposes of the Trust and subject to any limitations herein expressed, the Trustee is vested with the following powers until final distribution, in addition to any now or hereafter conferred by law affecting the trust or estate created hereunder. In exercising such powers, the Trustee shall act in a manner reasonable and equitable in view of the interests of the Beneficiaries and in a manner in which persons of ordinary prudence, diligence, discretion and judgment would act in the management of their own affairs. (a) Receive and Retain Property. To receive and retain any property received at the inception of the Trust or at any other time, whether or not such property is unproductive of income or is property in which the Trustee is personally interested or in which the Trustee owns an undivided interest in any other trust capacity. (b) Dispose of, Develop, and Abandon Assets. To dispose of an asset, for cash or on credit, at public or private sale and, in connection with any sale or disposition, to give such warranties and indemnifications as the Trustee shall determine; to manage, develop, improve, exchange, partition, change the character of or abandon a Trust asset or any interest therein. (c) Borrow and Encumber. To borrow money for any Trust purpose upon such terms and conditions as may be determined by the Trustee; to obligate the Trust or any part thereof by mortgage, deed of trust, pledge or otherwise, for a term within or extending beyond the term of the Trust. (d) Lease. To enter for any purpose into a lease as lessor or lessee, with or without an option to purchase or renew, for a term. (e) Grant or Acquire Options. To grant or acquire options and rights of first refusal involving the sale or purchase of any Trust assets, including the power to write covered call options listed on any securities exchange. (f) Powers Respecting Securities. To have all the rights, powers, privileges and responsibilities of an owner of securities, including, without limiting the foregoing, the power to vote, to give general or limited proxies, to pay calls, assessments, and other sums; to assent to, or to oppose, corporate sales or other acts; to participate in, or to oppose, any voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations, and, in connection therewith, to give warranties and indemnifications and to deposit securities with and transfer title to any protective or other committee; to exchange, exercise or sell stock subscription or conversion rights; and, regardless of any limitations elsewhere in this instrument relative to investments by the Trustee, to accept and retain as an investment hereunder any securities received through the exercise of any of the foregoing powers. (g) Use of Nominee. To hold securities or other property in the name of the Trustee, in the name of a nominee of the Trustee, or in the name of a custodian (or its nominee) selected by the Trustee, with or without disclosure of the Trust, the Trustee being responsible for the acts of such custodian or nominee affecting such property. (h) Advance Money. To advance money for the protection of the Trust, and for all expenses, losses and liabilities sustained or incurred in the administration of the Trust or because of the holding or ownership of any Trust assets, for which advances, with interest, the Trustee has a lien on the Trust assets as against the Beneficiaries. (i) Pay, Contest or Settle Claims. To pay, contest or settle any claim by or against the Trust by compromise, arbitration or otherwise; to release, in whole or in part, any claim belonging to the Trust to the extent that the claim is uncollectible. Notwithstanding the foregoing, the Trustee may only pay or settle a claim asserted against the Trust by the Grantor if it is compelled to do so by a final order of a court of competent jurisdiction. (j) Litigate. To prosecute or defend actions, claims or proceedings for the protection of Trust assets and of the Trustee in the performance of its duties. (k) Employ Advisers and Agents. To employ persons, corporations or associations, including attorneys, auditors, investment advisers or agents, even if they are associated with the Trustee, to advise or assist the Trustee in the performance of its administrative duties; to act without independent investigation upon their recommendations. (l) Use Custodian. If no bank or trust company is acting as Trustee hereunder, the Trustee shall appoint a bank or trust company to act as custodian (the "Custodian") for securities and any other Trust assets. Any such appointment shall terminate when a bank or trust company begins to serve as Trustee hereunder. The Custodian shall keep the deposited property, collect and receive the income and principal, and hold, invest, disburse or otherwise dispose of the property or its proceeds (specifically including selling and purchasing securities, and delivering securities sold and receiving securities purchased) upon the order of the Trustee. (m) Execute Documents. To execute and deliver all instruments which will accomplish or facilitate the exercise of the powers vested in the Trustee. (n) Grant of Powers Limited. The Trustee is expressly prohibited from exercising any powers vested in it primarily for the benefit of the Grantor rather than for the benefit of the Beneficiaries. The Trustee shall not have the power to purchase, exchange, or otherwise deal with or dispose of the assets of the Trust for less than adequate and full consideration in money or money's worth. (o) Deposit Assets. To deposit Trust assets in commercial, savings or savings and loan accounts (including such accounts in a corporate Trustee's banking department) and to keep such portion of the Trust assets in cash or cash balances as the Trustee may, from time to time, deem to be in the best interests of the Trust, without liability for interest thereon. 9. Resignation of Trustee and Appointment of Successor Trustee. Each Trustee shall have the right to resign upon 30 days' written notice to the Grantor, during which time the Grantor shall appoint a "Qualified Successor Trustee." If no Qualified Successor Trustee accepts such appointment, the resigning Trustee shall petition a court of competent jurisdiction for the appointment of a "Qualified Successor Trustee." For this purpose, a "Qualified Successor Trustee" may be an individual or a corporation but may not be the Grantor, any person who would be a "related or subordinate party" to the Grantor within the meaning of Section 672(c) of the Code or a corporation that would be a member of an "affiliated group" of corporations including the Grantor within the meaning of Section 1504(a) of the Code if the words "80 percent" wherever they appear in that section were replaced by the words "50 percent." Upon the written acceptance by the Qualified Successor Trustee of the trust and upon approval of the resigning Trustee's final account by those entitled thereto, the resigning Trustee shall be discharged. 10. Trustee Compensation. The Trustee shall be entitled to receive as compensation for its services hereunder the compensation (a) as negotiated and agreed to by the Grantor and the Trustee, or (b) if not negotiated or if the parties are unable to reach agreement, as allowed a trustee under the laws of the State of Minnesota in effect at the time such compensation is payable. Such compensation shall be paid by the Grantor; provided, however, that to the extent such compensation is not paid by the Grantor, subject to the provisions of Section 15(i) hereof, it shall be charged against and paid from the Trust and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment. 11. Trustee's Consent to Act and Indemnification of the Trustee. The Trustee hereby grants and consents to act as Trustee hereunder. The Grantor agrees to indemnify the Trustee and hold it harmless from and against all claims, liabilities, legal fees and expenses that may be asserted against it, otherwise than on account of the Trustee's own negligence or willful misconduct (as found by a final judgment of a court of competent jurisdiction) by reason of the Trustee's taking or refraining from taking any action in connection with the Trust, whether or not the Trustee is a party to a legal proceeding or otherwise. 12. Prohibition Against Assignment. No Beneficiary shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Trust before such assets are paid to the Beneficiary as provided in Section 6, and all rights created under the Trust and the Plans shall be unsecured contractual rights of the Beneficiary against the Grantor. No part of, or claim against, the assets of the Trust may be assigned, anticipated, alienated, encumbered, garnished, attached or in any other manner disposed of by any of the Beneficiaries, and no such part or claim shall be subject to any legal process or claims of creditors of any of the Beneficiaries. 13. Annual Accounting. The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and, within ninety days following the close of each calendar year, and within ninety days after the Trustee's resignation or termination of the Trust as provided herein, the Trustee shall render a written account of its administration of the Trust to the Grantor by submitting a record of receipts, investments, disbursements, distributions, gains, losses, assets on hand at the end of the accounting period and other pertinent information, including a description of all securities and investments purchased and sold during such calendar year. Written approval of an account shall, as to all matters shown in the account, be binding upon the Grantor and shall forever release and discharge the Trustee from any liability or accountability. The Grantor will be deemed to have given his written approval if he does not object in writing to the Trustee within one hundred and twenty days after the date of receipt of such account from the Trustee. The Trustee shall be entitled at any time to institute an action in a court of competent jurisdiction for a judicial settlement of its account. 14. Notices. Any notice or instructions required under any of the provisions of this Trust Agreement shall be deemed effectively given only if such notice is in writing and is delivered personally or by certified or registered mail, return receipt requested and postage prepaid, addressed to the addresses as set forth below of the parties hereto. The address of the parties are as follows: (i) The Grantor: General Mills, Inc. Post Office Box 1113 Number One General Mills Boulevard Minneapolis, MN 55440 Attention: Treasurer (ii) The Trustee: Norwest Bank Minnesota, N.A. 6th and Marquette Avenue Minneapolis, MN 55479-0069 Attention: Administrative Officer The Grantor or Trustee may at any time change the address to which notices are to be sent to it by giving written notice thereof in the manner provided above. 15. Miscellaneous Provisions. (a) This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota applicable to contracts made and to be performed therein and the Trustee shall not be required to account in any court other than one of the courts of such state. (b) All section headings herein have been inserted for convenience of reference only and shall in no way modify, restrict or affect the meaning or interpretation of any of the terms or provisions of this Trust Agreement. (c) This Trust Agreement is intended as a complete and exclusive statement of the agreement of the parties hereto, supersedes all previous agreements or understandings among them and may not be modified or terminated orally. (d) The term "Trustee" shall include any successor Trustee. (e) If a Trustee or Custodian hereunder is a bank or trust company, any corporation resulting from any merger, consolidation or conversion to which such bank or trust company may be a party, or any corporation otherwise succeeding generally to all or substantially all of the assets or business of such bank or trust company, shall be the successor to it as Trustee or custodian hereunder, as the case may be without the execution of any instrument or any further action on the part of any party hereto. (f) If any provision of this Trust Agreement shall be invalid and unenforceable, the remaining provisions hereof shall subsist and be carried into effect. (g) The Plans are by this reference expressly incorporated herein and made a part hereof with the same force and effect as if fully set forth at length. As of the date first stated above, the terms of the Plans are as set forth in Exhibit A attached hereto. (h) The assets of the Trust shall be subject only to the claims of the Grantor's general creditors in the event of the Grantor's bankruptcy or insolvency. The Grantor shall be considered "bankrupt" or "insolvent" if the Grantor is (A) unable to pay its debts when due or (B) engaged as a debtor in a proceeding under the Bankruptcy Code, 11 U.S.C. Section 101 et seq. The Board of Directors and the chief executive officer of the Grantor must notify the Trustee of the Grantor's bankruptcy or insolvency within three (3) days following the occurrence of such event. Upon receipt of such a notice, or, upon receipt of a written allegation from a person or entity claiming to be a creditor of the Grantor that the Grantor is bankrupt or insolvent, the Trustee shall discontinue payments to Beneficiaries. The Trustee shall, as soon as practicable after receipt of such notice or written allegation, determine whether the Grantor is bankrupt or insolvent. If the Trustee determines, based on such notice, written allegation, or such other information as it deems appropriate, that the Grantor is bankrupt or insolvent, the Trustee shall hold the assets of the Trust for the benefit of the Grantor's general creditors, and deliver any undistributed assets to satisfy the claims of such creditors as a court of competent jurisdiction may direct. The Trustee shall resume payments to Beneficiaries only after it has determined that the Grantor is not bankrupt or insolvent, is no longer bankrupt or insolvent (if the Trustee determined that the Grantor was bankrupt or insolvent), pursuant to an order of a court of competent jurisdiction. Unless the Trustee has actual knowledge of the Grantor's bankruptcy or insolvency, the Trustee shall have no duty to inquire whether the Grantor is bankrupt or insolvent. The Trustee may in all events rely on such evidence concerning the Grantor's solvency as may be furnished to the Trustee which will give the Trustee a reasonable basis for making a determination concerning the Grantor's solvency. If the Trustee discontinues payment of benefits from the Trust pursuant to this Section 15(h) and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments which would have been made to each Beneficiary (together with interest) during the period of such discontinuance, less the aggregate amount of payments made to the Beneficiary by the Grantor in lieu of the payments provided for hereunder during any such period of discontinuance. (i) Any and all taxes, expenses (including, but not limited to, the Trustee's compensation) and costs of litigation relating to or concerning the adoption, administration and termination of the Trust shall be borne and promptly paid by the Grantor; provided, however, that, to the extent such taxes, expenses and costs relating to the Trust are due and owing and (A) are not paid by the Grantor, and (B) do not in the aggregate exceed $1,000, they shall be charged against and paid from the Trust, and the Grantor shall reimburse the Trust for any such payment made from the Trust within 30 days of its receipt from the Trustee of written notice of such payment. (j) Any reference hereunder to a Beneficiary shall expressly be deemed to include, where relevant, the beneficiaries of a Beneficiary duly appointed under the terms of the Plans. A Beneficiary shall cease to have such status once any and all amounts due such Beneficiary under the Plan have been satisfied. (k) Any reference hereunder to the Grantor shall expressly be deemed to include the Grantor's successor and assigns. (l) Whenever used herein, and to the extent appropriate, the masculine, feminine or neuter gender shall include the other two genders, the singular shall include the plural and the plural shall include the singular. IN WITNESS WHEREOF, the parties hereto have executed this TRUST AGREEMENT as of this 26th day of September, 1988. GRANTOR: GENERAL MILLS, INC. Attest: _______________________________ By: _________________________ Name: Ivy S. Bernhardson Name: C. L. Whitehill Title: Assistant Secretary Title: Senior Vice President TRUSTEE: NORWEST BANK MINNESOTA, N.A. Attest: _______________________________ By: _________________________ Name: _________________________ Name: _______________________ Title: ________________________ Title: ______________________ 10-K 9 1994 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended May 29, 1994 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, $.10 par value New York Stock Exchange Midwest Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by Reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of Common Stock held by non- affiliates of the Registrant, based on the closing price of $50.375 per share as reported on the New York Stock Exchange on July 22, 1994: $7,947.9 million. Number of shares of Common Stock outstanding as of July 22, 1994: 157,775,569 (excluding 46,377,763 shares held in the treasury). DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's Proxy Statement dated August 19, 1994 are incorporated by reference into Part III, and portions of Registrant's 1994 Annual Report to Stockholders are incorporated by reference into Parts I, II and IV. PART I ITEM 1. BUSINESS. General Mills, Inc. was incorporated in Delaware in 1928. The Company currently markets consumer goods and services in two principal business areas: Consumer Foods and Restaurants. The terms "General Mills," "Company" and "Registrant" mean General Mills, Inc. and its subsidiaries unless the context indicates otherwise. CONSUMER FOODS The Company is a leading producer of packaged consumer foods, including those in the categories set forth below. Breakfast Products. General Mills produces and sells a number of ready-to-eat cereals, including such brands as: CHEERIOS, HONEY NUT CHEERIOS, APPLE CINNAMON CHEERIOS, MULTI- GRAIN CHEERIOS, WHEATIES, WHEATIES HONEY GOLD, LUCKY CHARMS, CORN TOTAL, WHEAT TOTAL, TRIX, GOLDEN GRAHAMS, KIX, BERRY BERRY KIX, FIBER ONE, COCOA PUFFS, CRISPY WHEATS 'N RAISINS, CINNAMON TOAST CRUNCH, CLUSTERS, RAISIN NUT BRAN, TOTAL RAISIN BRAN, OATMEAL CRISP, TRIPLES, BASIC 4 and RIPPLE CRISP. In fiscal 1994, the Company introduced SPRINKLE SPANGLES, HIDDEN TREASURES and REESE'S PEANUT BUTTER PUFFS. Desserts and Baking Mixes. General Mills makes and sells a line of dessert mixes under the BETTY CROCKER trademark, including Supermoist layer cakes, CREAMY DELUXE ready-to-spread frosting, SUPREME BROWNIE MIX, SUPREME DESSERT BARS, muffin mixes and two new lines, CREAMY CHILLED DESSERTS and EASY DELICIOUS DESSERTS. The Company markets a variety of baking mixes under the BISQUICK trademark and sells pouch mixes under the names GOLD MEDAL and ROBIN HOOD. Convenience Foods. General Mills manufactures a line of BETTY CROCKER dry packaged dinner mixes under the HAMBURGER HELPER, TUNA HELPER, and SKILLET CHICKEN HELPER trademarks. Also under the BETTY CROCKER trademark, the Company sells POTATO BUDS instant mashed potatoes, POTATO SHAKERS flavorings and other potato and pasta specialty mixes, such as SUDDENLY SALAD and BETTY CROCKER au gratin and scalloped potatoes. The Company also sells BAC*O'S garnish and salad topping. Family Flour, Bakery Flour and Ingredients. General Mills produces family flour under the GOLD MEDAL brand, introduced in 1880, and regional brands such as LA