-----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, Fzd6PFc/7LCbDtH7zGj+GbAlw/bLiCN2bnIYdR3od8lIywo1lEUy6QUOMMjCfS2C QSpG7/c5atdhXZteT8Rh+w== 0000040704-95-000002.txt : 19950110 0000040704-95-000002.hdr.sgml : 19950110 ACCESSION NUMBER: 0000040704-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941127 FILED AS OF DATE: 19950109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MILLS INC CENTRAL INDEX KEY: 0000040704 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 410274440 STATE OF INCORPORATION: DE FISCAL YEAR END: 0525 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01185 FILM NUMBER: 95500721 BUSINESS ADDRESS: STREET 1: NUMBER ONE GENERAL MILLS BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55426 BUSINESS PHONE: 6125402311 MAIL ADDRESS: STREET 1: P O BOX 1113 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 10-Q 1 SECOND QUARTER 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 27, 1994 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____ Commission file number: 1-1185 GENERAL MILLS, INC. (Exact name of registrant as specified in its charter) Delaware 41-0274440 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Number One General Mills Boulevard Minneapolis, MN 55426 (Mail: P.O. Box 1113) (Mail: 55440) (Address of principal executive offices) (Zip Code) (612) 540-2311 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of December 20, 1994, General Mills had 157,808,001 shares of its $.10 par value common stock outstanding (excluding 46,345,331 shares held in treasury). Part I. FINANCIAL INFORMATION Item 1. Financial Statements GENERAL MILLS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In Millions, Except per Share Data) Thirteen Weeks Ended Twenty-Six Weeks Ended November 27, November 28, November 27, November 28, 1994 1993 1994 1993 Sales $2,201.8 $2,182.2 $4,182.9 $4,272.0 Costs and Expenses: Cost of sales 1,185.8 1,127.1 2,260.7 2,205.2 Selling, general and administrative 666.9 729.5 1,223.4 1,370.0 Depreciation and amortization 79.0 72.5 159.8 143.9 Interest, net 31.5 23.4 59.3 50.1 Total Costs and Expenses 1,963.2 1,952.5 3,703.2 3,769.2 Earnings before Taxes 238.6 229.7 479.7 502.8 Income Taxes 89.4 89.0 179.7 196.5 Earnings from Operations 149.2 140.7 300.0 306.3 Cumulative Effect to May 31, 1993 of Accounting Changes - - - .2 Net Earnings $ 149.2 $ 140.7 $ 300.0 $ 306.5 Earnings per Share $ .95 $ .88 $ 1.90 $ 1.92 Dividends per Share $ .47 $ .47 $ .94 $ .94 Average Number of Common Shares 157.7 159.1 157.9 159.5 See accompanying notes to consolidated condensed financial statements.
