Pricing Supplement No. 14 Filing under Rule 424(b)(3) with respect to
Dated March 16, 1994 Registration Statement No. 33-56032
(To Prospectus dated January 7, 1993 and
Prospectus Supplement dated January 8, 1993)
$500,000,000
GENERAL MILLS, INC.
MEDIUM-TERM NOTES, SERIES D
Principal amount: $52,900,000
Interest Rate (if fixed rate): 4.28% semi-annually
Amount Payable at Maturity: Determined based on future
level of Italian, Swedish and
Spanish interest rates, as more
fully described below
Stated Maturity: March 17, 1995
Specified Currency: U.S. Dollars
Interest Payment Dates: September 17 and March 17 on a
30/360 day basis
Applicable Exchange Rate (if any): N/A
Issue price (as a percentage of
principal amount): A/S
Selling Agent's Commission (%): N/A
Agent's Fee: $79,350
Purchasing Agent's discount
or commission (%): .150%
Net proceeds to the Company: $52,820,650
Settlement date (original
issue date): March 17, 1994
Redemption Commencement Date (if any): N/A
Redemption prices (if any): N/A
Determination Agent: Merrill Lynch Capital Services, Inc.
"N/A" as used herein means "Not Applicable." "A/S" as used
herein means "as stated in the Prospectus Supplement referred to
above."
The following description of the particular terms of the Notes
(which are Indexed Notes) offered by this Pricing Supplement
supplements, and to the extent inconsistent therewith replaces, the
descriptions of the general terms and provisions of the Debt
Securities and Notes set forth in the accompanying Prospectus and
Prospectus Supplement (together, the "Prospectus") to which
descriptions reference is hereby made. Capitalized terms not
otherwise defined herein which are defined in the Prospectus have
the meanings set forth therein.
DESCRIPTION OF NOTES
Payment of Interest
The Notes will bear interest at the fixed rate per annum
stated above. Interest will be payable on September 17, 1994 and
at Stated Maturity.
Payment of Principal
The principal amount of a Note payable at Stated Maturity
shall be the greater of (i) zero and (ii) an amount determined by
the Determination Agent on the Reference Date based on the
following formula:
.25 x Face Amount x [Dur1 x (.0924 - ITL10) + 1] +
.45 x Face Amount x [Dur2 x (.0719 - SEK5) + 1] +
.30 x Face Amount x [Dur3 x (.0823 - ESP5) + 1]
See "Description of Notes--Certain Definitions" for the
definition of certain terms used in the foregoing formula.
The principal amount of a Note payable at Stated Maturity
thus will be determined with reference to the ten-year offered
side Italian Lira swap rates, the five-year offered side Swedish
Kroner swap rates and the five-year offered side Spanish Peseta
swap rate, but will never be less than zero. Depending on such
rates on the Reference Date, the principal amount payable at
Stated Maturity will range from zero to an amount in excess of
the Face Amount. In the absence of manifest error, the
determination by the Determination Agent of the principal amount
payable at Stated Maturity shall be final and binding.
Certain Definitions
"ITL10" means the rate determined by the Determination Agent
on the Reference Date in accordance with the following
provisions: ITL10 will be determined on the basis of the offered
side of the ten-year Italian Lira swap rate which appears on the
Telerate Page 42284 as of 11:00 A.M., London time. If such rate
does not so appear on such page, the Determination Agent will
request each of such number of Reference Dealers so as to obtain
five quotations to provide the Determination Agent with its
offered quotation for the ten-year Italian Lira swap rate as of
approximately 11:00 A.M., London time, on the Reference Date in
an amount that is representative of a single transaction for such
Reference Dealer at such time. The Determination Agent will
disregard the highest and lowest of the five quotations and
"ITL10" will be the arithmetic mean of the remaining three
quotations. If fewer than five but at least two such quotations
are provided, the rate shall be the arithmetic mean of the
quotations without disregarding any quotations, and, if fewer
than two quotations are provided as requested, the rate will be
determined by the Determination Agent by such method as the
Determination Agent determines, in good faith, in its absolute
discretion.