PINA, ROBIN HOOD and RED BAND. The Company also engages in grain merchandising, produces ingredient flour for internal requirements and sells flour to bakery, foodservice and manufacturing markets. Snack Products and Beverages. General Mills markets POP SECRET microwave popcorn; a line of grain snacks including NATURE VALLEY GRANOLA BARS, DUNKAROOS, FUNDAMIDDLES and a new lowfat chewy granola bar; a line of fruit snacks including FRUIT ROLL-UPS, FRUIT BY THE FOOT, GUSHERS, SHARK BITES, BUGS BUNNY and TASMANIAN DEVIL; and a line of savory snacks including BUGLES and new CHEERIOS snack mix and POP SECRET POP CHIPS. The Company also produces and sells a line of single-serving fruit juice drinks marketed under the SQUEEZIT trademark and introduced SQUEEZIT 100, a 100% juice beverage in fiscal 1994. International Food Operations. General Mills Canada, Inc. manufactures and sells food products in Canada, including BIG G ready-to-eat cereals, BETTY CROCKER baking and packaged dinner mixes and snacks and a variety of frozen seafood entrees under the BLUE WATER brand name. The Company also has interests in companies engaged primarily in flour milling operations in Latin America, licenses food products for manufacture in Europe and the Asia/Pacific region, and exports flour and packaged products throughout the world. Cereal Partners Worldwide ("CPW"), the Company's joint venture with Nestle, S.A. through various entities, initiated marketing activities in Belgium, Austria, Switzerland, Greece and Chile during fiscal 1994, and continues to market breakfast cereals in France, Spain, Portugal, Italy, Ireland, the United Kingdom, Mexico, Germany, the Phillipines, Malaysia, Thailand and Singapore. The following products under the umbrella NESTLE trademark were introduced into selected markets in fiscal 1994: TRIO, CLUSTERS, NESQUICK, MULTI-CHEERIOS, HONEY NUT CHEERIOS, GOLDEN GRAHAMS, CINI MINIS, CHOCAPIC and TRIX. The Company has a 50% equity interest in CPW. See Note Four to Consolidated Financial Statements appearing on page 25 of the Company's 1994 Annual Report to Stockholders, incorporated herein by reference. Snack Ventures Europe ("SVE"), the Company's joint venture with PepsiCo, Inc., manufactures and sells snack foods in Holland, France, Belgium, Spain, Portugal and Greece, and late in fiscal 1994 entered the Italian market. The Company has a 40.5% equity interest in SVE. See Note Four to Consolidated Financial Statements appearing on page 25 of the Company's 1994 Annual Report to Stockholders, incorporated herein by reference. Other. The Gorton's division sells a variety of seafood entrees and other products, mostly in frozen and canned form, under the GORTON'S brand name. The Gorton's division also markets institutional seafood and supplies frozen fish portions, breadings and coatings to the food service trade. Yoplait USA manufactures and sells a line of yogurt, including YOPLAIT ORIGINAL, YOPLAIT LIGHT, CUSTARD STYLE, LIGHT CUSTARD STYLE, FAT FREE FRUIT ON THE BOTTOM, TRIX, a layered yogurt for children, YOPLAIT CRUNCH 'N YOGURT, a lowfat yogurt with an overcap of crunchy toppings and CRUNCH 'N YOGURT LIGHT, a new addition to the Yoplait line. Yoplait USA also markets soft frozen yogurt in food service channels and hardpack frozen yogurt and novelties under a licensing arrangement. The Colombo yogurt business was acquired in December 1993 and manufactures and sells a variety of refrigerated cup yogurt, soft frozen yogurt, and superpremium hardpack frozen yogurt products under the COLOMBO brand name. The Foodservice division markets General Mills branded baking mixes, cereals and snacks to the commercial and non- commercial sectors, including airlines, schools, restaurants and food management companies. General Mills markets its packaged food products primarily through its own sales organizations, supported by advertising and other promotional activities. Such products are primarily distributed directly to retail food chains, co- operatives, membership stores and wholesalers. Certain food products, such as seafood and some food service products, are sold through distributors and brokers. The Company's Consumer Foods business segment is highly competitive, with numerous competitors of varying sizes. The principal methods of competition include product quality, advertising, promotion and price. In most of its consumer foods lines, General Mills competes not only with other widely advertised branded products, but also with generic products and private label products, which are generally distributed at lower prices. The Company is a major manufacturer of consumer food products in the United States. RESTAURANTS The Company operates RED LOBSTER full-service seafood restaurants in the United States and Canada and is engaged in a partnership in Japan operating RED LOBSTER restaurants. The Company also operates THE OLIVE GARDEN full-service Italian restaurants in the United States and Canada, and has started national expansion of CHINA COAST, its full-service Chinese restaurant concept. The Company's Restaurant businesses operate in the highly competitive casual dining segment, with numerous competitors of varying sizes, and compete on the basis of value and service. Restaurant businesses rely on the varied tastes, discretionary decisions and available disposable income of individual consumers. The Company's RED LOBSTER and THE OLIVE GARDEN restaurants are market share leaders in the United States. EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company, together with their ages and business experience, are set forth below. H.B. Atwater, Jr., age 63, is Chairman of the Board and Chief Executive Officer, and has been a director since 1971. Mr. Atwater joined the Company in 1958 and was elected an Executive Vice President in 1970, Chief Operating Officer in 1976, Chief Executive Officer in 1981 and Chairman of the Board in 1982. Dean Belbas, age 62, is Vice President and Director of Investor Relations. Mr. Belbas joined General Mills in 1956, was elected a Vice President in 1977 and was elected to his present position in 1979. Edward K. Bixby, age 58, is Senior Vice President; President, Consumer Foods Sales, with additional responsibility for Foodservice. Mr. Bixby joined the Company in 1958 and served as General Manager of several Consumer Foods divisions. Mr. Bixby was elected Senior Vice President, General Manager, Grocery Products Sales Division in 1987, and was named to his present position in 1989. Michael E. Cushmore, age 54, is Senior Vice President; President, Gold Medal. Mr. Cushmore joined the Company in 1966 and was named Vice President, General Manager for the Northstar Division in 1983, Chairman of Leeann Chin's, Inc., a former subsidiary of General Mills Restaurants, Inc., in 1985, Vice President, General Manager for the Betty Crocker Division in 1987 and was elected to his present position in 1993. Stephen R. Demeritt, age 50, is Senior Vice President of General Mills and Chief Executive Officer of CPW, S.A., a joint venture of General Mills and Nestle, S.A. Mr. Demeritt joined the Company in 1969 and was named a Marketing Director in the Big G Division in 1976, appointed a Vice President of the Company in 1983, named President of General Mills Canada, Inc. in 1986 and elected Senior Vice President of General Mills in 1992. He was named to his present position with CPW, S.A. in 1993. Walter W. Faster, age 60, is Vice President and Director of Corporate Growth and Development. Mr. Faster joined the Company in 1963 and was elected Vice President and Director of Corporate Growth and Development in 1982. Jon L. Finley, age 40, is Senior Vice President; President, China Coast. Mr. Finley joined the Company in 1983 and was named President, Yoplait USA in 1991, appointed a Vice President of the Company in 1991, named President of China Coast in 1992 and was elected to his present position in 1994. Leslie M. Frecon, age 41, is Senior Vice President, Corporate Finance. Ms. Frecon joined the Company in 1981 as Manager of Acquisitions and was named Director of Acquisitions in 1983, Controller of Foodservice in 1989 and Controller of Sperry in 1991. She was named a Vice President of the Company in 1991 and was elected to her present position in 1993. Charles W. Gaillard, age 53, is Vice Chairman, with overall responsibility for Big G, Consumer Foods Sales and Yoplait. Mr. Gaillard was elected a director in 1993. Mr. Gaillard joined the Company in 1966, became General Manager of the Golden Valley Division and was appointed a Vice President in 1977. He was appointed General Manager of the Big G Division in 1979, was elected a Senior Vice President in 1985, was named Senior Vice President, International Foods in 1988 and was elected Executive Vice President and President and Chief Executive Officer of CPW, S.A. in 1989. He was elected to his present position in 1993. Stephen J. Garthwaite, age 50, is Senior Vice President, Technology and Operations. Mr. Garthwaite joined the Company in 1982 as Vice President, Director of Corporate Research and was named Vice President, Research and Development for the Betty Crocker Division in 1986. He assumed the position of Vice President, Research and Development for Consumer Foods in 1987, was elected Senior Vice President, Research and Development in 1989 and was named Senior Vice President, Technology and Operations in 1990. Joe R. Lee, age 53, is Vice Chairman with overall responsibility for Betty Crocker Products, Gorton's, China Coast, Gold Medal, Marketing Services, Technology and Operations, Communications and Public Affairs. Mr. Lee was elected a director in 1985. Mr. Lee joined Red Lobster in 1967 as a member of its founding team, and was named its President in 1975. He was elected a Vice President of General Mills in 1976, a Group Vice President in 1979, an Executive Vice President in 1981, named Executive Vice President, Finance and International Restaurants in 1991 and elected to his present position in 1992. Ronald N. Magruder, age 46, is Executive Vice President; President, The Olive Garden - North America. Mr. Magruder joined Red Lobster in 1972 and has served as both Vice President of Operations and Vice President of International Growth and Development for Red Lobster. He was named President of Casa Gallardo in 1982, President of York Steak House Systems in 1983, President of The Olive Garden in 1987 and was elected Senior Vice President in 1989 and Executive Vice President in 1993. David D. Murphy, age 42, is Senior Vice President; President, General Mills Canada and International Foods. Mr. Murphy joined the Company in 1976, was appointed Vice President of Marketing Services in 1986 and subsequently Vice President, General Manager of the Minnetonka Division in 1988. He assumed overall responsibility for Betty Crocker Products in 1989, when the Minnetonka and Betty Crocker Divisions were merged. He was elected a Senior Vice President in 1991, named President of the Big G Division in 1992 and named President of General Mills Canada and International Foods in 1993. Sandy J. Navin, age 58, is Vice President and Director of Taxes. Mr. Navin joined General Mills as Tax Counsel in 1969, was named Assistant Director of Taxes in 1974 and was elected Vice President and Director of Taxes in 1988. Jeffrey J. O'Hara, age 46, is Executive Vice President; President, Red Lobster - North America. Mr. O'Hara joined the Company in 1970 and was named Vice President of Marketing and Menu Planning for Red Lobster in 1978. He was named President of The Good Earth in 1981, Executive Vice President of Marketing and Development for General Mills Restaurants in 1984 and President of Red Lobster in 1986. He was elected Senior Vice President in 1989 and Executive Vice President in 1993. Michael A. Peel, age 44, is Senior Vice President, Personnel. Mr. Peel joined the Company in 1991 from PepsiCo, Inc. where he was Senior Vice President, Personnel, responsible for PepsiCo Worldwide Foods from 1987 to 1991. He was elected to his present position in 1991. Gary M. Rodkin, age 42, is Senior Vice President; President, Yoplait USA. Mr. Rodkin joined the Company in 1979 and was named Vice President, Assistant General Manager, Sperry Division in 1988, Vice President, General Manager, Grain Snacks and Beverages in 1989, President, General Mills New Ventures in 1989, President, Yoplait USA in 1992 and was elected to his present position in 1994. Jeffrey J. Rotsch, age 44, is Senior Vice President; President, Betty Crocker Products. Mr. Rotsch joined the Company in 1974 and was named Vice President, Director of Marketing for the Betty Crocker Divsion in 1987, Vice President, General Manager for Betty Crocker main meals and side dishes in 1989 and was elected to his present position in 1993. Stephen W. Sanger, age 48, is President and has been a director since 1992. Mr. Sanger joined the Company in 1974 and was named Vice President, General Manager of the Northstar Division in 1983. He was appointed Vice President, General Manager of New Business Development in 1986, President of Yoplait USA in 1986, President of the Big G Division in 1988, elected Senior Vice President in 1989, Executive Vice President in 1991, Vice Chairman in 1992 and President in 1993. Blaine Sweatt, III, age 47, is Senior Vice President; General Manager, New Business Development, Restaurants. Mr. Sweatt joined the Company in 1976 and was named Vice President, General Manager, The Olive Garden in 1984, appointed a Vice President of the Company in 1989, named Vice President, General Manager, New Business Development, Restaurants in 1991, named President of New Business, Restaurants in 1992 and elected to his present position in 1994. Kenneth L. Thome, age 46, is Senior Vice President, Financial Operations. Mr. Thome joined the Company in 1969 and was named Vice President, Controller for Convenience and International Foods Group in 1985, Vice President, Controller for International Foods in 1989, Vice President, Director of Information Systems in 1991 and was elected to his present position in 1993. Stephen H. Warhover, age 50, is Senior Vice President; President, Gorton's. Mr. Warhover joined the Company in 1968 and was appointed Vice President, General Manager of the Betty Crocker Division in 1980. He was named Vice President, General Manager of the Minnetonka Division in 1983, President of the Gorton's Division in 1986 and was elected Senior Vice President in 1989. Clifford L. Whitehill, age 63, is Senior Vice President, General Counsel and Secretary. Mr. Whitehill joined the Company in 1962 as an attorney in the Law Department. He was appointed Assistant General Counsel in 1968, elected Vice President in 1971, named General Counsel in 1975, elected Senior Vice President in 1981 and elected Secretary in 1983. Mark H. Willes, age 53, is Vice Chairman, with overall responsibility for International Foods, Cereal Partners Worldwide, Red Lobster Japan, Restaurant Business Development, Corporate Finance, Financial Operations, Law and Investor Relations. Mr. Willes joined the Company as Executive Vice President and Chief Financial Officer in 1980. He was elected President and became a director in 1985 and was elected to his present position in 1992. GENERAL Trademarks and Patents. The Company's products are marketed and businesses operated under trademarks and service marks owned by or licensed to the Company. Trademarks and service marks are vital to the Company's business. The most significant trademarks and service marks of the Company are contained in the business segment discussions above. The Company considers that, taken as a whole, the rights under its various patents, which expire from time to time, are a valuable asset, but the Company does not believe that its businesses are materially dependent upon any single patent or group of related patents. The Company's activities under licenses or other franchises or concessions are not material. Raw Materials and Supplies. The principal raw materials used by General Mills are cereal grains, sugar, fruits, other agricultural products, vegetable oils, fish for food products, and plastic and paper for packaging materials. Although General Mills has some long-term contracts, the bulk of such raw materials are purchased on the open market. Although prices of most raw materials will probably increase over the long term, General Mills believes that it will be able to obtain an adequate supply of such raw materials. Occasionally and where possible, General Mills makes advance purchases of commodities significant to its business in order to ensure continuity of operations. In many cases, the Company also seeks to protect itself from basic market price fluctuations of certain commodities (grains and vegetable oil) through hedging transactions. Capital Expenditures. During the three fiscal years ended May 29, 1994, General Mills expended $1,879 million for capital expenditures, not including the cost of acquired companies. The Company expects to spend approximately $525 million for such purposes in fiscal 1995. Research and Development. The main research and development facilities are located at the James Ford Bell Technical Center in Golden Valley (suburban Minneapolis), Minnesota. With a staff of approximately 740, the Center is responsible for most of the food research for the Company. Approximately one-half of the staff hold degrees in various chemical, biological and engineering sciences. Research and development expenditures (all Company-sponsored) amounted to $63.6 million in fiscal 1994, $60.1 million in fiscal 1993 and $62.1 million in fiscal 1992. General Mills' research and development resources are focused on new product development, product improvement, process design and improvement, packaging and exploratory research in new business areas. Employees. At May 29, 1994, General Mills had approximately 125,700 employees. Environmental Matters. As of June 30, 1994, the Company has received notices advising it that there have been releases or threatened releases of hazardous substances or wastes at 10 sites, and alleging that the Company is potentially responsible for cleaning up those sites and/or paying certain costs in connection with those sites. These matters involve several different procedural contexts, including litigation initiated by governmental authorities and/or private parties, administrative proceedings commenced by regulatory agencies, and demand letters issued by regulatory agencies and/or private parties. The Company recognizes that its potential exposure with respect to any of these sites may be joint and several, but has concluded that its probable aggregate exposure is not material. This conclusion is based upon, among other things, the Company's payments and/or accruals with respect to each site; the number, ranking, and financial strength of other potentially responsible parties identified at each of the sites; the status of the proceedings, including various settlement agreements, consent decrees or court orders; allocations of volumetric waste contributions and allocations of relative responsibility among potentially responsible parties developed by regulatory agencies and by private parties; remediation cost estimates prepared by governmental authorities or private technical consultants; and the Company's historical experience in negotiating and settling disputes with respect to similar sites. Based on current facts and circumstances, General Mills believes that neither the results of these proceedings nor its compliance in general with environmental laws or regulations will have a material effect upon the capital expenditures, earnings or competitive position of the Company. Segment Information. For financial information relating to industry segments of General Mills and foreign and domestic operations