GENERAL MILLS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In Millions) (Unaudited) (Unaudited) November 27, November 28, May 29, 1994 1993 1994 ASSETS Current Assets: Cash and cash equivalents $ 41.1 $ 56.8 $ .2 Receivables 426.2 391.4 309.7 Inventories: Valued primarily at FIFO 333.8 289.4 243.2 Valued at LIFO (FIFO value exceeds LIFO by $55.7, $62.5 and $53.0, respectively) 315.5 264.2 245.1 Prepaid expenses and other current assets 106.6 98.2 110.6 Deferred income taxes 152.0 149.3 220.4 Total Current Assets 1,375.2 1,249.3 1,129.2 Land, Buildings and Equipment, at Cost 4,895.2 4,455.6 4,689.8 Less accumulated depreciation (1,727.7) (1,483.7) (1,597.2) Net Land, Buildings and Equipment 3,167.5 2,971.9 3,092.6 Other Assets 1,092.3 774.8 976.5 Total Assets $5,635.0 $4,996.0 $5,198.3 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 617.8 $ 698.1 $ 650.4 Current portion of long-term debt 122.8 72.1 115.2 Notes payable 761.5 393.9 433.3 Accrued taxes 142.8 160.2 178.3 Other current liabilities 382.8 349.4 454.9 Total Current Liabilities 2,027.7 1,673.7 1,832.1 Long-term Debt 1,488.2 1,414.8 1,417.2 Deferred Income Taxes 335.8 243.1 297.4 Deferred Income Taxes - Tax Leases 184.9 193.9 189.8 Other Liabilities 194.5 183.9 188.6 Total Liabilities 4,231.1 3,709.4 3,925.1 Common Stock Subject to Put Options 25.1 16.3 122.0 Stockholders' Equity: Cumulative preference stock, none issued - - - Common stock, 204.2 shares issued 349.4 350.9 251.0 Retained earnings 2,610.2 2,442.3 2,457.9 Less common stock in treasury, at cost, shares of 46.4, 45.1 and 45.7, respectively (1,381.7) (1,294.4) (1,334.4) Unearned compensation and other (140.6) (163.8) (160.2) Cumulative foreign currency adjustment (58.5) (64.7) (63.1) Total Stockholders' Equity 1,378.8 1,270.3 1,151.2 Total Liabilities and Equity $5,635.0 $4,996.0 $5,198.3 See accompanying notes to consolidated condensed financial statements.
GENERAL MILLS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In Millions) Twenty-Six Weeks Ended November 27, November 28, 1994 1993 Cash Flows - Operating Activities: Net Earnings $300.0 $306.5 Adjustments to reconcile earnings to cash flow: Depreciation and amortization 159.8 143.9 Deferred income taxes 94.2 .1 Change in current assets and liabilities (411.9) (149.6) Other, net 8.5 8.4 Cash provided by continuing operations 150.6 309.3 Cash used by discontinued operations (2.5) (2.7) Net Cash Provided by Operating Activities 148.1 306.6 Cash Flows - Investment Activities: Purchases of land, buildings and equipment (241.8) (273.4) Investments in businesses, intangibles and affiliates, net (27.4) (21.0) Purchases of marketable investments (3.4) (46.1) Proceeds from sale of marketable investments 2.7 24.5 Other, net (36.1) 5.3 Net Cash Used by Investment Activities (306.0) (310.7) Cash Flows - Financing Activities: Increase in notes payable 324.0 58.2 Issuance of long-term debt 130.5 202.4 Payment of long-term debt (50.0) (51.6) Common stock issued 7.8 10.5 Purchases of common stock for treasury (57.7) (102.9) Dividends paid (149.2) (150.1) Other, net (6.6) (5.6) Net Cash Provided (Used) by Financing Activities 198.8 (39.1) Increase (Decrease) in Cash and Cash Equivalents $40.9 $(43.2) See accompanying notes to consolidated condensed financial statements.