"Italian Lira swap rate" means, in general, a fixed per
annum rate of interest quoted on a 30/360 day basis and paid
annually that a hypothetical fixed rate payor would be prepared
to pay under an interest rate swap or exchange agreement, and for
which such payor would expect to receive, in return, over the
period of years specified, a floating rate of interest equal to
the then-prevailing six-month Italian Lira LIBOR rate.
"Telerate Page 42284" means the display page so designated
on the Dow Jones Telerate Service (or such other page as may
replace that page on that service, or such other service as may
be nominated as the information vendor, for the purpose of
displaying rates or prices relating to Italian Lira swap rates).
"SEK5" means the rate determined by the Determination Agent
on the Reference Date in accordance with the following
provisions: SEK5 will be determined on the basis of the offered
side of the five-year Swedish Kroner swap rate which appears on
the Reuters Page PMGA as of 11:00 A.M., London time. If such
rate does not so appear on such page, the Determination Agent
will request each of such number of Reference Dealers so as to
obtain five quotations to provide the Determination Agent with
its offered quotation for the five-year Swedish Kroner swap rate
as of approximately 11:00 A.M., London time, on the Reference
Date in an amount that is representative of a single transaction
for such Reference Dealer at such time. The Determination Agent
will disregard the highest and lowest of the five quotations and
"SEK5" will be the arithmetic mean of the remaining three
quotations. If fewer than five but at least two such quotations
are provided, the rate shall be the arithmetic mean of the
quotations without disregarding any quotations, and, if fewer
than two quotations are provided as requested, the rate will be
determined by the Determination Agent by such method as the
Determination Agent determines, in good faith, in its absolute
discretion.
"Swedish Kroner swap rate" means, in general, a fixed per
annum rate of interest quoted on a 30/360 day basis and paid
annually that a hypothetical fixed rate payor would be prepared
to pay under an interest rate swap or exchange agreement, and for
which such payor would expect to receive, in return, over the
period of years specified, a floating rate of interest equal to
the then-prevailing three-month Swedish Kroner STIBOR rate.
"Reuters Page PMGA" means the display page so designated on
the Reuters Service (or such other page as may replace that page
on that service, or such other service as may be nominated as the
information vendor, for the purpose of displaying rates or prices
relating to Swedish Kroner swap rates).
"ESP5" means the rate determined by the Determination Agent
on the Reference Date in accordance with the following
provisions: ESP5 will be determined on the basis of the offered
side of the five-year Spanish Peseta swap rate which appears on
the Telerate Page 42285 as of 11:00 A.M., London time. If such
rate does not so appear on such page, the Determination Agent
will request each of such number of Reference Dealers so as to
obtain five quotations to provide the Determination Agent with
its offered quotation for the five-year Spanish Peseta swap rate
as of approximately 11:00 A.M., London time, on the Reference
Date in an amount that is representative of a single transaction
for such Reference Dealer at such time. The Determination Agent
will disregard the highest and lowest of the five quotations and
"ESP5" will be the arithmetic mean of the remaining three
quotations. If fewer than five but at least two such quotations
are provided, the rate shall be the arithmetic mean of the
quotations without disregarding any quotations, and, if fewer
than two quotations are provided as requested, the rate will be
determined by the Determination Agent by such method as the
Determination Agent determines, in good faith, in its absolute
discretion.
"Spanish Peseta swap rate" means, in general, a fixed per
annum rate of interest quoted on a 30/360 day basis and paid
annually that a hypothetical fixed rate payor would be prepared
to pay under an interest rate swap or exchange agreement, and for
which such payor would expect to receive, in return, over the
period of years specified, a floating rate of interest equal to
the then-prevailing six-month Spanish Peseta LIBOR rate.