and sales, see Note Eighteen to Consolidated Financial Statements appearing on page 32 of the Company's 1994 Annual Report to Stockholders, incorporated herein by reference. ITEM 2. PROPERTIES. The Company's principal executive offices and main research laboratory are Company-owned and located in the Minneapolis, Minnesota metropolitan area. General Mills operates numerous manufacturing facilities and maintains many sales and administrative offices and warehouses mainly in the United States. Other facilities are also operated in Canada. General Mills operates ten major consumer foods plants for the production of cereal products, prepared mixes, convenience foods and other food products. These facilities are located at Albuquerque, New Mexico; Buffalo, New York; Cedar Rapids, Iowa; Chicago, Illinois (2); Covington, Georgia; Lodi, California; St. Charles, Illinois; Toledo, Ohio; and Etobicoke, Canada. The Company owns seven flour mills located at Avon, Iowa; Buffalo, New York; Great Falls, Montana; Johnson City, Tennessee; Kansas City, Missouri; Vallejo, California; and Vernon, California. The Company operates seven terminal grain elevators and has country grain elevators in 27 locations, primarily in Idaho and Montana. General Mills also has seven seafood processing facilities and ten other food and beverage production facilities with total floor space of approximately 771,000 square feet, including 212,000 square feet of leased space. General Mills also owns or leases warehouse space aggregating approximately 6,388,000 square feet, of which approximately 3,772,000 square feet are leased. A number of sales and administrative offices are maintained in the United States and Canada, totaling 1,528,000 square feet. The Company operates 1,158 restaurants, including 675 RED LOBSTER, 458 THE OLIVE GARDEN and 25 CHINA COAST restaurants, in the following locations: Alabama (17) Iowa (7) Nevada (8) South Dakota (3) Arizona (21) Kansas (10) New Hampshire (3) Tennessee (24) Arkansas (8) Kentucky (13) New Jersey (22) Texas (110) California (116) Louisiana (10) New Mexico (6) Utah (8) Colorado (20) Maine (5) New York (40) Vermont (1) Connecticut (10) Maryland (14) North Carolina (23) Virginia (31) Delaware (4) Massachusetts (4) North Dakota (4) Washington (16) Florida (121) Michigan (46) Ohio (65) West Virginia (3) Georgia (36) Minnesota (18) Oklahoma (13) Wisconsin (20) Hawaii (2) Mississippi (4) Oregon (10) Wyoming (1) Idaho (2) Missouri (26) Pennsylvania (42) Illinois (49) Montana (2) Rhode Island (3) Indiana (38) Nebraska (6) South Carolina (14) Canada (79) The Company is also engaged in a partnership which operates 48 RED LOBSTER restaurants in Japan. ITEM 3. LEGAL PROCEEDINGS. In management's opinion, there were no claims or litigation pending at June 30, 1994, the outcome of which could have a significant effect on the consolidated financial position of General Mills, Inc. and its subsidiaries. The Company has received several state consumer class action lawsuits in connection with the improper substitution by an independent contractor of an unapproved pesticide to treat some of the Company's stored oat supplies during fiscal 1994. The Federal Food and Drug Administration and the Environmental Protection Agency have stated that there is no health issue associated with this matter. The Company believes the cases to be without merit, and any cost to the Company is not expected to be material. See the information contained under the section entitled "Environmental Matters," supra, for a discussion of environmental matters in which the Company is involved. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The information relating to the market prices and dividends of the Company's common stock contained in Note Nineteen to Consolidated Financial Statements appearing on page 32 of Registrant's 1994 Annual Report to Stockholders, is incorporated herein by reference. As of July 22, 1994, the number of record holders of common stock was 45,694. The Company's common stock ($.10 par value) is listed on the New York and Midwest Stock Exchanges. ITEM 6. SELECTED FINANCIAL DATA. The information for fiscal years 1990 through 1994 contained in the Eleven-Year Financial Summary As Reported and the Financial Data for Continuing Operations on page 33 of Registrant's 1994 Annual Report to Stockholders, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. The information set forth in the section entitled "Management Discussion of Results of Operations and Financial Condition" on pages 17 through 19 of Registrant's 1994 Annual Report to Stockholders, is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information on pages 20 through 32 of Registrant's 1994 Annual Report to Stockholders, is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. - Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information contained in the sections entitled "Information Concerning Nominees" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" contained in Registrant's definitive proxy materials dated August 19, 1994, is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. The information contained in the section entitled "Board Compensation and Benefits" and pages 23 through 29 of Registrant's definitive proxy materials dated August 19, 1994 are incorporated herein by reference. The information appearing under the heading "Report of Compensation Committee on Executive Compensation" is not incorporated herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information contained in the section entitled "Share Ownership of Directors and Executive Officers" contained in Registrant's definitive proxy materials dated August 19, 1994 is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. - Not Applicable. The Company's Annual Report on Form 10-K for the fiscal year ended May 29, 1994, at the time of its filing with the Securities and Exchange Commission, shall modify and supersede all prior documents filed pursuant to Sections 13, 14 and 15(d) of the 1934 Act for purposes of any offers or sales of any securities after the date of such filing pursuant to any Registration Statement or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by reference such Annual Report on Form 10-K. AUDITORS' REPORT The Stockholders and the Board of Directors General Mills, Inc.: Under date of July 29, 1994, we reported on the consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 29, 1994 and May 30, 1993 and the related consolidated statements of earnings and cash flows for each of the fiscal years in the three-year period ended May 29, 1994, as contained in the 1994 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the fiscal year ended May 29, 1994. In connection with our audits of the aforementioned consolidated financial statements, we have also audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Our report covering the basic consolidated financial statements refers to changes in the method of accounting for postemployment benefits and for income taxes. KPMG Peat Marwick Minneapolis, Minnesota July 29, 1994 AUDITORS' CONSENT The Board of Directors General Mills, Inc.: We consent to incorporation by reference in the Registration Statements (Nos. 2-49637, 2-91893, 33-15323, 33- 37474, 33-39927 and 33-56032) on Form S-3 and Registration Statements (Nos. 2-13460, 2-53523, 2-66320, 2-91987, 2- 95574, 33-24504, 33-27628, 33-32059, 33-36892, 33-36893, 33- 51070 and 33-50337) on Form S-8 of General Mills, Inc. of our reports dated July 29, 1994, relating to the consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 29, 1994 and May 30, 1993 and the related consolidated statements of earnings, cash flows and related financial statement schedules for each of the fiscal years in the three-year period ended May 29, 1994, which reports are included or incorporated by reference in the May 29, 1994 annual report on Form 10-K of General Mills, Inc. Our report covering the basic consolidated financial statements refers to changes in the method of accounting for postemployment benefits and for income taxes. KPMG Peat Marwick Minneapolis, Minnesota August 22, 1994 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (A) 1. FINANCIAL STATEMENTS: Consolidated Statements of Earnings for the Fiscal Years Ended May 29, 1994, May 30, 1993 and May 31, 1992 (incorporated herein by reference to page 21 of the Registrant's 1994 Annual Report to Stockholders). Consolidated Balance Sheets at May 29, 1994 and May 30, 1993 (incorporated herein by reference to page 22 of the Registrant's 1994 Annual Report to Stockholders). Consolidated Statements of Cash Flows for the Fiscal Years Ended May 29, 1994, May 30, 1993 and May 31, 1992 (incorporated herein by reference to page 23 of the Registrant's 1994 Annual Report to Stockholders). Notes to Consolidated Financial Statements (incorporated herein by reference to pages 24 through 32 of the Registrant's 1994 Annual Report to Stockholders). 2. FINANCIAL STATEMENT SCHEDULES: For the Fiscal Years Ended May 29, 1994, May 30, 1993 and May 31, 1992: V - Property, Plant and Equipment VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment VIII - Valuation and Qualifying Accounts IX - Short-Term Borrowings X - Supplementary Income Statement Information 3. EXHIBITS: 3.1 - Copy of Registrant's Restated Certificate of Incorporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1992). 3.2 - Copy of Registrant's By-Laws, as amended to date. 4 - Copy of Indenture between Registrant and Continental Illinois National Bank and Trust Company of Chicago, as amended to date by Supplemental Indentures Nos. 1 through 8 (incorporated herein by reference to Exhibit 4 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1992 and to Exhibit 4(b) to Registrant's Current Report on Form 8-K filed January 8, 1993). *10.1 - Copy of Stock Option and Long-Term Incentive Plan of 1988, as amended to date. *10.2 - Copy of Stock Option and Long-Term Incentive Plan of 1984, as amended to date. *10.3 - Copy of Stock Option and Long-Term Incentive Plan of 1980, as amended to date (incorporated herein by reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1992). *10.4 - Copy of Executive Incentive Plan, as amended to date (incorporated herein by reference to Exhibit 10.4 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 30, 1993). *10.5 - Copy of Management Continuity Agreement, as amended to date. *10.6 - Copy of Supplemental Retirement Plan, as amended to date. *10.7 - Copy of Executive Survivor Income Plan, as amended to date (incorporated herein by reference to Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 26, 1991). *10.8 - Copy of Executive Health Plan, as amended to date (incorporated herein by reference to Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 26, 1991). *10.9 - Copy of Supplemental Savings Plan, as amended to date. 10.10 - Copy of Compensation Plan for Non-Employee Directors, as amended to date (incorporated herein by reference to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1992). 10.11 - Copy of Retirement Plan for Non-Employee Directors, as amended to date (incorporated herein by reference to Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 30, 1993). *10.12 - Copy of Deferred Compensation Plan, as amended to date (incorporated herein by reference to Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 30, 1993). *10.13 - Copy of Supplemental Benefits Trust Agreement dated February 9, 1987, as amended and restated as of September 26, 1988. *10.14 - Copy of Supplemental Benefits Trust Agreement dated September 26, 1988. 10.15 - Agreements dated November 29, 1989 by and between General Mills, Inc. and Nestle, S.A. (incorporated herein by reference to Exhibit 10.16 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 27, 1990). 10.16 - Copy of Protocol and Addendum No. 1 to Protocol of Cereal Partners Worldwide (incorporated herein by reference to Exhibit 10.17 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 26, 1991). 10.17 - Copy of Stock Plan for Non-Employee Directors, as amended to date (incorporated herein by reference to Exhibit 10.17 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 1992). *10.18 - Copy of 1990 Salary Replacement Stock Option Plan, as amended to date. 10.19 - Copy of Addendum No. 2 dated March 16, 1993 to Protocol of Cereal Partners Worldwide (incorporated herein by reference to Exhibit 10.19 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 30, 1993). 10.20 - Copy of Agreement dated July 31, 1992 by and between General Mills, Inc. and PepsiCo, Inc.(incorporated herein by reference to Exhibit 10.20 to Registrant's Annual Report on Form 10-K for the fiscal year ended May 30, 1993). *10.21 - Copy of Stock Option and Long-Term Incentive Plan of 1993, as amended to date. 11 - Statement of Determination of Common Shares and Common Share Equivalents (contained on page 19 of this Report). 12 - Statement of Ratio of Earnings to Fixed Charges (contained on page 20 of this Report). 13 - 1994 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Commission). 21 - List of Subsidiaries of General Mills, Inc. 23 - Consent of KPMG Peat Marwick (contained on page 9 of this Report). (B) REPORTS ON FORM 8-K. - Not applicable. * Items that are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: August 22, 1994 By: /s/ C. L. WHITEHILL C. L. Whitehill Senior Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. SIGNATURE TITLE DATE /s/ H.B. ATWATER, JR. Chairman of the Board and August 2, 1994 (H.B. Atwater, Jr.) Chief Executive Officer /s/ R.M. BRESSLER Director August 3, 1994 (Richard M. Bressler) /s/ L. DE SIMONE Director August 4, 1994 (Livio D. DeSimone) /s/ W.T. ESREY Director August 2, 1994 (William T. Esrey) /s/ C. W. GAILLARD Director, August 2, 1994 (Charles W. Gaillard) Vice Chairman /s/ JUDITH R. HOPE Director August 2, 1994 Judith R. Hope) /s/ JOE R. LEE Director, August 9, 1994 (Joe R. Lee) Vice Chairman /s/ KENNETH MACKE Director August 2, 1994 (Kenneth A. Macke) /s/ GEORGE PUTNAM Director August 3, 1994 (George Putnam) /s/ M.D. ROSE Director August 3, 1994 (Michael D. Rose) /s/ S.W. SANGER Director, August 16, 1994 (Stephen W. Sanger) President /s/ A. MICHAEL SPENCE Director August 8, 1994 (A. Michael Spence) /s/ Mark H. WILLES Director, August 8, 1994 (Mark H. Willes) Vice Chairman /s/ C. ANGUS WURTELE Director August 4, 1994 (C. Angus Wurtele) /s/ KENNETH L. THOME Senior Vice President, August 3, 1994 (Kenneth L. Thome) Financial Operations
GENERAL MILLS, INC. AND SUBSIDIARIES SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (in millions) Column A Column B Column C Column D Column E Column F Other Balance at changes Balance beginning Additions add at end of Description of period at cost Retirements(a) (deduct)(b) period Year ended May 29, 1994: Land $ 302.3 $ 60.1 $ .7 $ (.8) $ 360.9 Buildings 1,452.6 216.5 9.5 (4.0) 1,655.6 Equipment 2,048.1 419.3 94.1 .5 2,373.8 Construction in 436.5 (136.4) _ (.6) 299.5 progress Total $4,239.5 $559.5 $104.3 $ (4.9) $4,689.8 Year ended May 30, 1993: Land $ 253.9 $ 58.7 $ 9.7 $ (.6) $ 302.3 Buildings 1,302.2 218.3 66.4 (1.5) 1,452.6 Equipment 1,903.2 308.4 167.1 3.6 2,048.1 Construction in 450.0 38.4 55.5 3.6 436.5 progress Total $3,909.3 $623.8 $298.7 $ 5.1 $4,239.5 Year ended May 31, 1992: Land $ 215.2 $ 41.2 $ 1.6 $ (.9) $ 253.9 Buildings 1,116.6 198.0 10.2 (2.2) 1,302.2 Equipment 1,701.6 307.8 107.3 1.1 1,903.2 Construction in 303.7 148.3 2.0 - 450.0 progress Total $3,337.1 $695.3 $121.1 $ (2.0) $3,909.3 Notes: (a) Gross book value retired or sold. Fiscal 1993 includes assets contributed to Snack Ventures Europe. (b) Includes changes in dollar value of foreign assets due to foreign currency translation and the fiscal 1994 Colombo yogurt acquisition.
GENERAL MILLS, INC. AND SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (in millions)
Column A Column B Column C Column D Column E Column F Additions Other Balance at charged to changes Balance beginning costs and Retirements add at end of Description of period expenses(a) (b) (deduct)(c) period Year ended May 29, 1994: Buildings $ 366.7 $ 74.0 $ 4.6 $(1.9) $ 434.2 Equipment 1,013.2 223.8 71.0 (3.0) 1,163.0 Total $1,379.9 $297.8 $ 75.6 $(4.9) $1,597.2 Year ended May 30, 1993: Buildings $ 336.8 $ 64.1 $ 35.1 $ .9 $ 366.7 Equipment 923.9 206.7 120.6 3.2 1,013.2 Total $1,260.7 $270.8 $155.7 $ 4.1 $1,379.9 Year ended May 31, 1992: Buildings $ 289.1 $ 54.4 $ 7.0 $ .3 $ 336.8 Equipment 806.7 187.6 72.0 1.6 923.9 Total $1,095.8 $242.0 $ 79.0 $ 1.9 $1,260.7 Notes: (a) See Note One (B) of Notes to Consolidated Financial Statements contained in the Registrant's 1994 Annual Report to Stockholders. (b) Accumulated depreciation removed due to retirement or sale. Fiscal 1993 includes accumulated depreciation related to assets contributed to Snack Ventures Europe. (c) Changes in dollar value of foreign assets due to changes in foreign currency translation.
GENERAL MILLS, INC. AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (in millions)
Column A Column B Column C Column D Column E Additions Balance at charged to Deductions Balance beginning costs and from at end of Description of period expenses reserves period Allowance for possible losses on accounts receivable: Year ended May 29, 1994 $4.3 $ .8 $ .9 (a) $4.4 (.2)(b) Total $4.3 $ .8 $ .7 $4.4 Year ended May 30, 1993 $6.4 $ .9 $2.5 (a) $4.3 .5 (b) Total $6.4 $ .9 $3.0 $4.3 Year ended May 31, 1992 $6.0 $ 1.9 $1.6 (a) $6.4 (.1)(b) Total $6.0 $ 1.9 $1.5 $6.4 Notes: (a) Bad debt write-offs. (b) Other adjustments and reclassifications.
GENERAL MILLS, INC. AND SUBSIDIARIES SCHEDULE IX - SHORT-TERM BORROWINGS (in millions)
Column A Column B Column C Column D Column E Column F Maximum Weighted Weighted amount daily Balance at average outstanding Average average end interest (at any amount interest Category of short-term of period rate month end) outstanding* rate borrowings Year ended May 29, 1994: Banks** $250.3 4.5% $312.3 $172.4 3.8% U.S. commercial paper** 89.2 4.1 164.3 334.7 3.3 Canadian commercial paper 83.3 5.7 91.7 77.0 4.3 Other 10.5 3.5 10.5 .4 3.5 Year ended May 30, 1993: Banks** $208.2 4.6% $247.2 $206.9 4.3% U.S. commercial paper** 55.5 3.1 74.8 107.2 3.2 Canadian commercial paper 75.9 5.0 82.8 78.9 6.1 Year ended May 31, 1992: Banks** $ 66.2 9.2% $154.3 $106.6 6.1% U.S. commercial paper** _ _ _ 68.9 4.9 Canadian commercial paper 103.1 6.9 112.9 67.6 8.0 * Determined by dividing total of daily balances outstanding by 364 days for fiscal 1994 and 1993, and 371 days for fiscal 1992, excluding any reclassifications. **Short-term borrowings of $250.0 million, $200.0 million and $150.0 million were reclassified to long-term at May 29, 1994, May 30, 1993 and May 31, 1992, respectively, as the Company's revolving credit agreement (See Note Seven of Notes to Consolidated Financial Statements contained in the Registrant's 1994 Annual Report to Stockholders) provides the Company with the ability to refinance short-term borrowings. If the reclassifications had not been made, the maximum amount of bank debt outstanding would have been $312.3 million, $312.0 million and $194.4 million during the years ended May 29, 1994, May 30, 1993 and May 31, 1992, respectively, and the maximum amount of U.S. commercial paper outstanding would have been $381.2 million, $255.5 million and $131.5 million during the years ended May 29, 1994, May 30, 1993 and May 31, 1992, respectively.
GENERAL MILLS, INC. AND SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (in millions)
For the Fiscal Years Ended May 29, 1994 May 30, 1993 May 31, 1992 Maintenance and repairs $218.3 $205.4 $209.0 Depreciation and amortization of intangible assets, preoperating costs and similar deferrals * * * Taxes, other than payroll and income taxes * * * Royalties * * * Advertising media expenditures 409.5 395.4 426.8 *Less than 1% of total sales.
