-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HDUW7T9iznYuslSCElq0Kp3nuiXnYUqOoti69sILVpQW9YEp41u8baFk7fSmN+gT iTFc62tQM0jTsXXEWjXC/w== 0000040704-96-000004.txt : 19960111 0000040704-96-000004.hdr.sgml : 19960111 ACCESSION NUMBER: 0000040704-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951126 FILED AS OF DATE: 19960108 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: 96501807 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 26, 1995 / / 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 15, 1995, General Mills had 159,105,977 shares of its $.10 par value common stock outstanding (excluding 45,047,355 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 26, November 27, November 26, November 27, 1995 1994 1995 1994 Continuing Operations: Sales $1,448.4 $1,417.3 $2,724.7 $2,574.0 Costs and Expenses: Cost of sales 596.1 595.1 1,121.7 1,055.3 Selling, general and administrative 551.7 537.5 1,010.3 977.1 Depreciation and amortization 46.7 44.2 93.4 91.1 Interest, net 25.8 25.4 52.8 47.5 Total Costs and Expenses 1,220.3 1,202.2 2,278.2 2,171.0 Earnings from Continuing Operations before Taxes 228.1 215.1 446.5 403.0 Income Taxes 82.4 80.3 163.9 150.2 Earnings from Continuing Operations 145.7 134.8 282.6 252.8 Discontinued Operations after Taxes - 14.4 - 47.2 Net Earnings $ 145.7 $ 149.2 $ 282.6 $ 300.0 Earnings per Share: Continuing operations $ .92 $ .85 $ 1.78 $ 1.60 Discontinued operations - .10 - .30 Net Earnings per Share $ .92 $ .95 $ 1.78 $ 1.90 Dividends per Share $ .47 $ .47 $ .94 $ .94 Average Number of Common Shares 158.8 157.7 158.6 157.9 See accompanying notes to consolidated condensed financial statements. GENERAL MILLS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In Millions) (Unaudited) (Unaudited) November 26, November 27, May 28, 1995 1994 1995 ASSETS Current Assets: Cash and cash equivalents $ 44.0 $ 52.5 $ 13.0 Receivables 381.4 387.0 277.3 Inventories: Valued primarily at FIFO 230.2 163.7 134.7 Valued at LIFO (FIFO value exceeds LIFO by $56.0, $45.4 and $53.0, respectively) 215.5 305.6 237.3 Prepaid expenses and other current assets 84.3 80.3 80.8 Deferred income taxes 125.4 134.3 153.8 Total Current Assets 1,080.8 1,123.4 896.9 Land, Buildings and Equipment, at Cost 2,607.5 2,547.3 2,611.9 Less accumulated depreciation (1,205.7) (1,082.3)(1,155.3) Net Land, Buildings and Equipment 1,401.8 1,465.0 1,456.6 Net Assets of Discontinued Operations - 1,695.7 - Other Assets 1,033.0 977.4 1,004.7 Total Assets $3,515.6 $5,261.5 $3,358.2 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 538.7 $ 506.3 $ 494.0 Current portion of long-term debt 64.9 122.8 93.7 Notes payable 299.3 761.5 112.9 Accrued taxes 130.2 112.7 108.8 Other current liabilities 338.0 265.1 411.5 Total Current Liabilities 1,371.1 1,768.4 1,220.9 Long-term Debt 1,246.4 1,484.4 1,400.9 Deferred Income Taxes 259.4 244.1 248.6 Deferred Income Taxes - Tax Leases 163.4 184.9 169.1 Other Liabilities 175.6 175.8 177.7 Total Liabilities 3,215.9 3,857.6 3,217.2 Common Stock Subject to Put Options - 25.1 - Stockholders' Equity: Cumulative preference stock, none issued - - - Common stock, 204.2 shares issued 381.6 349.4 379.5 Retained earnings 1,367.7 2,610.2 1,233.3 Less common stock in treasury, at cost, shares of 45.2, 46.4 and 46.3, respectively (1,349.9) (1,381.7)(1,372.1) Unearned compensation and other (52.8) (140.6) (57.9) Cumulative foreign currency adjustment (46.9) (58.5) (41.8) Total Stockholders' Equity 299.7 1,378.8 141.0 Total Liabilities and Equity $3,515.6 $5,261.5 $3,358.2 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 26, November 27, 1995 1994 Cash Flows - Operating Activities: Earnings from continuing operations $282.6 $252.8 Adjustments to reconcile earnings to cash flow: Depreciation and amortization 93.4 91.1 Deferred income taxes 34.9 85.7 Change in current assets and liabilities (152.7) (358.0) Other, net (3.4) .4 Cash provided by continuing operations 254.8 72.0 Cash provided (used) by discontinued operations (11.2) 59.9 Net Cash Provided by Operating Activities 243.6 131.9 Cash Flows - Investment Activities: Purchases of land, buildings and equipment (57.5) (61.9) Investments in businesses, intangibles and affiliates (20.3) (26.9) Purchases of marketable investments (3.6) (3.4) Proceeds from sale of marketable investments 7.0 2.7 Other, net (6.7) (21.5) Discontinued operations investments activities, net - (195.0) Net Cash Used by Investment Activities (81.1) (306.0) Cash Flows - Financing Activities: Increase in notes payable 109.7 324.0 Issuance of long-term debt 38.6 130.5 Payment of long-term debt (146.1) (50.0) Common stock issued 22.1 7.8 Purchases of common stock for treasury - (57.7) Dividends paid (149.1) (149.2) Other, net (6.7) (6.6) Net Cash Provided (Used) by Financing Activities (131.5) 198.8 Increase in Cash and Cash Equivalents $31.0 $24.7 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 26, 1995 are not necessarily indicative of the results that may be expected for the fiscal year ending May 26, 1996. These statements should be read in conjunction with the financial statements and footnotes included in our annual report for the year ended May 28, 1995. The accounting policies used in preparing these financial statements are the same as those described in our annual report. Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. (2) Discontinued Operations As of May 28, 1995, General Mills distributed the common stock of Darden Restaurants, Inc. (Darden) to General Mills' shareholders. This distribution reduced Stockholders' Equity by $1,218.7 million. Our former restaurant operations included in Darden are now presented as a part of Discontinued Operations for all periods presented. On May 18, 1995, we sold Gorton's, a leading marketer of frozen and canned seafood products, to Unilever United States, Inc. Gorton's is also included in Discontinued Operations for all periods presented. (3) Statements of Cash Flows During the first six months, we paid $59.9 million for interest (net of amount capitalized) and $99.5 million for income taxes. (4) Updated Rights Plan Subsequent to the end of the quarter, the Board of Directors adopted a new Preferred Share Purchase Rights Plan to replace the existing rights plan which expires in March 1996. The existing plan is described in Note 11 to the consolidated financial statements for the year ended May 28, 1995. The new Rights are similar in purpose and effect to the existing Rights and entitle each outstanding share of common stock on and after January 10, 1996 to one right. The new Rights will expire on February 1, 2006. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION During the fiscal year ended May 28, 1995 the company spun off its restaurant operations as a separate, free-standing company, Darden Restaurants, Inc., and sold the Gorton's frozen and canned seafood products business. The financial statements for the second quarter of fiscal 1995 have been restated to present assets and results of these operations as Discontinued Operations. The restaurant spinoff reduced Stockholders' Equity by $1,218.7 million at May 28, 1995. Continuing operations generated $182.8 million more cash in the first half of fiscal 1996 than in the same prior-year period. The increase in cash provided by continuing operations is due mainly to a lower rate of increase in working capital. Fiscal 1996 capital expenditures are estimated to be approximately $150 million. During the first six months, capital expenditures totaled $57.5 million. 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. Our long-term outside financing is obtained primarily through our medium-term note program. First half activity included new debt of $35.0 million and principal payments of $141.3 million under this program. RESULTS OF OPERATIONS Second quarter sales of $1,448.4 million grew 2 percent from the prior year. First half sales of $2,724.7 million grew 6 percent. Second quarter earnings from operations of $145.7 million ($.92 per share) were up 8 percent from $134.8 million ($.85 per share) reported last year. Cumulative earnings of $282.6 million ($1.78 per share) were up 12 percent from $252.8 million ($1.60 per share) reported for last year's first half. The prior-year comparisons exclude results for Gorton's and the restaurant operations. Record results for the first half met company expectations, with cumulative domestic retail unit volume growth of 6 percent, continued strong productivity increases and improving profitability from international operations. As anticipated, the company's rate of growth in the second quarter was slower than the 15 percent earnings-per-share increase achieved in the first quarter, reflecting volume fluctuations in the prior year due to the oats-related business disruption and changes in promotion timing. Second-quarter overall domestic volume was up slightly as promotional changes primarily affected snack products where volume declined 21 percent, offsetting a large first quarter gain. Volume for the company's remaining domestic businesses grew 4 percent, led by a 6 percent volume gain by Big G cereals. Total unit volume, including strong gains by international joint ventures that are not consolidated in the company's sales results, grew 3 percent in the second quarter and 8 percent for the first half. Consumer retail sales were even or up for most major product lines, excluding domestic snacks. Big G cereals led General Mills' performance, both in the half and the latest quarter. Through six months, cereal volume was up 12 percent and profit growth was even stronger. The second quarter's 6 percent volume gain was led by new Frosted Cheerios, which began shipping Sept. 11 and achieved a 1.6 percent pound market share for the period. Other contributors to the second quarter volume gain included improved versions of Apple Cinnamon Cheerios and Lucky Charms, and growing business in non- traditional retail outlets. Big G's second-quarter pound share of the U.S. grocery cereal market was 23.5 percent, up a full percentage point from the same period a year earlier. Snack foods' 21 percent volume decline in the second quarter followed a 10 percent gain in the first quarter. The decline reflected shifts in promotional strategies and timing toward first-quarter back-to-school merchandising, and strong levels of competitive new-product and merchandising activity