"Telerate Page 42285" means the display page so designated
on the Dow Jones Telerate Service (or such other page as may
replace that page on that service, or such other service as may
be nominated as the information vendor, for the purpose of
displaying rates or prices relating to Spanish Peseta swap
rates).
"Determination Day" means any day, other than a Saturday or
Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to close in New York
City and also is a day in which dealings in deposits in Italian
Lira, Swedish Kroner and Spanish Peseta are transacted in the
London interbank market.
"Reference Date" means the second Determination Day prior to
Stated Maturity.
"Reference Dealer" means any major bank or banking
corporation in London, selected in good faith by the
Determination Agent, which will provide offered quotations on the
relevant swap rate.
"Dur1" means an amount equal to the formula:
(1 / ITL10) x [1 - (1 + ITL10) raised to the exponent (-10)].
"Dur2" means an amount equal to the formula:
(1 / SEK5) x [1 - (1 + SEK5) raised to the exponent (-5)].
"Dur3" means an amount equal to the formula:
(1 / ESP5) x [1 - (1 + ESP5) raised to the exponent (-5)].
IMPORTANT INFORMATION
An investment in the Notes entails significant risks that
are not associated with a similar investment in other Debt
Securities. Such risks include, without limitation, the
possibility of significant changes in Italian Lira, Swedish
Kroner and Spanish Peseta swap rates and in rates of exchange
between currencies and the possibility of the impositions or
modification of foreign exchange controls by either the United
States or foreign governments. Such risks generally depend on
factors over which the Company has no control. For example, the
exchange rates between currencies are at any moment a result of
the supply of, and demand for, each currency. Changes in swap
rates result over time from the interaction of many factors
directly or indirectly affecting economic conditions in the
United States, Italy, Sweden and Spain, as well as economic,
military and political developments in other countries. Of
particular importance are exchange rates, rates of inflation,
interest rate levels, the balance of payments and the extent of
government surpluses and deficits in the respective countries,
all of which are in turn sensitive to the monetary, fiscal and
trade policies pursued by the governments in such countries and
in other countries important to international trade and finance.
Also, sovereign governments use a variety of techniques,
such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the level of interest
rates and exchange rates of their currencies. Governments may
also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by
devaluation or revaluation of a currency. Thus, a special risk
in purchasing the Notes is that governmental actions could
interfere with or change theretofore freely determined currency
valuations and fluctuations in market forces. There will be no
adjustment or change in the terms of the Notes in the event that
exchange rates should become fixed, or in the event of any
devaluation or revaluation or imposition of exchange or other
regulatory controls or taxes, or in the event of other
developments affecting the U.S. Dollar, Italian Lira, Swedish
Kroner or Spanish Peseta swap rates.
THIS PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO
NOT DESCRIBE ALL THE RISKS OF ANY INVESTMENT IN THE NOTES. THE
COMPANY BELIEVES THAT THESE RISKS ARE POTENTIALLY TOO VARIABLE TO
ASCERTAIN AND DESCRIBE WITH ANY REASONABLE DEGREE OF CERTAINTY
AND INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND
MILITARY CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICAL.
PROSPECTIVE INVESTORS SHOULD THEREFORE CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN THE NOTES. NOTES ARE NOT AN APPROPRIATE INVESTMENT
FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN
CURRENCY TRANSACTIONS.
SWAP RATES
The following table sets forth certain historical offered
side swap rates as reported by Reuters Monitors Money Rates
Service the last New York Business Day of the month indicated:
Ten-Year Five-Year Five-Year
Month-End Italian Lira Swedish Kroner Spanish Peseta
1989:
March NA NA 13.35
June NA NA 13.00
September 13.25 NA 13.05
December 13.65 NA 14.10
1990:
March 13.95 NA 14.70
June 13.02 NA 13.85
September 13.75 14.67 14.50
December 13.12 13.83 14.10
1991:
March 12.58 12.55 12.30
June 12.72 11.40 12.10
September 12.42 10.93 11.48
December 12.24 11.50 11.85
1992:
March 11.97 10.87 11.53
June 12.31 11.00 12.15
September 13.22 12.50 14.10
December 12.67 10.38 13.10
1993:
March 11.83 9.14 11.67
June 10.26 8.01 9.92
September 8.51 7.78 8.84
December 8.17 7.01 7.81
On March 14, 1994, the offered side swap rates as reported
by Reuters Monitors Money Rates Service were as follows:
ten-year Italian Lira = 9.48%; five-year Swedish Kroner = 7.58%;
five-year Spanish Peseta = 8.53%.