EXHIBIT 11 GENERAL MILLS, INC. STATEMENT OF DETERMINATION OF COMMON SHARES AND COMMON SHARE EQUIVALENTS (in millions)
Weighted average number of common shares and common share equivalents assumed outstanding For the Fiscal Years Ended May 29, 1994 May 30, 1993 May 31, 1992 Weighted average number of common shares outstanding, excluding common stock held in treasury (a) 159.1 163.1 165.7 Common share equivalents resulting from the assumed exercise of certain stock options (b) 2.4 * 3.3 * 3.3 * Total common shares and common share equivalents 161.5 166.4 169.0 Notes: (a) Beginning balance of common stock is adjusted for changes in the number of shares outstanding, weighted monthly 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 for the period concerned. * Common share equivalents are not material. As a result, earnings per share have been computed using the weighted average of common shares outstanding of 159.1 million, 163.1 million and 165.7 million for fiscal 1994, 1993 and 1992, respectively.
EXHIBIT 12 GENERAL MILLS, INC. RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended May 29, May 30, May 31, May 26, May 27, 1994 1993 1992 1991 1990 Ratio of Earnings to Fixed Charges 6.16 7.79 8.58 7.82 7.66
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. EXHIBIT INDEX 3.2 - Copy of Registrant's By-Laws, as amended to date. 10.1 - Copy of Stock Option and Long-Term Incentive Plan of 1988, as amended to date. 10.2 - Copy of Stock Option and Long-Term Incentive Plan of 1984, as amended to date. 10.5 - Copy of Management Continuity Agreement, as amended to date. 10.6 - Copy of Supplemental Retirement Plan, as amended to date. 10.9 - Copy of Supplemental Savings Plan, as amended to date. 10.13 - Copy of Supplemental Benefits Trust Agreement dated February 9, 1987, as amended and restated as of September 26, 1988. 10.14 - Copy of Supplemental Benefits Trust Agreement dated September 26, 1988. 10.18 - Copy of 1990 Salary Replacement Stock Option Plan, as amended to date. 10.21 - Copy of Stock Option and Long-Term Incentive Plan of 1993, as amended to date. 11 - Statement of Determination of Common Shares and Common Share Equivalents. 12 - Statement of Ratio of Earnings to Fixed Charges. 13 - 1994 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Commission). 21 - List of Subsidiaries of General Mills, Inc. 23 - Consent of KPMG Peat Marwick. EX-10.18 10 1990 SALARY REPLACEMENT STOCK OPTION PLAN EXHIBIT 10.18 GENERAL MILLS, INC. 1990 SALARY REPLACEMENT STOCK OPTION PLAN As Amended Through June 27, 1994 GENERAL MILLS, INC. 1990 SALARY REPLACEMENT STOCK OPTION PLAN 1. PURPOSE OF THE PLAN The purpose of the General Mills, Inc. 1990 Salary Replacement Stock Option Plan (the "Plan") is to give key employees of General Mills, Inc. (the "Company") and its subsidiaries who are primarily responsible for the management of the business of the Company the opportunity to receive stock option grants in lieu of salary increases, and, as to employees who are not subject to Section 16 of the 1934 Act (each as hereinafter defined), an opportunity to receive stock option grants in lieu of certain other compensation and employee benefits thereby encouraging focus on the growth and profitability of the Company and its Common Stock. 2. EFFECTIVE DATE OF PLAN This Plan shall become effective as of September 17, 1990, subject to the approval of the stockholders of the Company at the Annual Meeting on September 17, 1990. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Compensation Committee (the "Committee"). The Committee shall be made up of non-management members of the Board of Directors (the "Board") appointed in accordance with the Company's Certificate of Incorporation. The Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom grants will be made ("Optionees"), the number of shares to be optioned and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), so permits without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate the administration of the Plan in whole or in part, on such terms and conditions, and to such person or persons as it may determine in its discretion, as it relates to persons not subject to Section 16 of the 1934 Act, or any successor provision. Decisions of the Committee (or its delegate as permitted herein) shall be final, conclusive and binding upon all parties, including the Company, stockholders and Optionees. 4. COMMON STOCK SUBJECT TO THE PLAN The shares of "Common Stock" of the Company ($.10 par value) to be issued upon the exercise of a non-qualified option to purchase Common Stock granted hereunder (an "Option") may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or Common Stock purchased on the open market or otherwise. Approval of the Plan by the stockholders of the Company shall constitute authorization to use such shares for the Plan, subject to the discretion of the Board or as such discretion may be delegated to the Committee. Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares originally authorized under the Plan for which Options could be granted under the Plan shall was 3,000,000 shares. As of June 1, 1992, and subject to the provisions of the next succeeding paragraph, there remain 4,493,000 shares authorized to be issued under the Plan (as adjusted for stock splits). If an Option granted under the Plan is terminated without having been exercised in full, the unpurchased or forfeited shares or rights to receive shares shall become available for grant to other employees. The number of shares of Common Stock subject to the Plan, the outstanding Salary Stock Options, and the exercise price per share of outstanding Options may be appropriately adjusted by the Committee in the event that: (i) the number of outstanding shares of Common Stock of the Company shall be changed by reason of split-ups, combinations or reclassifications of shares; (ii) any stock dividends are distributed to the holders of Common Stock of the Company; or (iii) the Common Stock of the Company is converted into or exchanged for other shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization. 5. ELIGIBLE PERSONS Only persons who are officers or key employees of the Company or a subsidiary shall be eligible to receive grants under the Plan. No grant shall be made to any member of the Committee or any other non-employee director. 6. PURCHASE PRICE OF SALARY STOCK OPTIONS The purchase price for each share of Common Stock issuable under an Option shall not be less than 100 percent of the Fair Market Value of the Shares of Common Stock of the Company subject to such option on the date of grant. "Fair Market Value" as used in the Plan shall equal the mean of the high and low price of the Common Stock on the New York Stock Exchange on the applicable date. 7. OPTION TERM The term of each Option grant as determined by the Committee shall not exceed ten (10) years and one (1) month from the date of that grant and shall expire as of the last day of the designated term, unless terminated earlier under the provisions of the Plan. 8. OPTION TYPE Option grants will be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the "Code") or any successor provision. 9. NON-TRANSFERABILITY OF OPTIONS No Option granted under this Plan shall be transferable by the Optionee otherwise than by the Optionee's Last Will and Testament or by the laws of descent and distribution. An Optionee shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this Section. Each Option shall be exercised during the Optionee's lifetime only by the Optionee or his or her guardian or legal representative. 10. EXERCISE OF OPTIONS Except as provided in Sections 12, 13 and 14, each Option shall be vested and may be exercised in accordance with such terms and conditions as may be determined by the Committee for grants to officers or executives and by the Chief Executive Officer of the Company for grants to other management participants. Subject to the provision of this Section 10, each Option may be exercised in whole or, from time to time, in part with respect to the number of then exercisable shares in any sequence desired by the Optionee without regard to the date of grant of stock options under other plans of the Company. An Optionee exercising an Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. At the time of purchase, the Optionee shall tender the full purchase price of the shares purchased. Until such payment has been made and a certificate or certificates for the shares purchased has been issued in the Optionee's name, the Optionee shall possess no stockholder rights with respect to any such shares. Payment of such purchase price shall be made to the Company, subject to any applicable rule or regulation adopted by the Committee: (i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company); (ii) through the delivery of shares of Common Stock owned by the Optionee; or (iii) by a combination of (i) and (ii) above. For determining the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise. 11. WITHHOLDING TAXES ON OPTION EXERCISE Each Optionee shall deliver to the Company cash in an amount equal to all federal, state and local withholding taxes required to be collected by the Company in respect of the exercise of an Option, and until such payment is made, the Company may, in its discretion, retain all or a portion of the shares to be issued. Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, an Optionee may authorize the Company to satisfy any such withholding requirement by directing the Company to withhold from any shares to be issued such number of shares as shall be sufficient to satisfy the withholding obligation. 12. EXERCISE OF OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL Each outstanding Option shall become immediately and fully exercisable for a period of six (6) months following the date of the following occurrences, each constituting a "Change of Control": (i) if any person (including a group as defined in Section 13(d)(3) of the 1934 Act) becomes, directly or indirectly, the beneficial owner of twenty (20) percent or more of the shares of the Company entitled to vote for the election of directors; (ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were Directors of the Company just prior to such event cease to constitute a majority of the Company's Board of Directors; or (iii) the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs. After such six (6) month period the normal option exercise provisions of the Plan shall govern. In the event an Optionee is terminated as an employee of the Company or a Subsidiary within two (2) years of any of the events specified in (i), (ii) or (iii), all outstanding Stock Options at that date of termination shall become immediately exercisable for a period of three (3) months. 13. TERMINATION OF EMPLOYMENT OR LEAVE OF ABSENCE OF AN OPTIONEE (a) Normal Termination If the Optionee's employment by the Company or a subsidiary terminates for any reason other than as specified in subsections (b), (c), (d) or (e), the Options shall terminate three (3) months after such termination. If the employment by the Company or a subsidiary of an Optionee, other than an Optionee subject to Section 16 of the 1934 Act, is terminated for the convenience of the Company, as determined by the Committee, and, at the time of termination the sum of the Optionee's age and service with the Company equals or exceeds 70, the Committee, in its sole discretion, may permit any Option previously granted to the Optionee under the Plan to be exercised to the full extent that such Option could have been exercised by such Optionee immediately prior to the Optionee's termination and may permit such Option to remain exercisable until the expiration of the Option in accordance with its original term. (b) Death If the termination of employment is due to the Optionee's death, the Options may be exercised as provided in Section 14. (c) Retirement If the termination of employment is due to the Optionee's retirement, the Optionee thereafter may exercise an Option within the period remaining under the original term of the Option. (d) Spin-offs If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, may determine that all outstanding Options granted more than one (1) year prior to the date of such termination shall immediately become exercisable for a period of three (3) years after the date of such termination, subject to the provisions of Section 7. (e) Leave of Absence Unless the Committee shall otherwise determine, if an Optionee is placed on an unpaid leave of absence, such Optionee's Options shall terminate at the expiration of the unpaid leave of absence. If an Optionee is placed on an unpaid leave of absence, retires during such leave, and the Committee had decided not to terminate the Optionee's right to exercise an Option at the date of the inception of said leave of absence, then such Optionee may exercise an Option in accordance with subsection (c). 14. DEATH OF OPTIONEE If an Optionee should die while employed by the Company or a subsidiary or after retirement, any Option previously granted to the Optionee under this Plan may be exercised by the person designated in such Optionee's Last Will and Testament or, in the absence of such designation, by the Optionee's estate, to the full extent that such Option could have been exercised by such Optionee immediately prior to the Optionee's death, subject to the original term of the Option. 15. AMENDMENTS TO THE PLAN The Plan may be terminated, modified, or amended by the Board of Directors of the Company. Subject to the approval of the Board of Directors, the Committee may at any time terminate, modify or suspend the operation of the Plan, provided that no such amendment, alteration or discontinuation shall be made without the approval of the stockholders of the Company: (i) if such approval is necessary to comply with any legal, tax or regulatory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16(b) of the 1934 Act; or (ii) to materially increase the number of shares which may be issued under the Plan or materially modify the requirements as to eligibility for participating in the Plan. The Board of Directors shall have authority to cause the Company to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the 1934 Act, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Company. No termination, modification, suspension or amendment of the Plan shall alter or impair the rights of any Optionee pursuant to a prior grant, without the consent of the Optionee. 16. FOREIGN JURISDICTIONS The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of laws of any foreign jurisdiction, to key employees of the Company who are subject to such laws and who are eligible to receive Option grants under the Plan. 17. DURATION OF THE PLAN Grants may be made under the Plan until September 30, 1995. 18. NOTICE All notices and communications to the Company shall be in writing, effective as of actual receipt by the Company, and shall be sent to: General Mills, Inc. Number One General Mills Boulevard Minneapolis, Minnesota 55426 Attention: Corporate Compensation If by Telex: 170360 Gen Mills If by Facsimile: (612) 540-4925 19. SECTION 16 OFFICERS With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Effective as of September 17, 1990 As amended effective June 1, 1992 As amended effective June 27, 1994 EX-10.21 11 STOCK OPTION & L-T INCEN PLAN OF 1993 EXHIBIT 10.21 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1993 As Amended Through June 27, 1994 GENERAL MILLS, INC. STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1993 1. PURPOSE OF THE PLAN The purpose of the General Mills, Inc. Stock Option and Long-Term Incentive Plan of 1993 (the "Plan") is to attract and retain able employees by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. owns an equity interest of 25% or more) (collectively, the "Company") who are responsible for the growth and sound development of the business of the Company, and to align the interests of all employees with those of the stockholders of the Company. 2. EFFECTIVE DATE, DURATION AND SUMMARY OF PLAN A. Effective Date and Duration This Plan shall become effective as of September 20, 1993, subject to the approval of the stockholders of the Company at the Annual Meeting on September 20, 1993. Awards may be made under the Plan until October 1, 1998. B. Summary of Option Provisions for Participants The stock option that will be awarded to employees under this Plan gives a right to an employee to purchase at a future date shares of General Mills, Inc. common stock at a fixed price. As an employee, you will receive an "option certificate" in your own name, which will contain the term and other conditions of the option grant. In general, each certificate will state the number of shares of General Mills that you can purchase from the Company, the price at which you can purchase the shares, and the date you can make your purchase. You will not have any taxable income when you receive the option certificate. The price at which you may buy the General Mills shares will be equal to the market price of the Company shares on the New York Stock Exchange as of the day the option was awarded to you. If during the period that you must hold the option certificate before you can use it, the price of General Mills stock has risen, you will make a gain on exercising the option certificate equal to the difference between the price shown on the option certificate and the market price of General Mills shares on the date you use your option to buy shares under the terms of the option certificate. This gain is taxable to you. You will never be obligated to buy shares of General Mills if you do not wish to do so. After the necessary holding period before you can use the certificate, you can continue to hold the option certificate as an employee for up to ten years and one month before making the decision whether or not to buy shares of General Mills. After the full term of ten years and one month, the rights under the certificate will lapse and cannot then be used by the employee. In general, you cannot sell or assign the option certificate to any other person, and the specific provisions which cover your rights in the option certificate are covered in the full text of the Plan. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Compensation Committee (the "Committee"). The Committee shall be comprised solely of non-employee, independent members of the Board of Directors (the "Board") appointed in accordance with the Company's Certificate of Incorporation. Subject to the provisions of Section 14, the Committee shall have authority to adopt rules and regulations for carrying out the purpose of the Plan, select the employees to whom Awards will be made ("Participants"), determine the number of shares to be awarded and the other terms and conditions of Awards in accordance with the Plan provisions and interpret, construe and implement the provisions of the Plan; provided that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), so permits, without adversely affecting the ability of the Plan to comply with the conditions for exemption from Section 16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the Committee may delegate its duties under the Plan in whole or in part, on such terms and conditions, to the Chief Executive Officer and to other senior officers of the Company; provided further, that only the Committee may select and make other decisions as to Awards to Participants who are subject to Section 16 of the 1934 Act and to other executives of the Company. The Committee (or its permitted delegate) may correct any defect or supply any omission or reconcile any inconsistency in any agreement relating to any Award under the Plan in the manner and to the extent it deems necessary. Decisions of the Committee (or its permitted delegate) shall be final, conclusive and binding upon all parties, including the Company, stockholders and Participants. 4. COMMON STOCK SUBJECT TO THE PLAN The shares of common stock of the Company ($.10 par value) ("Common Stock") to be issued upon exercise of a Stock Option, awarded as Restricted Stock, or issued upon expiration of the restricted period for Restricted Stock Units, may be made available from the authorized but unissued Common Stock, shares of Common Stock held in the Company's treasury, or Common Stock purchased by the Company on the open market or otherwise. Approval of the Plan by the stockholders of the Company shall constitute authorization to use such shares for the Plan. The Committee, in its discretion, may require as a condition to the grant of Stock Options, Restricted Stock or Restricted Stock Units (collectively, "Awards"), the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such Awards, if such deposit is not made or maintained during the required holding period or the applicable restricted period. Such shares of deposited Common Stock may not be otherwise sold, pledged or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner. Subject to the provisions of the next succeeding paragraph, the maximum aggregate number of shares of Common Stock authorized under the Plan for which Awards may be granted under the Plan is 8,000,000; provided that if during the term of the Plan the Company repurchases shares of Common Stock, on the open market or otherwise and in compliance with the rules and regulations of the Securities and Exchange Commission, additional Awards may be granted equal to the number of shares repurchased, subject that no more than 4,000,000 additional shares of Common Stock shall be authorized for Awards hereunder; and provided further that the total number of shares of Common Stock that shall be available for Restricted Stock and Restricted Stock Unit Awards under the Plan shall be limited to 4% of the total shares authorized for Award hereunder. Upon the expiration, forfeiture, termination or cancellation, in whole or in part, of unexercised Stock Options, or forfeiture of Restricted Stock or Restricted Stock Units on which no dividends or dividend equivalents have been paid, the shares of Common Stock subject thereto shall again be available for Awards under the Plan. The number of shares subject to the Plan, the outstanding Awards and the exercise price per share of outstanding Stock Options may be appropriately adjusted by the Committee in the event that: (i) the number of outstanding shares of Common Stock shall be changed by reason of split-ups, spin-offs, combinations or reclassifications of shares; (ii) any stock dividends are distributed to the holders of Common Stock; or (iii) the Common Stock is converted into or exchanged for other shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization, or other similar events occur which affect the value of the Common Stock. 