in the grain snack segment. Volume growth in the company's other domestic retail businesses was led by Yoplait and Colombo yogurt, Helper dinner mixes, and new Whipped Deluxe frosting and fat-free Sweet Rewards cake mixes. Additionally, the company's Foodservice operations achieved a 13 percent volume gain in the first half. General Mills' Canadian food operations reported a 14 percent increase in first-half unit volume, including a 13 percent gain in the second quarter. Cereal Partners Worldwide (CPW), the company's strategic alliance with Nestle, posted volume growth of 19 percent in the quarter and 22 percent through six months, with share gains in most markets. Snack Ventures Europe, the company's joint venture with PepsiCo Foods International, reported volume gains of 16 percent for both the second quarter and first half. Each of these joint ventures and the company's fully-owned international operations contributed to first-half earnings growth. Net interest expense for the first six months increased by $5.3 million compared to last year, primarily due to higher interest rates. The effective tax rate for the first six months of fiscal 1996 of 36.7% was less than the 37.3% rate for the first six months of fiscal 1995 due primarily to the effects of state taxes. PART II Item 4. Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Stockholders was held on September 18, 1995. (b) All directors nominated were elected at the Annual Meeting. (c) For the election of directors, the results were as follows: Richard M. Bressler For 134,678,727 Withheld 682,432 Livio D. DeSimone For 135,342,058 Withheld 19,101 William T. Esrey For 135,324,654 Withheld 36,505 Charles W. Gaillard For 135,314,580 Withheld 46,579 Judith R. Hope For 135,243,799 Withheld 117,360 Kenneth A. Macke For 135,310,121 Withheld 51,038 George Putnam For 135,300,397 Withheld 60,762 Michael D. Rose For 135,305,288 Withheld 55,871 Stephen W. Sanger For 135,341,378 Withheld 19,781 A. Michael Spence For 135,279,549 Withheld 81,610 Dorothy A. Terrell For 135,205,934 Withheld 155,225 C. Angus Wurtele For 135,332,246 Withheld 28,913 On the ratification of the appointment of KPMG Peat Marwick LLP as auditors for fiscal 1996 the results were as follows: For: 135,401,311 Withheld: 334,521 Abstain: 277,775 On the proposal to adopt the General Mills, Inc. 1995 Salary Replacement Stock Option Plan, the results were as follows: For: 122,890,196 Against: 11,702,115 Abstain: 1,421,296 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 1996. 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 8, 1996 /s/ S. S. Marshall S. S. Marshall Senior Vice President, General Counsel and Secretary Date January 8, 1996 /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 26, November 27, 1995 1994 Net Earnings $282.6 $300.0 Computation of Shares: Weighted average number of shares outstanding, excluding shares held in treasury (a) 158.6 157.9 Net shares resulting from the assumed exercise of certain stock options (b) 3.0* 1.9* Shares potentially issuable under compensation plans -* .1* Total common shares and common share equivalents 161.6 159.9 Earnings per Share $1.78 $1.90 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 158.6 million and 157.9 million for the first six months of fiscal 1996 and 1995, respectively. Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES Twenty-Six Weeks Ended Fiscal Year Ended November 26, November 27, May 28, May 29, May 30, May 31, May 26, 1995 1994 1995 1994 1993 1992 1991 Ratio of Earnings to Fixed Charges 7.87 7.52 4.10 6.18 8.62 9.28 8.06 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 EXHIBIT 11 TO 10-Q Exhibit 11 GENERAL MILLS, INC. COMPUTATION OF EARNINGS PER SHARE (In Millions, Except per Share Data) Twenty-Six Weeks Ended November 26, November 27, 1995 1994 Net Earnings $282.6 $300.0 Computation of Shares: Weighted average number of shares outstanding, excluding shares held in treasury (a) 158.6 157.9 Net shares resulting from the assumed exercise of certain stock options (b) 3.0* 1.9* Shares potentially issuable under compensation plans -* .1* Total common shares and common share equivalents 161.6 159.9 Earnings per Share $1.78 $1.90 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 158.6 million and 157.9 million for the first six months of fiscal 1996 and 1995, respectively. EX-12 3 EXHIBIT 12 TO 10-Q Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES Twenty-Six Weeks Ended Fiscal Year Ended November 26, November 27, May 28, May 29, May 30, May 31, May 26, 1995 1994 1995 1994 1993 1992 1991 Ratio of Earnings to Fixed Charges 7.87 7.52 4.10 6.18 8.62 9.28 8.06 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 twenty-six week period ended November 26, 1995 and is qualified in its entirety by reference to such financial statements. 6-MOS MAY-28-1995 NOV-26-1995 44,000,000 0 381,400,000 0 445,700,000 1,080,800,000 2,607,500,000 (1,205,700,000) 3,515,600,000 1,371,100,000 1,246,400,000 381,600,000 0 0 (81,900,000) 3,515,600,000 2,724,700,000 2,724,700,000 1,121,700,000 1,121,700,000 93,400,000 0 52,800,000 446,500,000 163,900,000 282,600,000 0 0 0 282,600,000 1.78 1.78
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