GENERAL MILLS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) (1) Background These financial statements do not include certain information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the twenty-six weeks ended November 27, 1994 are not necessarily indicative of the results that may be expected for the fiscal year ending May 28, 1995. These statements should be read in conjunction with the financial statements and footnotes included in our annual report for the year ended May 29, 1994. The accounting policies used in preparing these financial statements are the same as those described in our annual report except for the change in accounting for marketable investments, as noted below. (2) Marketable Investments We adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," during the first quarter. The standard requires accounting for investments at fair value instead of amortized cost for those securities that are not intended to be held to maturity. All of of our marketable investments are classified as available-for-sale and are now reported at fair value with the unrealized gain or loss, net of taxes, recorded in the "Unearned compensation and other" account, within Stockholders' Equity. The net unrealized gain as of November 27, 1994 was $18.3 million. There was no impact on net earnings. (3) Statements of Cash Flows During the first six months of fiscal 1995, we paid $57.3 million for interest (net of amount capitalized) and $109.6 million for income taxes. (4) Long-term Debt During the first six months of fiscal 1995, we issued $125.0 million of debt under our medium-term note program with various maturities ranging from 2 to 12 years and various interest rates from 6.4% to 8.0%. (5) Stockholders' Equity and Put Options During the first six months, we purchased 1.0 million shares of common stock for $57.7 million, primarily from the exercise of put options, previously sold in private placements. (6) Investments in Affiliates During the first six months, we made additional capital contributions and advances of $25.6 million to Cereal Partners Worldwide. (7) Subsequent Event On December 14, 1994, we announced plans to separate into two independent public corporations, one for Consumer Foods and one for Restaurants. General Mills, Inc. will be the Consumer Foods company. Plans are to spin off our Restaurant operations as a separate free-standing company to our shareholders. It is planned that General Mills' shareholders will receive one share in the Restaurant company for each share of General Mills common stock owned as of the record date for the distribution. It is expected that the two companies will become separate entities on approximately June 1, 1995, subject to final approval of the General Mills Board of Directors. Beginning with our third-quarter financial statements, Restaurant operations will be presented as Discontinued Operations. Following are sales and operating profits for the twenty-six weeks ended on November 27, 1994: Twenty-six weeks ended November 27, 1994 Consumer Corporate (In Millions) Foods Restaurants Expense Consolidated Sales $2,661.3 $1,521.6 $ - $4,182.9 Operating Profits 458.5 87.4 (66.2) 479.7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Operations generated $158.5 million less cash in the first half of fiscal 1995 than in the prior period. This decrease in cash provided by operations as compared to last year was caused by a $262.3 million increase in the working capital change (principally, increased rates of cash absorption in inventory and payables), partially offset by a $103.6 million increase in cash from operations, after adjustment for non-cash charges. Fiscal 1995 capital expenditures are estimated to be approximately $525 million, of which $350 million is attributable to Restaurants. During the first half, capital expenditures totaled $241.8 million, of which $178.4 million was expended by Restaurants. Our fixed-asset investment has decreased from recent peak levels, which included adding cereal production capacity. Purchases of marketable investments made during fiscal 1994 to take advantage of interest rate spreads declined to minor amounts in fiscal 1995. Our short-term outside financing is obtained through private placement of commercial paper and bank notes. Our level of notes payable fluctuates based on cash flow needs. In the first half of fiscal 1995, $125.0 million of debt was issued under our medium-term note program. In the first half of fiscal 1995, $57.7 million was paid for common stock for our treasury, primarily from the exercise of put options that were previously sold in private placements. RESULTS OF OPERATIONS Second quarter sales of $2,201.8 million grew 1 percent from the prior year. Consumer Foods' sales of $1,468.4 million were down 3 percent for the quarter, reflecting a 2 percent decline in total domestic packaged foods unit