5. ELIGIBLE PERSONS Only persons who are employees of the Company and, except as expressly approved by the Committee, having three or more years of service, shall be eligible to receive Awards under the Plan ("Participants"). No Award shall be made to any member of the Committee or any other non-employee director of the Company. 6. PURCHASE PRICE OF STOCK OPTIONS The purchase price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the shares of Common Stock on the date of grant. "Fair Market Value" as used in the Plan shall equal the mean of the high and low price of the Common Stock on the New York Stock Exchange on the applicable date. 7. STOCK OPTION TERM AND TYPE The term of any Stock Option as determined by the Committee shall not exceed 10 years and one month from the date of grant and shall expire as of the close of business on the last day of the designated term, unless terminated earlier under the provisions of the Plan. Stock Option grants under the Plan shall be Non- Qualified Stock Options governed by section 83 of the Internal Revenue Code of 1986, as amended (the "Code"). 8. EXERCISE OF STOCK OPTIONS Except as provided in Sections 12 and 13 (Change of Control and Termination of Employment), each Stock Option may be exercised only after five years of the Participant's continued employment with the Company. An optionee exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company. At the time of purchase, the Participant shall tender the full purchase price of the shares purchased. Until such payment has been made and a certificate or certificates for the shares purchased has been issued in the Participant's name, the Participant shall possess no stockholder rights with respect to such shares. Payment of such purchase price shall be made to the Company, subject to any applicable rule or regulation adopted by the Committee: (i) in cash (including check, draft, money order or wire transfer made payable to the order of the Company); (ii) through the delivery of shares of Common Stock owned by the Participant; or (iii) by a combination of (i) and (ii) above. For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise. 9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS With respect to Awards of Restricted Stock and Restricted Stock Units, the Committee shall: (i) select Participants to whom Awards will be made, provided that Restricted Stock Units may only be awarded to those employees of the Company who are employed in a country other than the United States; (ii) determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded; (iii) determine the length of the restricted period, which shall be no less than three years; (iv) determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and (v) determine any restrictions other than those set forth in this Section 9. Any shares of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of stock certificates, and may be held in escrow. Subject to the restrictions set forth in this Section 9, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions. Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to and register in the name of each such Participant a certificate for that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock. Subject to the provisions of Section 12, for awards of Restricted Stock or Restricted Stock Units which have a deposit requirement, a Participant will be eligible to vest only in those shares of Restricted Stock or Restricted Stock Units for which personally-owned shares are on deposit with the Company as of the date the Participant's employment with the Company terminates. 10. NON-TRANSFERABILITY Except as otherwise provided in Section 9, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged, or otherwise disposed of during the restricted period. No Stock Options granted under this Plan shall be transferable by a Participant otherwise than (i) by the Participant's last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant's lifetime only by the Participant or his or her guardian or legal representative. Other than as set forth herein, no Award under the Plan shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. 11. WITHHOLDING TAXES It shall be a condition to the obligation of the Company to deliver shares upon the exercise of a Stock Option, the vesting of Restricted Stock or Restricted Stock Units and the corresponding issuance of shares of unrestricted Common Stock, that the Participant pay to the Company cash in an amount equal to all federal, state, local and foreign withholding taxes required to be collected in respect thereof. Notwithstanding the foregoing, to the extent permitted by law and pursuant to such rules as the Committee may adopt, a Participant may authorize the Company to satisfy any such withholding requirement by directing the Company to withhold from any shares of Common Stock to be issued, all or a portion of such number of shares as shall be sufficient to satisfy the withholding obligation, provided that in the case of the vesting of Restricted Stock or Restricted Stock Units, the number of shares of Common Stock to be issued equals or exceeds 500. 12. CHANGE OF CONTROL Each outstanding Stock Option shall become immediately and fully exercisable for a period of 6 months following the date of the following occurrences, each constituting a "Change of Control": (i) if any person (including a group as defined in Section 13(d)(3) of the 1934 Act) becomes, directly or indirectly, the beneficial owner of 20% or more of the shares of the Company entitled to vote for the election of directors; (ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event cease to constitute a majority of the Company's Board of Directors; or (iii) the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs. After such 6-month period the normal option exercise provisions of the Plan shall govern. In the event a Participant is terminated as an employee of the Company within 2 years after any of the events specified in (i), (ii) or (iii), his or her outstanding Stock Options at that date of termination shall become immediately exercisable for a period of 3 months. With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights: (a) said deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the Participant; and (b) any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse. In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control, and any deposited shares of Common Stock shall be promptly returned to the Participant. 13. TERMINATION OF EMPLOYMENT A. Termination of Employment If the Participant's employment by the Company terminates for any reason other than as specified herein or in subsections B, C or D, the Participant's Stock Options shall terminate 3 months after such termination and all shares of Restricted Stock and all Restricted Stock Units which are subject to restriction as of said termination date shall be forfeited by the Participant to the Company. In the event a Participant's employment with the Company is terminated for the convenience of the Company, as determined by the Committee, the Committee, in its sole discretion, may vest such Participant in all or any portion of outstanding Stock Options (which shall become exercisable) and/or shares of Restricted Stock or Restricted Stock Units awarded to such Participant, effective as of the date of such termination and if, at the time of such termination the sum of the Participant's age and service with the Company equals or exceeds 70, the Committee, in its sole discretion, may also extend the period during which such Participant's outstanding Stock Options, except those granted to Participants who are subject to Section 16 of the 1934 Act, may be exercised until the expiration of the Stock Options in accordance with their original terms. B. Death If a Participant should die while employed by the Company, any Stock Option previously granted under this Plan may be exercised by the person designated in such Participant's last will and testament or, in the absence of such designation, by the Participant's estate, to the full extent that such Stock Option could have been exercised by such Participant immediately prior to death. Further, with respect to outstanding Stock Option grants which, as of the date of death, are not yet exercisable, any such option grant shall vest and become exercisable in a pro-rata amount, based on the full months of employment completed during the full vesting period of the Stock Option from the date of grant to the date of death. With respect to Stock Option grants which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant should die while employed by the Company, said Stock Options may be exercised as provided in the first paragraph of this Section 13B, subject to the following special conditions: (i) any restrictions on the sale of shares issued in respect of any such Stock Option shall cease; and (ii) any owned Common Stock deposited by the Participant pursuant to said grant shall be promptly returned to the person designated in such Participant's last will and testament or, in the absence of such designation, to the Participant's estate, and all requirements regarding deposit by the Participant shall be terminated. A Participant who dies during any applicable restricted period shall vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of death, as a percentage of the applicable restricted period. C. Retirement The Committee shall determine, at the time of grant, the treatment of the Stock Option upon the retirement of the Participant. Unless other terms are specified in the original Stock Option grant, if the termination of employment is due to a Participant's retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and conditions of the Stock Option, including any Stock Option granted under the Plan prior to such retirement. With respect to Stock Option grants which require the deposit of owned Common Stock as a condition to obtaining rights, any restrictions on the sale of shares issued in respect of any such Stock Option shall lapse at the date of any such retirement. A Participant who retires on or after the date he or she attains age 65 shall fully vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the date of retirement (unless any such award specifically provides otherwise). A Participant who takes early retirement (after age 55, but prior to age 65) during any applicable restricted period may elect either of the following alternatives with respect to Restricted Stock or Restricted Stock Units (unless any such award specifically provides otherwise): (a) Leave owned shares on deposit with the Company and vest in all shares of Restricted Stock or Restricted Stock Units, effective as of the earlier of the date the Participant attains age 65 or the termination date of the applicable restricted period; or (b) Withdraw owned shares and vest in a proportionate number of shares of Restricted Stock or Restricted Stock Units, effective as of the date the shares on deposit are withdrawn. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of early retirement, as a percentage of the applicable restricted period. D. Spin-offs If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan. 14. AMENDMENTS OF THE PLAN The Plan may be terminated, modified, or amended by the Board of Directors of the Company. The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, the Committee may at any time terminate, modify, or suspend the operation of the Plan, provided that no action shall be taken by the Board of Directors or the Committee without the approval of the stockholders of the Company which would: (i) materially increase the number of shares which may be issued under the Plan; (ii) materially increase the benefits accruing to Participants under the Plan; or (iii) materially modify the requirements as to eligibility for participating in the Plan. The Board of Directors shall have authority to cause the Company to take any action related to the Plan which may be required to comply with the provisions of the Securities Act of 1933, as amended, the 1934 Act, and the rules and regulations prescribed by the Securities and Exchange Commission. Any such action shall be at the expense of the Company. No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to a prior Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan. 15. FOREIGN JURISDICTIONS The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan. 16. NOTICE All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to: General Mills, Inc. Number One General Mills Boulevard Minneapolis, Minnesota 55426 Attention: Corporate Compensation Effective September 20, 1993 As Amended June 27, 1994 EX-11 12 STMT. OF DETERMINATION OF COMMON SHARES & EQV EXHIBIT 11 GENERAL MILLS, INC. STATEMENT OF DETERMINATION OF COMMON SHARES AND COMMON SHARE EQUIVALENTS (in millions)
Weighted average number of common shares and common share equivalents assumed outstanding For the Fiscal Years Ended May 29, 1994 May 30, 1993 May 31, 1992 Weighted average number of common shares outstanding, excluding common stock held in treasury (a) 159.1 163.1 165.7 Common share equivalents resulting from the assumed exercise of certain stock options (b) 2.4 * 3.3 * 3.3 * Total common shares and common share equivalents 161.5 166.4 169.0 Notes: (a) Beginning balance of common stock is adjusted for changes in the number of shares outstanding, weighted monthly 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 for the period concerned. * Common share equivalents are not material. As a result, earnings per share have been computed using the weighted average of common shares outstanding of 159.1 million, 163.1 million and 165.7 million for fiscal 1994, 1993 and 1992, respectively.
EX-12 13 STATEMENT OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 GENERAL MILLS, INC. RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended May 29, May 30, May 31, May 26, May 27, 1994 1993 1992 1991 1990 Ratio of Earnings to Fixed Charges. . . . 6.16 7.79 8.58 7.82 7.66
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. EX-13 14 1994 ANNUAL REPORT TO STOCKHOLDERS EXHIBIT 13 MANAGEMENT DISCUSSION OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION General Mills' financial goal is to achieve performance that places us in the top 10 percent of major American companies, ranked by the combination of growth in earnings per share and return on capital. Over the past five years, our earnings per share have grown at a 13 percent compound rate and our after-tax return on capital has averaged 21 percent, both before unusual items. Meeting our financial objectives is the key to providing superior returns to shareholders. Results of Operations In 1994, sales rose 5 percent to $8.52 billion. Earnings per share from continuing operations were $2.95 compared to $3.10 in 1993. After-tax earnings were $469.7 million compared to $506.1 million a year ago. Results for 1994 include an unusual after-tax charge of $87.1 million, or 55 cents per share, to cover estimated costs associated with the actions of an independent licensed contractor who made an improper pesticide substitution in treating some of our oat supplies. See note two to the consolidated financial statements for further discussion. We voluntarily suspended production and shipments of oat- containing products for a period of time during the first quarter of 1995 while resolving this issue; therefore, there will be a negative impact on 1995 first-quarter volume and earnings. There was an unusual net after-tax charge in 1993 of $57.3 million, or 35 cents per share, primarily for restructuring actions at consumer foods manufacturing facilities as well as selected restaurant unit closings. Segment operating results are summarized in note eighteen to the consolidated financial statements on page 32. Consumer Foods' sales grew 3 percent in 1994 to $5.55 billion with domestic packaged foods unit volume increasing 3 percent. Operating profits decreased 1 percent excluding unusual items from both years. In 1994, there was an unusual charge of $146.9 million related to the improper pesticide application as noted above. Included in operating profits for 1993 were unusual items totaling $33.4 million for increasing manufacturing productivity, and our share of streamlining and tax-reorganization costs associated with the formation of Snack Ventures Europe (SVE), our joint venture with PepsiCo Foods International. Including the unusual items, operating profits for 1994 decreased to $653.1 million. Big G's 1994 operating profit decline reflected the year-long cereal market promotional escalation and the fourth-quarter impact of our pricing and promotional actions. In a departure from recent cereal industry practices, the Company announced actions in April 1994 to reduce spending on inefficient cereal couponing and price promotion, and to reduce prices on our largest cereal brands by an average of 11 percent. These actions were designed to deliver consumer value more directly and efficiently, and are anticipated to have positive profit impact in 1995, but are expected to be volume and market share neutral. Yoplait yogurt, Betty Crocker Products, Gorton's seafood and Canada Foods posted double-digit operating profit gains for the year. SVE showed an excellent increase in operating profits and volume, and expanded beyond its original six European markets in Italy. CPW, our cereal joint venture with Nestle, continued to demonstrate progress in existing markets and expanded operations to Belgium, Switzerland, Austria, Greece and Chile during the year. Consumer Foods' operating profits include a loss of $30.3 million in 1994 and $30.6 million in 1993 for General Mills' share of CPW's losses. The developmental spending burden for CPW is expected to moderate as initial operations in European markets approach profitability in 1995. In 1993, Consumer Foods' sales and operating profits grew 3 percent and 11 percent (excluding unusual items), respectively, led by Betty Crocker Products, Big G cereals, Yoplait yogurt, Foodservice, Gorton's seafood and Canada Foods. Restaurants' sales grew 8 percent in 1994 to $2.96 billion. An operating profit gain of 3 percent before unusual items in the prior year was achieved despite disappointing results at The Olive Garden and the effects of unprecedented harsh winter weather. A net total of 115 new restaurants were opened in North America. Red Lobster's profits increased strongly as new menu items, improved service and a new decor package favorably influenced results. The Olive Garden's profits were lower, due to a decline in average unit sales that resulted primarily from not updating the successful concept soon enough to meet changing consumer expectations. China Coast commenced broader market expansion in 1994. Twenty new units were opened during the year with plans calling for faster expansion during 1995. Including the unusual items for last year, operating profits increased 21 percent. In 1993, Restaurants' sales and operating profits before unusual items increased 8 percent and 11 percent, respectively. Results reflected good gains by The Olive Garden and good overall performance by Red Lobster. Together, The Olive Garden and Red Lobster added 112 new units in North America. Results for Canadian restaurants improved versus the prior year, but still trailed expectations. A charge of $30.6 million was recorded in 1993 for closing 31 Red Lobster and The Olive Garden units in the United States and Canada. Including the charge, operating profits decreased 5 percent. Interest expense in 1994 was $115.6 million, an increase of $27.3 million from the prior year due to borrowing to fund purchases of common shares for treasury. The 1993 interest expense of $88.3 million was $12.4 million greater than 1992 primarily due to funding purchases of common shares for treasury. Interest income of $14.7 million in 1993 was $3.0 million less than the prior year reflecting lower rates. The effective tax rates in 1994 and 1993 were 37.6 percent and 40.0 percent, respectively. Excluding the unusual items in both years, the rates were 38.1 percent and 38.2 percent in 1994 and 1993, respectively. The federal tax law changes in 1993 did not have a significant impact on 1994, but are expected to have a slight negative impact in the future. It is management's view that changes in the rate of inflation have not had a significant effect on profitability from continuing operations over the three most recent years. Management attempts to minimize the effects of inflation through appropriate planning and operating practices. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," in May 1993. The American Institute of Certified Public Accountants issued Statement of Position 93-7, "Reporting on Advertising Costs," in December 1993. Neither of these statements will have a significant impact on the Company when adopted. Financial Condition The Company intends to manage its businesses and financial ratios so as to maintain a strong "A" bond rating, which allows access to financing at reasonable costs. Currently, General Mills' publicly issued long-term debt carries "A1" (Moody's Investors Services, Inc.) and "A+" (Standard & Poor's Corporation) ratings. Our commercial paper has ratings of "P-1" (Moody's) and "A-1" (Standard & Poor's) in the United States and "R-1 (middle)" in Canada from Dominion Bond Rating Service. General Mills' financial condition remains strong. As important measures of financial strength, the Company focuses on the cash flow to debt and fixed charge coverage ratios, which were 46 percent and 6.2 times, respectively, in 1994. The purchase of 2.4 million shares of common stock for our treasury increased debt and reduced equity by $145.7 million, contributing to a debt to capital ratio of 65 percent. The composition of the Company's capital structure is shown in the accompanying table. Capital Structure
