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