volume and the lower average cereal prices. Restaurants sales of $733.4 million grew 9 percent. First half sales for Consumer Foods of $2,661.3 million declined 7 percent and Restaurants' sales grew 7 percent to $1,521.6 million. Second quarter earnings from operations of $149.2 million ($.95 per share) were up 6 percent from $140.7 million ($.88 per share) reported last year. Cumulative earnings of $300.0 million ($1.90 per share) were down 2 percent from $306.5 million ($1.92 per share) reported for last years first half due to the temporary interruption in cereal shipments experienced in the first quarter. Excluding Big G cereals, first-half net earnings were 5 percent above the prior year. Second-quarter Consumer Foods operating profits increased 8 percent, led by the improved profitability of Big G cereals. Reflecting strategic actions taken by Big G in the second half of last year, weighted-average cereal prices were 5 percent lower and unit volume was nearly even with last year's second quarter, but planned reductions in inefficient promotional spending and increasing productivity resulted in good profit improvement. Big G made steady progress throughout the quarter in rebuilding its share of the $9.2 billion U.S. ready-to-eat cereal market. For November, Big G's dollar market share was 26.8 percent, up from 24 percent in the first quarter. Second-quarter unit volume for the Cheerios brands was up 4 percent. Quarterly market shares for major categories excluding popcorn and grain snacks equaled or exceeded their 52-week levels. CPW, the company's worldwide cereal joint venture with Nestle, recorded a 21 percent volume gain for the quarter. While total Restaurant operating profits were down 3 percent for the quarter, combined profits from Red Lobster and The Olive Garden were up more than 11 percent. Expenses related to the rapid rollout of China Coast accounted for the profit decline. Red Lobster's same-store sales increased 1 percent for the quarter due in part to the popular LOBSTERFEST promotion, and outpaced the casual dining industry. Same- store sales for The Olive Garden were up nearly 1 percent, following declines earlier in the year. The improving trend reflects the early success of efforts to enhance the dining experience and strengthen marketing. New unit openings included three new Red Lobsters, seven The Olive Garden restaurants and ten China Coast units, for a total of 1,189 units in operation in North America. In addition, The Olive Garden expanded its Cafe test concept, opening 2 new units in Texas and 1 in New York City that is part of the company's new restaurant in Times Square. Interest expense increased by $8 million in the quarter, primarily due to increased working capital, higher interest rates, and previous borrowings associated with the company's share repurchase program. Average shares outstanding totaled 157.7 million in this year's second quarter, down from 159.1 million for the same period a year ago. During the first quarter, the company adopted SFAS #115 ("Accounting for Certain Investments in Debt and Equity Securities") with no impact on net earnings. As described in note 7 of Notes to Consolidated Condensed Financial Statements, the company has announced plans to separate into two independent public corporations, one for Consumer Foods and one for Restaurants. Plans are to spin off our Restaurant operations as a separate free-standing company to shareholders on or about June 1, 1995. The attached financial statements present the Restaurant operations on a fully-consolidated basis as part of continuing operations. Starting with the third-quarter's financial statements, the Restaurant operations will be presented as Discontinued Operations. For the twenty-six weeks ended November 27, 1994, the Restaurant operations accounted for approximately 36% of the Company's consolidated sales, and about 16% of operating profits before corporate expense. PART II Item 4. Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Stockholders was held on September 19, 1994. (b) All directors nominated were elected at the Annual Meeting. (c) For the election of directors, the results were as follows: H. Brewster Atwater For 132,238,599 Withheld 1,055,444 Richard M. Bressler For 132,369,809 Withheld 924,234 Livio D. DeSimone For 132,414,710 Withheld 879,333 William T. Esrey For 132,367,221 Withheld 926,822 Charles W. Gaillard For 132,397,273 Withheld 896,770 Judith R. Hope For 132,364,274 Withheld 929,769 Joe R. Lee For 132,372,869 Withheld 921,174 Kenneth A. Macke For 132,393,441 Withheld 900,602 George Putnam For 132,381,999 Withheld 912,044 Michael D. Rose For 132,395,473 Withheld 898,570 Stephen W. Sanger For 132,387,441 Withheld 906,602 A. Michael Spence For 132,359,966 Withheld 934,077 Dorothy A. Terrell For 132,260,479 Withheld 1,033,564 Mark H. Willes For 132,344,350 Withheld 949,693 C. Angus