May 29, May 30, In Millions 1994 1993 Notes payable $ 433.3 $ 339.6 Current portion of long-term debt 115.2 64.3 Long-term debt 1,417.2 1,268.3 Deferred income taxes - tax leases 189.8 195.6 Total debt 2,155.5 1,867.8 Debt adjustments: Leases - debt equivalent 434.4 428.8 Domestic cash equivalents - (109.4) Marketable investments (196.1) (137.0) Adjusted debt 2,393.8 2,050.2 Common stock subject to put options 122.0 - Stockholders' equity 1,151.2 1,218.5 Total capital $3,667.0 $3,268.7
We selectively use derivatives to hedge financial risks, primarily interest rate volatility and foreign currency fluctuations. The derivatives are generally treated as hedges for accounting purposes. We manage our debt structure through both issuance of fixed and floating-rate debt as well as the use of derivatives. The debt equivalent of our leases and deferred income taxes related to tax leases are both fixed-rate obligations. The table below, when reviewed in conjunction with the capital structure table, shows the composition of our debt structure including the impact of derivatives. Debt Structure
In Millions May 29, 1994 May 30, 1993 Floating-rate debt $ 733.4 31% $ 534.9 26% Fixed-rate debt 1,036.2 43 890.9 43 Leases - debt equivalent 434.4 18 428.8 21 Deferred income taxes - tax leases 189.8 8 195.6 10 Total debt $2,393.8 100% $2,050.2 100%
Commercial paper has historically been our primary source of short-term financing. Bank credit lines are maintained to ensure availability of short- term funds on an as-needed basis. In June 1994, our fee-paid credit lines were increased from $500.0 million to $650.0 million. Our shelf registration statement permits issuance of up to $222.1 million net proceeds in unsecured debt securities. The shelf registration authorizes a medium-term note program that provides additional flexibility in accessing the debt markets. Sources and uses of cash in the past three years are shown in the accompanying table. Cash Sources (Uses)
In Millions 1994 1993 1992 From operations $ 830.7 $ 859.9 $ 771.6 Fixed assets and other investments-net (732.1) (714.4) (725.7) From dispositions of businesses - - 77.7 Change in marketable investments (50.1) (69.7) - Increase in outstanding debt-net 287.7 585.7 91.0 Common stock issued 13.3 32.3 39.3 Treasury stock purchases (145.7) (420.2) (40.1) Dividends paid (299.4) (274.8) (245.2) Other (4.2) (7.4) (7.9) Decrease in cash and cash equivalents $ (99.8) $ (8.6) $ (39.3)
Operations generated $29.2 million less cash in 1994 than in the previous year primarily due to an increase in inventory levels. We purchased various marketable investments to take advantage of interest rate spreads. Capital expenditures in 1995 are estimated to be approximately $525 million; an additional $50 million capital investment is anticipated for our joint ventures, principally CPW. In July 1994, the Company purchased 976,000 shares of common stock for $56.4 million as privately placed put options were exercised. The unusual item recorded in 1994 will be substantially included in 1995 as cash outflow. As a result, the Company is anticipating a net cash outflow in 1995 and will borrow either short- or long-term, depending on market conditions. INDEPENDENT AUDITORS' REPORT The Stockholders and the Board of Directors of General Mills, Inc.: We have audited the accompanying consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 29, 1994 and May 30, 1993, and the related consolidated statements of earnings and cash flows for each of the fiscal years in the three-year period ended May 29, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of General Mills, Inc. and subsidiaries as of May 29, 1994 and May 30, 1993, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended May 29, 1994 in conformity with generally accepted accounting principles. As discussed in notes thirteen and fifteen to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits, and No. 109, Accounting for Income Taxes, in fiscal 1994. KPMG PEAT MARWICK Minneapolis, Minnesota July 29, 1994 CONSOLIDATED STATEMENTS OF EARNINGS
Fiscal Year Ended May 29, May 30, May 31, In Millions, Except per Share Data 1994 1993 1992 Continuing Operations: Sales $8,516.9 $8,134.6 $7,777.8 Costs and Expenses: Cost of sales 4,458.2 4,297.6 4,123.2 Selling, general and administrative 2,755.5 2,578.2 2,516.3 Depreciation and amortization 303.8 274.2 247.4 Interest, net 99.2 73.6 58.2 Unusual expenses (income) 146.9 67.0 (11.8) Total Costs and Expenses 7,763.6 7,290.6 6,933.3 Earnings from Continuing Operations before Taxes 753.3 844.0 844.5 Income Taxes 283.6 337.9 338.9 Earnings from Continuing Operations 469.7 506.1 505.6 Discontinued Operations after Taxes - - (10.0) Cumulative Effect to May 31, 1993 of Accounting Changes .2 - - Net Earnings $ 469.9 $ 506.1 $ 495.6 Earnings per Share: Continuing operations $ 2.95 $ 3.10 $ 3.05 Discontinued operations - - (.06) Cumulative effect of accounting changes - - - Net Earnings per Share $ 2.95 $ 3.10 $ 2.99 Average Number of Common Shares 159.1 163.1 165.7 See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
May 29, May 30, In Millions 1994 1993 Assets Current Assets: Cash and cash equivalents $ .2 $ 100.0 Receivables, less allowance for doubtful accounts of $4.4 in 1994 and $4.3 in 1993 309.7 287.4 Inventories 488.3 439.0 Prepaid expenses and other current assets 110.6 108.2 Deferred income taxes 220.4 142.3 Total Current Assets 1,129.2 1,076.9 Land, Buildings and Equipment, at cost 3,092.6 2,859.6 Other Assets 976.5 714.3 Total Assets $5,198.3 $4,650.8 Liabilities and Equity Current Liabilities: Accounts payable $ 650.4 $ 617.0 Current portion of long-term debt 115.2 64.3 Notes payable 433.3 339.6 Accrued taxes 178.3 139.7 Accrued payroll 165.6 158.8 Other current liabilities 289.3 239.4 Total Current Liabilities 1,832.1 1,558.8 Long-term Debt 1,417.2 1,268.3 Deferred Income Taxes 297.4 262.0 Deferred Income Taxes -- Tax Leases 189.8 195.6 Other Liabilities 188.6 147.6 Total Liabilities 3,925.1 3,432.3 Common Stock Subject to Put Options 122.0 - Stockholders' Equity: Cumulative preference stock, none issued - - Common stock, 204.2 shares issued 251.0 358.7 Retained earnings 2,457.9 2,284.5 Less common stock in treasury, at cost, shares of 45.7 in 1994 and 43.7 in 1993 (1,334.4) (1,196.4) Unearned compensation and other (160.2) (167.5) Cumulative foreign currency adjustment (63.1) (60.8) Total Stockholders' Equity 1,151.2 1,218.5 Total Liabilities and Equity $5,198.3 $4,650.8 See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended May 29, May 30, May 31, In Millions 1994 1993 1992 Cash Flows - Operating Activities: Earnings from continuing operations $469.9 $506.1 $505.6 Adjustments to reconcile earnings to cash flow: Depreciation and amortization 303.8 274.2 247.4 Deferred income taxes (27.8) 40.8 13.5 Change in current assets and liabilities, net of effects from business acquired (72.0) 2.5 20.0 Unusual expenses 146.9 57.3 - Other, net 15.2 (15.0) 3.9 Cash provided by continuing operations 836.0 865.9 790.4 Cash used by discontinued operations (5.3) (6.0) (18.8) Net Cash Provided by Operating Activities 830.7 859.9 771.6 Cash Flows - Investment Activities: Purchases of land, buildings and equipment (559.5) (623.8) (695.3) Investments in businesses, intangibles and affiliates, net of dividends (140.8) (55.8) (30.6) Purchases of marketable investments (83.8) (82.8) (6.9) Proceeds from sale of marketable investments 33.7 13.1 6.9 Proceeds from disposal of land, buildings and equipment 7.2 5.2 8.1 Proceeds from dispositions - - 77.7 Other, net (39.0) (40.0) (7.9) Net Cash Used by Investment Activities (782.2) (784.1) (648.0) Cash Flows - Financing Activities: Increase in notes payable 93.2 207.6 150.3 Issuance of long-term debt 273.6 422.6 188.7 Payment of long-term debt (79.1) (44.5) (248.0) Common stock issued 13.3 32.3 39.3 Purchases of common stock for treasury (145.7) (420.2) (40.1) Dividends paid (299.4) (274.8) (245.2) Other, net (4.2) (7.4) (7.9) Net Cash Used by Financing Activities (148.3) (84.4) (162.9) Decrease in Cash and Cash Equivalents (99.8) (8.6) (39.3) Cash and Cash Equivalents - Beginning of Year 100.0 .5 39.8 Reclassification of Marketable Investment - 108.1 - Cash and Cash Equivalents - End of Year $ .2 $100.0 $ .5 Cash Flow from Changes in Current Assets and Liabilities: Receivables $(17.3) $(44.7) $ 2.1 Inventories (111.0) 28.7 .6 Prepaid expenses and other current assets (5.1) 4.6 (8.9) Accounts payable 33.2 9.0 54.5 Other current liabilities 28.2 4.9 (28.3) Change in Current Assets and Liabilities $(72.0) $ 2.5 $ 20.0 See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note One: Summary of Significant Accounting Policies A. Principles of Consolidation The consolidated financial statements include the following domestic and foreign operations: parent company and 100% owned subsidiaries, and General Mills' investment in and share of net earnings or losses of 20-50% owned companies. Our fiscal year ends on the last Sunday in May. Years 1994 and 1993 each consisted of 52 weeks and 1992 consisted of 53 weeks. B. Land, Buildings, Equipment and Depreciation Buildings and equipment are depreciated over estimated useful lives ranging from three to 50 years, primarily using the straight-line method. Accelerated depreciation methods are generally used for income tax purposes. When an item is sold or retired, the accounts are relieved of its cost and related accumulated depreciation; the resulting gains and losses, if any, are recognized. C. Inventories Inventories are valued at the lower of cost or market. Certain domestic inventories are valued using the LIFO method, while other inventories are generally valued using the FIFO method. D. Intangible Assets Goodwill represents the difference between purchase prices of acquired companies and the related fair values of net assets acquired and accounted for by the purchase method of accounting. Goodwill acquired after October 1970 is amortized on a straight- line basis over 40 years or less. Intangible assets include an amount that offsets a minimum liability recorded for a pension plan with assets less than accumulated benefits as required by Financial Accounting Standard No. 87. The costs of patents, copyrights and other intangible assets are amortized evenly over their estimated useful lives. The Audit Committee of the Board of Directors annually reviews goodwill and other intangibles. At its meeting on April 25, 1994, the Board of Directors affirmed that the remaining amounts of these assets have continuing value. E. Research and Development All expenditures for research and development are charged against earnings in the year incurred. The charges for 1994, 1993 and 1992 were $63.6 million, $60.1 million and $62.1 million, respectively. F. Earnings per Share Earnings per share has been determined by dividing the appropriate earnings by the weighted average number of common shares outstanding during the year. Common share equivalents were not material. G. Foreign Currency Translation For most foreign operations, local currencies are considered the functional currency. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average exchange rates prevailing throughout the period. Translation effects are accumulated in the foreign currency adjustment in stockholders' equity. Gains and losses from foreign currency transactions are generally included in net earnings for the period. H. Interest Rate Swap Agreements Any interest rate differential on an interest rate swap is recognized as an adjustment of interest expense or income over the term of the agreement. We enter into these agreements with a diversified group of highly-rated financial institutions. We are exposed to credit loss in the event of nonperformance by the other parties to these agreements. However, we do not anticipate any losses. The fair value of interest rate swaps is the estimated amount we would receive or pay to replace the swap agreements, taking into consideration current interest rates. This estimated amount was immaterial at May 29, 1994. I. Statements of Cash Flows For purposes of the statement of cash flows, we consider all investments purchased with a maturity of three months or less to be cash equivalents. Note Two: Unusual Items In 1994, we recorded an after-tax charge of $87.1 million ($.55 per share) to cover estimated costs associated with the actions of an independent licensed contractor who made an improper substitution of a pesticide in treating some of our oat supplies, a portion of which were used in production. While the substitution presented no consumer health or safety issues, the pesticide had not been registered for use on oats and thus its application represented a FDA regulatory violation. Due to a lengthy government approval process for registration, the affected finished oat-products inventory would be past the Company's freshness standard dates. Therefore, the charge includes costs associated with disposition of the finished oat products and oats inventory as well as other related expenses. Several consumer class action lawsuits have been filed in connection with this matter. The Company believes these lawsuits are without merit and will not have any material impact on the financial condition of the Company. We recorded restructuring charges in 1993 related primarily to restaurant closings in the U.S. and Canada, costs for increasing Consumer Foods manufacturing productivity and efficiency, and our share of streamlining and tax reorganization costs associated with the formation of Snack Ventures Europe. These charges resulted in a reduction in net earnings of $57.3 million ($.35 per share). These actions were substantially completed in 1994. In 1992, we recognized a gain on the sale of the stock of our Spanish frozen food subsidiary, Preparados y Congelados Alimenticios, S.A. (PYCASA) and also recorded charges primarily related to restructuring of Betty Crocker packaged mixes production, European food operations, and Consumer Foods national sales organization, and the call of our 9 3/8% sinking fund debentures. These transactions resulted in no net effect on earnings. Note Three: Foreign Exchange We selectively hedge the potential effect of foreign currency fluctuations related to operating activities and net investments in foreign operations by entering into foreign exchange contracts with major financial institutions. Realized and unrealized gains and losses on contracts that hedge operating activities are recognized currently in net earnings. Realized and unrealized gains and losses on contracts that hedge net investments are recognized in the foreign currency adjustment in stockholders' equity. The components of our net foreign investment exposure by geographic region are as follows:
May 29, May 30, In Millions 1994 1993 Europe $118.3 $103.9 North/South America 43.3 41.7 Asia 12.1 13.0 Total exposure 173.7 158.6 After-tax hedges (30.2) (134.1) Net exposure $143.5 $ 24.5
At May 29, 1994, we had forward contracts maturing in 1995 to sell $59.5 million and purchase $7.5 million of foreign currencies. We also had foreign currency put options expiring in 1995 of $26.8 million. The fair value of these contracts is based on third-party quotes and is immaterial at May 29, 1994. Note Four: Acquisition and Investments We purchased the Colombo yogurt business for approximately $75.0 million from a U.S. subsidiary of Bongrain S.A. effective December 1993. Colombo has a refrigerated yogurt business in the Northeast and is a leading producer of soft frozen yogurt, as well as premium hard pack frozen yogurt. The transaction did not have any material effect on our 1994 earnings. During 1994 and 1993, we made capital contributions and advances of $48.3 million and $66.1 million, respectively, to Cereal Partners Worldwide (CPW), our joint venture with Nestle, S.A. In 1993, we entered into a joint venture, Snack Ventures Europe (SVE), with PepsiCo Foods International to merge six existing Continental European snack operations (three from each company) into one company to develop, manufacture and market snack foods. We own 40.5 percent of SVE. The merger was effective July 1992. We reclassified the net individual assets and liabilities of our operations to investment in affiliates and excluded the noncash transaction from our statement of cash flows. Note Five: Inventories The components of inventories are as follows:
May 29, May 30, In Millions 1994 1993 Raw materials, work in process and supplies $245.0 $206.2 Finished goods 249.3 252.6 Grain 47.0 40.5 Reserve for LIFO valuation method (53.0) (60.3) Total inventories $488.3 $439.0
At May 29, 1994 and May 30, 1993, respectively, inventories of $245.1 million and $244.5 million were valued at LIFO. Note Six: Balance Sheet Information The components of certain balance sheet items are as follows:
May 29, May 30, In Millions 1994 1993 Land, Buildings and Equipment: Land $ 360.9 $ 302.3 Buildings 1,655.6 1,452.6 Equipment 2,373.8 2,048.1 Construction in progress 299.5 436.5 Total land, buildings and equipment 4,689.8 4,239.5 Less accumulated depreciation (1,597.2) (1,379.9) Net land, buildings and equipment $3,092.6 $2,859.6 Other Assets: Prepaid pension $ 288.0 $ 257.4 Marketable investments, at cost 196.1 137.0 Investments in and advances to affiliates 188.3 163.9 Intangible assets 157.3 70.6 Miscellaneous 146.8 85.4 Total other assets $ 976.5 $ 714.3
Based on quoted market prices, the fair value of the marketable investments was $231.4 million at May 29, 1994 and $186.9 million at May 30, 1993. We have interest rate and currency swap agreements related to marketable investments that convert fixed interest rates to variable interest rates and foreign currencies to U.S. dollars on a notional amount of $81.9 million. These agreements mature from December 1994 to January 2001. Note Seven: Notes Payable The components of notes payable are as follows:
May 29, May 30, In Millions 1994 1993 U.S. commercial paper $339.2 $255.5 Canadian commercial paper 83.3 75.9 Financial institutions 260.8 208.2 Amount reclassified to long-term debt (250.0) (200.0) Total notes payable $433.3 $339.6
To ensure availability of funds, we maintain bank credit lines sufficient to cover our outstanding commercial paper. As of May 29, 1994, we had $500.0 million fee-paid lines and $179.4 million uncommitted, no-fee lines available in the U.S. and Canada. In addition, other foreign subsidiaries had unused credit lines of $37.1 million. We have a revolving credit agreement expiring in 1999 that provides for the fee-paid credit lines. This agreement provides us with the ability to refinance short-term borrowings on a long- term basis, and therefore we have reclassified a portion of our notes payable to long-term debt. We occasionally enter into swap agreements to lock in interest rates on notes payable that may result in fixed rates higher than short-term rates. At May 29, 1994 we had interest rate swap agreements on a notional amount of $145.0 million that convert an average interest rate of 2.8% to an average interest rate of 5.7%. These agreements mature from June 1994 to August 1994. At May 30, 1993 we had interest rate swap agreements on a notional amount of $169.0 million that converted an average interest rate of 3.3% to an average interest rate of 7.9%. We purchased and sold interest rate cap agreements, expiring in May 1995, on a notional amount of $200.0 million with strike rates of 5.0% and 6.5%, respectively. These agreements limit our exposure to an increase in short-term interest rates. If rates are between 5.0-6.5%, our rate is limited to 5.0%; if rates are greater than 6.5%, our rate will be 150 basis points less than market rates until the agreements expire. Note Eight: Long-term Debt
May 29, May 30, In Millions 1994 1993 4.3% to 9.1% medium-term notes, due 1994 to 2033 $1,080.3 $ 918.3 Zero coupon notes, yield 11.1%, $327.0 due August 15, 2013 41.4 47.1 ESOP loan guaranty, variable rate (3.7% at May 29, 1994), due December 31, 2007 50.0 50.0 8.3% ESOP loan guaranty, due through June 30, 2007 78.3 82.0 Zero coupon notes, yield 11.7%, $64.4 due August 15, 2004 20.2 18.0 Notes payable, reclassified 250.0 200.0 Other 12.2 17.2 1,532.4 1,332.6 Less amounts due within one year (115.2) (64.3) Total long-term debt $1,417.2 $1,268.3