The information presented in the above table is furnished as
a matter of information only. In recent years, Italian Lira,
Swedish Kroner and Spanish Peseta swap rates have been highly
volatile and such volatility may occur in the future. The
fluctuations in the Italian Lira, Swedish Kroner and Spanish
Peseta swap rates that have occurred in the past, however, are
not necessarily indicative of fluctuations in the rates that may
occur over the term of the Notes.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In addition to the consequences summarized in the Prospectus
Supplement under the heading "United States Taxation," set forth
below is a summary of certain United States Federal income tax
consequences to original Holders of the Notes that have purchased
the Notes at their Issue Price.
The Federal income tax treatment of the payments on the
Notes is unclear because payment on the Notes at Stated Maturity
is entirely contingent. However, there are at least three
possible alternative approaches.
Under the first approach, interest payment made on September 17,
1994, and at Stated Maturity will be taxable to a Holder that
is a United States person (a "U.S. Holder") as ordinary income at
the time they accrue or are received, depending on the U.S.
Holder's method of tax accounting. At Stated Maturity a U.S.
Holder will recognize short-term capital loss if the amount paid
with respect to a Note is less than the Note's Issue Price and
short-term capital gain or ordinary income if the amount paid is
greater that the Issue Price.
Under the second approach, the payments of interest on
September 17, 1994 and at Stated Maturity will be treated as a
non-taxable return of principal and reduce the U.S. Holder's tax
basis (which initially was the Issue Price). On the Stated
Maturity, a U.S. Holder will recognize ordinary income (treated
as interest) to the extent the payment made by the Company
exceeds such U.S. Holder's tax basis and capital loss to the
extent it is less than such U.S. Holder's tax basis. This
approach is based on existing proposed original issue discount
regulations relating to contingent payment debt obligations (the
"Proposed Regulations"), which by their terms apply to the Notes.
However, the proposed Regulations no longer appear to reflect the
IRS's current position with respect to contingent payment debt
obligations.
Under the third approach, accrual method U.S. Holders would
accrue original issue discount ("OID") into income, as described
in the Prospectus, based on the expected yield of the Note using
a reasonable estimate of the payment at Stated Maturity
determined as of the end of a taxable year or as of the issue
date, or a market yield for the Note determined as of the issue
date. Such amounts would be subject to subsequent adjustments to
the extent that the estimate was incorrect. The payments of
interest on September 17, 1994 and at Stated Maturity will be
treated first as payments of OID to the extent of accrued OID at
such time and then as a return of principal. Cash method U.S.
holders would apply estimates in a similar fashion to that
described in the Prospectus Supplement under "United States
Taxation--Short-Term Notes" to determine the portion of interest
received that was taxable. This approach is based on proposed
contingent payment debt regulations that were announced by the
IRS in January, 1993 but subsequently withdrawn.
Under the three approaches, it is not clear whether any gain
recognized on the sale or exchange of a Note would be ordinary
income or capital gain, although any loss would be a capital loss
(except in some circumstances under the third approach).
Backup Withholding. The rate of backup withholding has been
increased from 20% to 31%.
MERRILL LYNCH & CO.
NORTH CAROLINA
The Commissioner of Insurance of the State of North Carolina
has not approved or disapproved this offering nor has the
Commissioner passed upon the accuracy or adequacy of this
Prospectus.