Wurtele For 132,415,490 Withheld 878,553 On the ratification of the appointment of KPMG Peat Marwick LLP as auditors for fiscal 1995 the results were as follows: For: 132,349,295 Against: 391,095 Abstain: 553,653 On the proposal to adopt a Restated Certificate of Incorporation of General Mills, Inc., the results were as follows: For: 120,499,314 Against: 1,310,694 Abstain: 909,451 Broker Non-Vote: 10,574,584 The stockholders' proposal requesting that the directors take action to adopt cumulative voting was rejected: For: 23,842,590 Against: 94,303,192 Abstain: 1,792,708 Broker Non-Vote: 13,355,553 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 11 Statement re Computation of Earnings per Share. Exhibit 12 Statement re Ratio of Earnings to Fixed Charges. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the second quarter of fiscal 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL MILLS, INC. (Registrant) Date January 9, 1995 /s/ S. S. Marshall S. S. Marshall Senior Vice President, General Counsel and Secretary Date January 9, 1995 /s/ K. L. Thome K. L. Thome Senior Vice President, Financial Operations Exhibit 11 GENERAL MILLS, INC. COMPUTATION OF EARNINGS PER SHARE (In Millions, Except per Share Data) Twenty-Six Weeks Ended November 27, November 28, 1994 1993 Net Earnings $300.0 $306.5 Computation of Shares: Weighted average number of shares outstanding, excluding shares held in treasury (a) 157.9 159.5 Net shares resulting from the assumed exercise of certain stock options (b) 1.9* 2.6* Shares potentially issuable under compensation plans .1* -* Total common shares and common share equivalents 159.9 162.1 Earnings per Share $1.90 $1.92 Notes to Exhibit 11: (a) Computed as the weighted average of net shares outstanding on stock- exchange trading days. (b) Common share equivalents are computed by the "treasury stock" method. This method first determines the number of shares issuable under stock options that had an option price below the average market price for the period, and then deducts the number of shares that could have been repurchased with the proceeds of options exercised. * Common share equivalents are not material. As a result, earnings per share have been computed using the weighted average number of shares outstanding of 157.9 million and 159.5 million for the first six months of fiscal 1995 and 1994, respectively. Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES Twenty-Six Weeks Ended Fiscal Year Ended November 27,November 28, May 29,May 30,May 31,May 26,May 27, 1994 1993 1994 1993 1992 1991 1990 Ratio of Earnings to Fixed Charges 6.72 7.57 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-11 2 EX.11 TO 2ND QTR 10-Q Exhibit 11 GENERAL MILLS, INC. COMPUTATION OF EARNINGS PER SHARE (In Millions, Except per Share Data) Twenty-Six Weeks Ended November 27, November 28, 1994 1993 Net Earnings $300.0 $306.5 Computation of Shares: Weighted average number of shares outstanding, excluding shares held in treasury (a) 157.9 159.5 Net shares resulting from the assumed exercise of certain stock options (b) 1.9* 2.6* Shares potentially issuable under compensation plans .1* -* Total common shares and common share equivalents 159.9 162.1 Earnings per Share $1.90 $1.92 Notes to Exhibit 11: (a) Computed as the weighted average of net shares outstanding on stock- exchange trading days. (b) Common share equivalents are computed by the "treasury stock" method. This method first determines the number of shares issuable under stock options that had an option price below the average market price for the period, and then deducts the number of shares that could have been repurchased with the proceeds of options exercised. * Common share equivalents are not material. As a result, earnings per share have been computed using the weighted average number of shares outstanding of 157.9 million and 159.5 million for the first six months of fiscal 1995 and 1994, respectively. EX-12 3 EX.12 TO 2ND QTR 10-Q Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES Twenty-Six Weeks Ended Fiscal Year Ended November 27,November 28, May 29,May 30,May 31,May 26,May 27, 1994 1993 1994 1993 1992 1991 1990 Ratio of Earnings to Fixed Charges 6.72 7.57 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-27 4 ART. 5 FDS FOR 2ND QTR
5 This schedule contains summary financial information extracted from our Form 10-Q for the quarterly period ended November 27, 1994, and is qualified in its entirety by reference to such financial statements. QTR-2 MAY-28-1995 NOV-27-1994 41,100,000 0 426,200,000 0 649,300,000 1,375,200,000 4,895,200,000 (1,727,700,000) 5,635,000,000 2,027,700,000 1,488,200,000 349,400,000 0 0 1,029,400,000 5,635,000,000 4,182,900,000 4,182,900,000 2,260,700,000 2,260,700,000 159,800,000 0 59,300,000 479,700,000 179,700,000 300,000,000 0 0 0 300,000,000 1.9 1.9
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