Our shelf registration statement permits the issuance of up to $222.1 million net proceeds in unsecured debt securities to reduce short-term debt and for other general corporate purposes. This registration includes a medium-term note program that allows us to issue debt quickly for various amounts and at various rates and maturities. In 1994, we issued $217.9 million of debt under our medium- term note program with maturities from one to 40 years and interest rates from 4.3% to 7.3%. In 1993, $366.7 million of debt was issued under this program with maturities from one to 30 years and interest rates from 3.5% to 8.6%. We had interest rate swap agreements that convert an average interest rate of 5.5% to an average interest rate of 3.2% on $162.9 million notional amount of medium-term notes. These agreements mature from October 1994 to January 1999. In 1994, we sold a swap option that gives the holder the right, if exercised, to receive a fixed payment of 6.8% and pay a floating rate based on commercial paper on a notional amount of $21.3 million from February 1995 until February 1997. At May 30, 1993 we had interest rate swap agreements that converted an average interest rate of 5.4% to an average interest rate of 2.9% on $120.0 million notional amount of medium-term notes. In 1992, we called our 9 3/8% sinking fund debentures due March 1, 2009 (see note two). This transaction resulted in a decrease in net earnings of $3.5 million ($.02 per share). The Company has guaranteed the debt of the Employee Stock Ownership Plans; therefore, the loans are reflected on our consolidated balance sheets as long-term debt with a related offset in stockholders' equity, "Unearned compensation and other." Based on borrowing rates currently available for debt with similar terms and average maturities, the fair value of our long- term debt, excluding current portion, was $1,476.4 million at May 29, 1994 and $1,413.4 million at May 30, 1993. The sinking fund and principal payments due on long-term debt are (in millions) $115.2, $72.0, $94.2, $101.0 and $99.7 in years ending 1995, 1996, 1997, 1998 and 1999, respectively. The notes payable that are reclassified under our revolving credit agreement are not included in these principal payments. Our marketable investments include zero coupon U.S. Treasury securities. These investments are intended to provide the funds for the payment of principal and interest for the zero coupon notes due August 15, 2013 and 2004. Note Nine: Stock Options The following table contains information on stock options:
Average Option Shares Price per Share Granted 1994 4,868,098 $63.22 1993 3,384,144 66.64 1992 2,574,008 58.29 Exercised 1994 562,714 $31.08 1993 1,962,063 22.90 1992 1,026,760 19.64 Expired 1994 459,800 $62.56 1993 288,907 61.63 1992 175,804 39.12 Outstanding at year end 1994 18,009,478 $49.52 1993 14,163,894 44.50 1992 13,030,720 35.88 Exercisable at year end 1994 10,278,466 $38.73 1993 9,488,948 36.23 1992 8,938,384 28.71
A total of 10,622,403 shares (including 2,535,750 shares for salary replacement options and 321,164 shares for restricted stock) are available for grants of options or restricted stock to employees under our 1990 and 1993 stock plans through October 1, 1998. An additional 3,083,400 shares are available for grants on a one-for-one basis as common stock shares are repurchased by the Company. The options may be granted at a price not less than 100% of fair market value on the date the option is granted. Options now outstanding include some granted under the 1980, 1984 and 1988 option plans, under which no further options or other rights may be granted. All options expire within 10 years plus one month after the date of grant. The plans provide for full vesting of the option in the event there is a change of control. The 1993 plan permits awards of restricted stock to key employees subject to a restricted period and a purchase price, if any, to be paid by the employee as determined by the Compensation Committee of the Board of Directors. Most of the restricted stock awards require the employee to deposit personally owned shares (on a one-for-one basis) with the Company during the restricted period. In 1994, grants of 95,685 shares of restricted stock were made and on May 29, 1994, there were 188,822 of such shares outstanding. The 1988 plan also permitted the granting of performance units corresponding to stock options granted. The value of performance units will be determined by return on equity and growth in earnings per share measured against preset goals over three-year performance periods. For seven years after a performance period, holders may elect to receive the value of performance units (with interest) as an alternative to exercising corresponding stock options. On May 29, 1994, there were 2,894,984 outstanding options with corresponding performance units or performance unit accounts. A total of 52,300 shares are available for grants of options and restricted stock to non-employee directors until September 30, 1995 under a separate 1990 stock plan. Each newly elected non-employee director is granted an option to purchase 2,500 shares at fair market value on the date of grant. Options expire 10 years after the date of grant. Each year 400 shares of restricted stock will be awarded to each non-employee director, restricted until the later of the expiration of one year or completion of service on the Board of Directors. Note Ten: Stockholders' Equity and Put Options
$.10 Par Value Common Stock Cumulative (One Billion Shares Authorized) Unearned Foreign In Millions, Except Issued Treasury Retained Compensation Currency per Share Data Shares Amount Shares Amount Earnings and Other Adjustment Total Balance at May 26, 1991 204.2 $320.2 (39.1) $ (777.4) $1,795.5 $(177.6) $(47.2) $1,113.5 Net earnings 495.6 495.6 Cash dividends declared ($1.48 per share), net of income taxes of $3.1 (242.1) (242.1) Stock option, profit sharing and ESOP plans 23.4 1.1 21.5 44.9 Shares purchased on open market (.7) (47.0) (47.0) Unearned compensation related to restricted stock awards (4.3) (4.3) Earned compensation 9.6 9.6 Translation adjustments, net of income taxes of $.7 (6.7) (6.7) Amount charged to gain on sale of foreign operation 7.4 7.4 Balance at May 31, 1992 204.2 343.6 (38.7) (802.9) 2,049.0 (172.3) (46.5) 1,370.9 Net earnings 506.1 506.1 Cash dividends declared ($1.68 per share), net of income taxes of $4.2 (270.6) (270.6) Stock option, profit sharing and ESOP plans 15.1 1.3 19.7 34.8 Shares purchased on open market (6.3) (413.2) (413.2) Unearned compensation related to restricted stock awards (3.2) (3.2) Earned compensation 9.6 9.6 Minimum pension liability adjustment (1.6) (1.6) Translation adjustments, net of income tax benefit of $2.0 (14.3) (14.3) Balance at May 30, 1993 204.2 358.7 (43.7) (1,196.4) 2,284.5 (167.5) (60.8) 1,218.5 Net earnings 469.9 469.9 Cash dividends declared ($1.88 per share), net of income taxes of $2.9 (296.5) (296.5) Stock option, profit sharing and ESOP plans 8.0 .4 7.5 15.5 Shares purchased on open market (2.4) (145.7) (145.7) Put option premium 6.3 .2 6.5 Transfer of put options (122.0) (122.0) Unearned compensation related to restricted stock awards (3.9) (3.9) Earned compensation 9.6 9.6 Minimum pension liability adjustment 1.6 1.6 Translation adjustments, net of income taxes of $4.2 (2.3) (2.3) Balance at May 29, 1994 204.2 $251.0 (45.7) $(1,334.4) $2,457.9 $(160.2) $(63.1) $1,151.2
Cumulative preference stock of 5.0 million shares, without par value, is authorized but unissued. We have a shareholder rights plan that entitles each outstanding share of common stock to one-fourth of a right. Each right entitles the holder to purchase one one-hundredth of a share of cumulative preference stock (or, in certain circumstances, common stock or other securities), exercisable upon the occurrence of certain events. The rights are not transferable apart from the common stock until a person or group has acquired 20% or more, or makes a tender offer for 20% or more, of the common stock. If the Company is then acquired in a merger or other business combination transaction, each right will entitle the holder (other than the acquiring company) to receive, upon exercise, common stock of either the Company or the acquiring company having a value equal to two times the exercise price of the right. The rights are redeemable by the Board in certain circumstances and expire on March 7, 1996. At May 29, 1994, there were 39.6 million rights issued and outstanding. The Board of Directors has authorized the repurchase, from time to time, of common stock for our treasury, provided that the number of shares held in treasury shall not exceed 60.0 million. Through private placements, we issued put options that entitle the holder to sell shares of our common stock to us, at a specified price, if the holder exercises the option. In 1994, we issued put options for 2.6 million shares for $6.5 million in premiums. As of May 29, 1994, put options for 2.2 million shares remain outstanding at strike prices ranging from $50.00 to $59.99 per share with exercise dates from July 1994 to March 1995. The amount related to our potential obligation has been transferred from stockholders' equity to "Common Stock Subject to Put Options." Note Eleven: Interest Expense The components of net interest expense are as follows:
Fiscal Year In Millions 1994 1993 1992 Interest expense $121.7 $99.8 $89.5 Capitalized interest (6.1) (11.5) (13.6) Interest income (16.4) (14.7) (17.7) Interest expense, net $ 99.2 $73.6 $58.2
During 1994, 1993 and 1992, we paid interest (net of amount capitalized) of $99.0 million, $77.0 million and $70.7 million, respectively. Note Twelve: Retirement Plans We have defined benefit plans covering most employees. Benefits for salaried employees are based on length of service and final average compensation. The hourly plans include various monthly amounts for each year of credited service. Our funding policy is consistent with the funding requirements of federal law and regulations. Our principal plan covering salaried employees has a provision that any excess pension assets would be vested in plan participants if the plan is terminated within five years of a change in control. Plan assets consist principally of listed equity securities and corporate obligations, and U.S. government securities. Components of net pension income are as follows:
Fiscal Year Expense (Income) in Millions 1994 1993 1992 Service cost--benefits earned $ 19.1 $ 14.7 $ 14.2 Interest cost on projected benefit obligation 57.8 52.6 51.2 Actual return on plan assets (50.5) (136.6) (75.0) Net amortization and deferral (47.0) 38.3 (26.1) Net pension expense (income) $(20.6) $(31.0) $(35.7)
The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the benefit obligations were 8.8% and 4.6% in 1994, and 8.5% and 5.1% in 1993, respectively. The expected long-term rate of return on assets was 10.4%. The funded status of the plans and the amount recognized on the consolidated balance sheets (as determined as of May 31, 1994 and 1993) are as follows:
May 29, 1994 May 30, 1993 Assets Accumulated Assets Accumulated Exceed Benefits Exceed Benefits Accumulated Exceed Accumulated Exceed In Millions Benefits Assets Benefits Assets Actuarial present value of benefit obligations: Vested benefits $572.7 $ 24.1 $545.5 $ 12.1 Nonvested benefits 55.9 3.3 55.0 2.3 Accumulated benefit obligations 628.6 27.4 600.5 14.4 Projected benefit obligation 688.4 30.3 680.9 18.8 Plan assets at fair value 920.8 10.7 921.6 - Plan assets in excess of (less than) the projected benefit obligation 232.4 (19.6) 240.7 (18.8) Unrecognized prior service cost 31.4 2.9 40.1 .3 Unrecognized net loss 148.1 10.7 125.3 6.0 Recognition of minimum liability - (10.1) - (10.7) Unrecognized transition (asset) liability (130.6) 6.2 (148.7) 8.8 Prepaid (accrued) pension cost $281.3 $ (9.9) $257.4 $(14.4)
We have defined contribution plans covering salaried and non- union employees. Contributions are determined by matching a percentage of employee contributions. Such plans had net assets of $665.3 million at May 31, 1994. Expense recognized in 1994, 1993 and 1992 was $6.7 million, $9.6 million and $12.7 million, respectively. Within our defined contribution plans we have Employee Stock Ownership Plans (ESOPs). These ESOPs borrowed funds guaranteed by the Company with terms described in the long-term debt footnote, as well as originally borrowed $35.0 million from the Company at a variable interest rate. At May 29, 1994, the interest rate was 4.6% with outstanding amounts of $21.0 million due December 2014 and $7.2 million with sinking fund payments to June 2015. Compensation expense is recognized as contributions are accrued. Our contributions to the plans, plus the dividends accumulated on the common stock held by the ESOPs, are used to pay principal, interest and expenses of the plans. As loan payments are made, common stock is allocated to ESOP participants. In 1994, 1993 and 1992, the ESOPs incurred interest expense of $9.0 million, $9.6 million and $11.3 million, respectively, and used dividends received of $8.9 million, $8.2 million and $7.8 million and contributions received from the Company of $7.4 million, $7.4 million and $7.1 million, respectively, to pay principal and interest on their debt. Note Thirteen: Other Postretirement and Postemployment Benefits We sponsor several plans that provide health care benefits to the majority of our retirees. The salaried plan is contributory with retiree contributions based on years of service. We fund plans for certain employees and retirees on an annual basis. In 1994, 1993 and 1992 we contributed $38.3 million, $30.6 million and $4.2 million, respectively. Plan assets consist principally of listed equity securities and U.S. government securities. Components of the postretirement health care expense are as follows:
Fiscal Year Expense (Income) in Millions 1994 1993 1992 Service cost--benefits earned $ 5.6 $ 3.6 $3.5 Interest cost on accumulated benefit obligation 14.0 11.0 9.7 Actual return on plan assets (1.5) (3.9) (3.0) Net amortization and deferral (4.5) (1.0) (1.2) Net postretirement expense $13.6 $ 9.7 $9.0
The funded status of the plans and the amount recognized on our consolidated balance sheets are as follows:
May 29, 1994 May 30, 1993 Assets Accumulated Accumulated Exceed Benefits Benefits Accumulated Exceed Exceed In Millions Benefits Assets Assets Accumulated benefit obligations: Retirees $ 36.3 $48.7 $ 80.0 Fully eligible active employees 12.7 8.0 19.3 Other active employees 27.0 48.5 70.4 Accumulated benefit obligations 76.0 105.2 169.7 Plan assets at fair value 89.3 7.4 60.8 Accumulated benefit obligations in excess of (less than) plan assets (13.3) 97.8 108.9 Unrecognized prior service cost .1 12.2 14.3 Unrecognized net loss (28.1) (27.7) (51.1) Accrued (prepaid) postretirement benefits $(41.3) $82.3 $ 72.1
The discount rates used in determining the actuarial present value of the benefit obligations were 8.8% and 8.5% in 1994 and 1993, respectively. The expected long-term rate of return on assets was 10%. The health care cost trend rate increase in the per capita charges for benefits ranged from 6.2% to 9.8% for 1995 depending on the medical service category. The rates gradually decrease to 4.4% to 5.7% for 2007 and remain at that level thereafter. If the health care cost trend rate increased by one percentage point in each future year, the aggregate of the service and interest cost components of postretirement expense would increase for 1994 by $3.1 million and the accumulated benefit obligation as of May 29, 1994 would increase by $24.6 million. In 1994, we adopted Statement of Financial Accounting Standards (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). Note Fourteen: Profit-sharing Plans We have profit-sharing plans to provide incentives to key individuals who have the greatest potential to contribute to current earnings and successful future operations. These plans were approved by the Board of Directors upon recommendation of the Compensation Committee. The awards under these plans depend on profit performance in relation to pre-established goals. The plans are administered by the Compensation Committee, which consists solely of outside directors. Profit-sharing expense, including performance unit accruals, was $1.7 million, $7.3 million and $8.8 million in 1994, 1993 and 1992, respectively. Note Fifteen: Income Taxes We adopted SFAS No. 109, "Accounting for Income Taxes" as of May 31, 1993. The adoption of SFAS 109 changed our method of accounting for income taxes from the deferred method to the asset and liability method. Deferred income taxes reflect the differences between assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes measured using the current enacted tax rates. The cumulative effect of adoption was an increase in net earnings of $17.5 million ($.11 per share). The components of earnings before income taxes and the income taxes thereon are as follows:
Fiscal Year In Millions 1994 1993 1992 Earnings (loss) before income taxes: U.S. $746.4 $887.2 $818.3 Foreign 6.9 (43.2) 26.2 Total earnings before income taxes $753.3 $844.0 $844.5 Income taxes: Current: Federal $246.5 $243.1 $254.0 State and local 60.9 60.2 55.1 Foreign 4.0 (6.2) 16.3 Total current 311.4 297.1 325.4 Deferred (principally U.S.) (27.8) 40.8 13.5 Total income taxes $283.6 $337.9 $338.9
During 1994, income tax benefits of $3.5 million were allocated to stockholders' equity. These benefits were attributable to the exercise of employee stock options, dividends paid on unallocated ESOP shares and translation adjustments. During 1994, 1993 and 1992, we paid income taxes of $273.8 million, $268.3 million and $326.4 million, respectively. In prior years we purchased certain income tax items from other companies through tax lease transactions. Total current income taxes charged to earnings reflect the amounts attributable to operations and have not been materially affected by these tax leases. Actual current taxes payable on 1994, 1993 and 1992 operations were increased by approximately $10 million, $10 million and $8 million, respectively, due to the effect of tax leases. These tax payments do not affect taxes for statement of earnings purposes since they repay tax benefits realized in prior years. The repayment liability is classified as "Deferred Income Taxes - Tax Leases." The following table reconciles the U.S. statutory income tax rate with the effective income tax rate:
Fiscal Year 1994 1993 1992 U.S. statutory rate 35.0% 34.0% 34.0% State and local income taxes, net of federal tax benefits 5.0 5.2 4.9 Other, net (2.4) .8 1.2 Effective income tax rate 37.6% 40.0% 40.1%
The tax effects of temporary differences that give rise to deferred tax assets and liabilities at May 29, 1994 are as follows:
In Millions Accrued liabilities $129.1 Unusual charge for oats 59.8 Compensation and employee benefits 59.6 Disposition liabilities 37.5 Foreign tax loss carryforward 16.2 Other 13.6 Gross deferred tax assets 315.8 Depreciation 219.5 Prepaid pension asset 112.0 Intangible assets 12.7 Other 37.5 Gross deferred tax liabilities 381.7 Valuation allowance 11.1 Net deferred tax liability $ 77.0
As of May 29, 1994, we have foreign operating loss carryovers for tax purposes of $40.9 million, which will expire as follows if not offset against future taxable income: $11.0 million in 1998, $9.3 million in 1999, $10.9 million in 2000 and $9.7 million in 2001. We have not recognized a deferred tax liability for unremitted earnings of $60.1 million for our foreign operations because we do not expect those earnings to become taxable to us in the foreseeable future. A determination of the potential liability is not practicable. If a portion were to be remitted, we believe income tax credits would substantially offset any resulting tax liability. Note Sixteen: Leases and Other Commitments An analysis of rent expense by property leased follows:
Fiscal Year In Millions 1994 1993 1992 Restaurant space $41.2 $39.5 $33.9 Warehouse space 13.8 13.0 12.6 Equipment 10.6 10.6 8.3 Other 3.9 5.5 5.4 Total rent expense $69.5 $68.6 $60.2
Some leases require payment of property taxes, insurance and maintenance costs in addition to the rent payments. Contingent and escalation rent in excess of minimum rent payments and sublease income netted in rent expense were insignificant. Noncancelable future lease commitments are (in millions) $60.6 in 1995, $56.2 in 1996, $52.0 in 1997, $46.9 in 1998, $43.6 in 1999 and $236.5 after 1999, with a cumulative total of $495.8. We are contingently liable under guarantees and comfort letters for $88.5 million. The guarantees and comfort letters are issued to support borrowing arrangements, primarily for our joint ventures. Note Seventeen: Discontinued Operations We recorded a net after-tax charge related to previously discontinued operations of $10.0 million ($.06 per share) in 1992. This charge primarily related to a lease adjustment with the R. H. Macy Company, which is operating under bankruptcy law protection. Note Eighteen: Segment Information
Unallocated Consumer Corporate Consolidated In Millions Foods Restaurants Items (a) Total Sales 1994 $5,553.9 $2,963.0 $8,516.9 1993 5,397.2 2,737.4 8,134.6 1992 5,233.8 2,544.0 7,777.8 Operating Profits 1994 653.1(b) 219.4 $(119.2) 753.3 1993 772.6(c) 181.4(c) (110.0) 844.0 1992 744.3(d) 190.8 (90.6) 844.5 Identifiable Assets 1994 2,820.8 1,834.9 542.6 5,198.3 1993 2,576.4 1,605.0 469.4 4,650.8 1992 2,481.2 1,419.3 404.5 4,305.0 Capital Expenditures 1994 207.7 343.3 8.5 559.5 1993 321.6 301.2 1.0 623.8 1992 397.1 297.0 1.2 695.3 Depreciation and Amortization 1994 176.6 125.4 1.8 303.8 1993 155.8 116.8 1.6 274.2 1992 142.2 101.0 4.2 247.4
Unallocated Corporate Consolidated U.S.A. Foreign Items (a) Total Sales 1994 $8,172.1 $344.8 $8,516.9 1993 7,719.4 415.2 8,134.6 1992 7,039.6 738.2 7,777.8 Operating Profits 1994 875.6(b) (3.1) $(119.2) 753.3 1993 997.1(c) (43.1)(c) (110.0) 844.0 1992 896.3(d) 38.8 (d) (90.6) 844.5 Identifiable Assets 1994 4,297.6 358.1 542.6 5,198.3 1993 3,828.3 353.1 469.4 4,650.8 1992 3,452.2 448.3 404.5 4,305.0 (a) Corporate expenses reported here include net interest expense and general corporate expenses. (b) Consumer Foods operating profits include a charge of $146.9 million for unusual items described in note two. (c) Consumer Foods and Restaurants operating profits include a charge of $33.4 million and $30.6 million, respectively, (U.S.A. $35.5 million; Foreign $28.5 million) for unusual items. (d) Consumer Foods operating profits include a net gain of $17.5 million (U.S.A. $20.5 million loss; Foreign $38.0 million gain) for unusual items.
Note Nineteen: Quarterly Data (unaudited) Summarized quarterly data for 1994 and 1993 follows:
First Second Third In Millions, Except per Share Quarter Quarter Quarter and Market Price Amounts 1994 1993 1994 1993 1994 1993 Sales $2,089.8 2,019.6 $2,182.2 $2,096.9 $2,101.4 $2,010.7 Gross profit (a) 1,011.7 977.3 1,055.1 1,016.6 994.6 941.4 Earnings from operations 165.6 159.6 140.7 138.1 145.0 140.9(b) Earnings per share from operations 1.04 .97 .88 .85 .91 .86 Cumulative effect of accounting changes .2 - - - - - Net earnings 165.8 159.6 140.7 138.1 145.0 140.9 Net earnings per share 1.04 .97 .88 .85 .91 .86 Dividends per share .47 .42 .47 .42 .47 .42 Market price of common stock: High 68 3/4 71 1/8 67 3/4 73 7/8 63 72 1/2 Low 56 7/8 62 59 5/8 64 1/2 55 1/2 65
Fourth Total In Millions, Except per Share Quarter Year and Market Price Amounts 1994 1993 1994 1993 Sales $2,143.5 $2,007.4 $8,516.9 $8,134.6 Gross profit (a) 997.3 901.7 4,058.7 3,837.0 Earnings from operations 18.4(c) 67.5(d) 469.7 506.1 Earnings per share from operations .12 .42 2.95 3.10 Cumulative effect of accounting changes - - .2 - Net earnings 18.4 67.5 469.9 506.1 Net earnings per share .12 .42 2.95 3.10 Dividends per share .47 .42 1.88 1.68 Market price of common stock: High 57 74 1/8 68 3/4 74 1/8 Low 49 7/8 64 1/8 49 7/8 62 (a) Before charges for depreciation. (b) Includes an after-tax loss of $8.7 million ($.05 per share) for a restructuring charge for SVE. (c) Includes an after-tax loss of $87.1 million ($.55 per share) related to the improper treatment of oat supplies. (d) Includes an after-tax loss of $47.0 million ($.29 per share) for restructuring charges related to restaurant closings and Consumer Foods manufacturing costs.
ELEVEN YEAR FINANCIAL SUMMARY AS REPORTED
May 29, May 30, May 31, May 26, May 27, In Millions, Except per Share Data 1994 1993 1992 1991 1990 Financial Results Earnings (loss) per share (a) $ 2.95 $ 3.10 $ 2.99 $ 2.87 $ 2.32 Return on average equity 37.7% 39.1% 39.9% 49.2% 49.5% Dividends per share (a) 1.88 1.68 1.48 1.28 1.10 Sales 8,516.9 8,134.6 7,777.8 7,153.2 6,448.3 Costs and expenses: Cost of sales 4,458.2 4,297.6 4,123.2 3,722.1 3,485.1 Selling, general and administrative 2,902.4 2,645.2 2,504.5 2,386.0 2,138.0 Depreciation and amortization 303.8 274.2 247.4 218.4 180.1 Interest 99.2 73.6 58.2 61.1 32.4 Earnings before income taxes 753.3(b) 844.0(c) 844.5 765.6 612.7 Net earnings (loss) 469.9 506.1 495.6 472.7 381.4 Net earnings (loss) as a percent of sales 5.5% 6.2% 6.4% 6.6% 5.9% Weighted average no. of common shares(a) 159.1 163.1 165.7 164.5 164.4 Taxes (income, payroll, property, etc.) per share (a) 2.98 3.14 3.09 2.77 2.29 Financial Position Total assets 5,198.3 4,650.8 4,305.0 3,901.8 3,289.5 Land, buildings and equipment, net 3,092.6 2,859.6 2,648.6 2,241.3 1,934.5 Working capital at year end (702.9) (481.9) (337.1) (190.1) (263.1) Long-term debt, excluding current portion 1,417.2 1,268.3 920.5 879.0 688.5 Stockholders' equity 1,151.2 1,218.5 1,370.9 1,113.5 809.7 Stockholders' equity per share (a) 7.26 7.59 8.28 6.74 4.96 Other Statistics Cash provided by operations 836.0 865.9 790.4 548.6 657.1 Total dividends 299.4 274.8 245.2 210.6 180.8 Gross capital expenditures 559.5 623.8 695.3 554.6 540.0 Research and development 63.6 60.1 62.1 57.0 48.2 Advertising media expenditures 409.5 395.4 426.8 419.6 394.9 Wages, salaries and employee benefits 1,490.0 1,433.2 1,398.5 1,331.6 1,171.5 Number of employees 125,670 121,290 111,501 108,077 97,238 Accumulated LIFO reserve 53.0 60.3 67.0 75.9 71.4 Common stock price range (a) 68 3/4 74 1/8 75 7/8 60 7/8 39 5/8 49 7/8 62 54 1/4 37 7/8 31 3/8 (a) Year 1990 has been adjusted for the two-for-one stock split in November 1990. (b) Includes pretax unusual expense of $146.9 million. (c) Includes pretax restructuring charge of $67.0 million.
FINANCIAL DATA FOR CONTINUING OPERATIONS
Fiscal Year Ended In Millions, Except May 29, May 30, May 31, May 26, May 27, per Share Data 1994 1993 1992 1991 1990 Sales $8,516.9 $8,134.6 $7,777.8 $7,153.2 $6,448.3 Earnings after taxes 469.7 506.1 505.6 464.2 373.7 Earnings per share 2.95 3.10 3.05 2.82 2.27
EX-21 15 LIST OF SUBSIDIARIES OF GENERAL MILLS, INC. EXHIBIT 21 GENERAL MILLS, INC. SUBSIDIARIES
Percentage Country or of Voting State in Which Securities Each Subsidiary Owned Was Organized (Note 1) ALTCARE CORPORATION Minnesota 50 Elder Homestead Corporation Minnesota 50 CMHC, INC. Delaware 100 COLOMBO DAIRY FOODS LTD. Ontario 100 COLOMBO, INC. Delaware 100 COLOMBO YOGURT SHOP, QUINCY MARKET, INC. Delaware 100 C.P.A. CEREAL PARTNERS HANDELSGESELLSCHAFT m.b.H. (Note 12) Austria 50 C.P.D. CEREAL PARTNERS DEUTSCHLAND VERWALTUNGSGESSELSCHAFT m.b.H (Note 2) Germany 50 CPW MEXICO S.A. de C.V. Mexico 50 CPW S.A. (Note 15) Switzerland 50 FYL CORP. California 100 GENERAL MILLS CONTINENTAL, INC. (Note 13) Delaware 100 GENERAL MILLS EUROPE LIMITED England 100 C.P. HELLES EEIG Greece 50 GENERAL MILLS FINANCE, INC. Delaware 100 GENERAL MILLS FRANCE S.A. France 100 GMSNACKS, SCA (Note 3) France 43.29 Snack Ventures Europe, SCA (Note 4) Belgium 40.49 Biscuiterie Nantaise-BN, S.A. France 100 Laprovar Sociedade de Productos Alimentares, S.A. Portugal 100 Smiths Food Group B.V. The Netherlands 100 Tasty Foods S.A. Greece 100 GENERAL MILLS HOLDING B.V. (Note 5) The Netherlands 100 CEREAL PARTNERS FRANCE B.V. (Note 6) The Netherlands 100 GENERAL MILLS HOLLAND B.V. (Note 7) The Netherlands 100 GMR Japan, Inc. Japan 100 SMITHS FOOD GROUP DEUTSCHLAND B.V. The Netherlands 100 SMITHS FOOD GROUP ESPANA B.V. (Note 8) The Netherlands 100 GENERAL MILLS MAARSSEN B.V. The Netherlands 100 GENERAL MILLS PRODUCTS CORP. Delaware 100 GENERAL MILLS INTERNATIONAL LIMITED (Note 13) Delaware 100 INDUSTRIA HARINERA GUATEMALTECA, S.A. Guatemala 50 Programacion y Computacion, S.A. ("PROCOMSA") Guatemala 99.8 Triticus S.A. Guatemala 99.8 INMOBILIARIA SELENE, S.A. DE C.V. Mexico 100 TORONTO MACARONI & IMPORTED FOODS LIMITED Ontario 100 General Mills Canada, Inc. (Note 9) Canada 100 893643 Ontario, Inc. Ontario 100 GMR of Alberta, Inc. Alberta 100 Industria del Maiz, S.A. Guatemala 50 GENERAL MILLS RESTAURANTS, INC. (Note 10) Florida 100 GOLD MEDAL INSURANCE CO. (Note 11) Minnesota 100 GRANDES MOLINOS DE VENEZUELA, S.A Venezuela 16.1 MILLS SYNDICATED PROPERTIES, INC. Minnesota 100 NESTLE ASEAN PHILIPPINES, INC. (Note 14) The Philippines 30 YOPLAIT USA, INC. Delaware 100
Notes to list of subsidiaries: 1. Except where noted, the percentage of ownership refers to the total ownership by the indicated parent corporation. 2. General Mills, Inc. also owns a 50% ownership interest in a partnership organized under the laws of Germany. 3. General Mills Holland B.V. owns a 29.34% interest in GMSNACKS, SCA, General Mills Holding B.V. owns a 26.25% interest in GMSNACKS, SCA, and General Mills Products Corp. owns a 1.12% interest in GMSNACKS, SCA. 4. General Mills Holding B.V. owns a .01% interest in Snack Ventures Europe, SCA. 5. General Mills Holding B.V. and General Mills, Inc. together own a 100% interest in a Belgian partnership, General Mills Belgium, SNC, which also has a 50% interest in a partnership organized under the laws of Portugal. 6. Cereal Partners France B.V., General Mills, Inc. and General Mills France S.A. own a 100% interest in a French partnership, GMEAF SNC, which owns a 50% interest in a partnership organized under the laws of France. 7. General Mills Holland B.V. owns a 19% ownership interest in a partnership organized under the laws of Japan. 8. Smiths Food Group Espana B.V. owns a 50% interest in a partnership organized under the laws of Spain. 9. General Mills Canada, Inc. and General Mills Products Corp. together own a 100% interest in a Canadian partnership, General Mills North America Affiliates, which owns a 50% interest in a partnership organized under the laws of the United Kingdom. 10.General Mills Restaurants, Inc. ("GMRI") owns and operates full-service specialty seafood and Italian restaurants. In order to comply with certain state laws, GMRI has 43 wholly- owned domestic subsidiaries; 2 domestic subsidiaries in which it has a 97% ownership interest; 1 domestic subsidiary in which it has a 50% ownership interest; and 13 domestic subsidiaries in which it has a 49% ownership interest. 11.Eighty-one percent of the voting securities are owned by General Mills, Inc. and 19% of the voting securities are owned by General Mills Canada, Inc. 12.General Mills, Inc. also owns a 50% ownership interest in a partnership organized under the laws of Austria. 13.General Mills Continental, Inc. and General Mills International Limited together own a 100% interest in a Chilean partnership, General Mills Continental, Inc. y Compania, which owns a 50% interest in Cereales C.P.W. Chile Limitada, a corporation organized under the laws of Chile. 14.The 30% ownership interest of General Mills, inc. is held in trust by Nestle, S.A. 15.General Mills, Inc. also owns a 50% ownership interest in a partnership organized under the laws of Switzerland. EX-23 16 CONSENT OF KPMG PEAT MARWICK EXHIBIT 23 AUDITORS' CONSENT The Board of Directors General Mills, Inc.: We consent to incorporation by reference in the Registration Statements (Nos. 2-49637, 2-91893, 33-15323, 33-37474, 33-39927 and 33-56032) on Form S-3 and Registration Statements (Nos. 2- 13460, 2-53523, 2-66320, 2-91987, 2-95574, 33-24504, 33-27628, 33- 32059, 33-36892, 33-36893, 33-51070 and 33-50337) on Form S-8 of General Mills, Inc. of our reports dated July 29, 1994, relating to the consolidated balance sheets of General Mills, Inc. and subsidiaries as of May 29, 1994 and May 30, 1993 and the related consolidated statements of earnings, cash flows and related financial statement schedules for each of the fiscal years in the three-year period ended May 29, 1994, which reports are included or incorporated by reference in the May 29, 1994 annual report on Form 10-K of General Mills, Inc. Our report covering the basic consolidated financial statements refers to changes in the method of accounting for postemployment benefits and for income taxes. KPMG Peat Marwick Minneapolis, Minnesota August 22, 1994 -----END PRIVACY-ENHANCED MESSAGE-----