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
AUGUST 27, 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 September 15, 1995, General Mills had 158,596,749 shares of
its $.10 par value common stock outstanding (excluding 45,556,583
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
August 27, August 28,
1995 1994
Continuing Operations:
Sales $1,276.3 $1,156.7
Costs and Expenses:
Cost of sales 525.6 460.2
Selling, general and administrative 458.6 439.6
Depreciation and amortization 46.7 46.9
Interest, net 27.0 22.1
Total Costs and Expenses 1,057.9 968.8
Earnings from Continuing Operations
before Taxes 218.4 187.9
Income Taxes 81.5 69.9
Earnings from Continuing Operations 136.9 118.0
Discontinued Operations after Taxes - 32.8
Net Earnings $ 136.9 $ 150.8
Earnings per Share:
Continuing operations $ .86 $ .75
Discontinued operations - .20
Net Earnings per Share $ .86 $ .95
Dividends per Share $ .47 $ .47
Average Number of Common Shares 158.4 158.1
See accompanying notes to consolidated condensed financial statements.
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)
(Unaudited) (Unaudited)
August 27, August 28, May 28,
1995 1994 1995
ASSETS
Current Assets:
Cash and cash equivalents $ 16.7 $ 50.1 $ 13.0
Receivables 330.1 312.8 277.3
Inventories:
Valued primarily at FIFO 185.0 162.1 134.7
Valued at LIFO (FIFO value exceeds LIFO by
$55.0, $44.1 and $53.0, respectively) 249.3 342.5 237.3
Prepaid expenses and other current assets 77.4 80.0 80.8
Deferred income taxes 142.6 168.8 153.8
Total Current Assets 1,001.1 1,116.3 896.9
Land, Buildings and Equipment, at Cost 2,624.2 2,524.9 2,611.9
Less accumulated depreciation (1,187.3) (1,044.8) (1,155.3)
Net Land, Buildings and Equipment 1,436.9 1,480.1 1,456.6
Net Assets of Discontinued Operations - 1,610.0 -
Other Assets 1,017.0 953.2 1,004.7
Total Assets $3,455.0 $5,159.6 $3,358.2
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 490.1 $ 546.5 $ 494.0
Current portion of long-term debt 130.8 125.0 93.7
Notes payable 139.9 704.4 112.9
Accrued taxes 165.3 183.1 108.8
Other current liabilities 378.5 276.7 411.5
Total Current Liabilities 1,304.6 1,835.7 1,220.9
Long-term Debt 1,334.9 1,393.4 1,400.9
Deferred Income Taxes 258.4 239.7 248.6
Deferred Income Taxes - Tax Leases 169.6 189.9 169.1
Other Liabilities 177.8 172.5 177.7
Total Liabilities 3,245.3 3,831.2 3,217.2
Common Stock Subject to Put Options - 58.2 -
Stockholders' Equity:
Cumulative preference stock, none issued - - -
Common stock, 204.2 shares issued 381.0 314.2 379.5
Retained earnings 1,296.2 2,534.9 1,233.3
Less common stock in treasury, at cost,
shares of 45.6, 46.5 and 46.3,
respectively (1,361.0) (1,383.5) (1,372.1)
Unearned compensation and other (57.9) (138.1) (57.9)
Cumulative foreign currency adjustment (48.6) (57.3) (41.8)
Total Stockholders' Equity 209.7 1,270.2 141.0
Total Liabilities and Equity $3,455.0 $5,159.6 $3,358.2
See accompanying notes to consolidated condensed financial statements.
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (In Millions)
Thirteen Weeks Ended
August 27, August 28,
1995 1994
Cash Flows - Operating Activities:
Earnings from continuing operations $136.9 $118.0
Adjustments to reconcile earnings to cash flow:
Depreciation and amortization 46.7 46.9
Deferred income taxes 20.0 45.1
Change in current assets and liabilities (76.9) (198.3)
Other, net (2.1) 1.8
Cash provided by continuing operations 124.6 13.5
Cash provided (used) by discontinued operations (10.2) 34.1
Net Cash Provided by Operating Activities 114.4 47.6
Cash Flows - Investment Activities:
Purchases of land, buildings and equipment (30.3) (29.4)
Investments in businesses, intangibles and
affiliates (11.9) (6.4)
Purchases of marketable investments (1.8) (1.7)
Proceeds from sale of marketable investments 5.8 .5
Other, net (7.9) (22.0)
Discontinued operations investments activities, net - (95.8)
Net Cash Used by Investment Activities (46.1) (154.8)
Cash Flows - Financing Activities:
Increase in notes payable 27.4 265.6
Issuance of long-term debt 16.8 1.7
Payment of long-term debt (45.3) (10.0)
Common stock issued 10.9 5.6
Purchases of common stock for treasury - (57.7)
Dividends paid (74.4) (74.6)
Other, net - (1.1)
Net Cash Provided (Used) by Financing Activities (64.6) 129.5
Increase in Cash and Cash Equivalents $ 3.7 $22.3
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
thirteen weeks ended August 27, 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
On May 28, 1995, General Mills distributed the common stock of Darden
Restaurants, Inc. (Darden) to General Mills' shareholders ("spin-off"). 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 now
included in Discontinued Operations for all periods presented.
(3) Statements of Cash Flows
During the quarter, we paid $13.5 million for interest (net of amount
capitalized) and $1.0 million for income taxes.
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 first quarter of
fiscal 1995 have been restated to present assets and results of these
operations as Discontinued Operations. The spinoff of the restaurant
division reduced Stockholders' Equity by $1,218.7 million at May 28, 1995.
Continuing operations generated $111.1 million more cash in the first
quarter 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, primarily inventory.
Fiscal 1996 capital expenditures are estimated to be approximately $170
million. During the first three months, capital expenditures totaled
$30.3 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 quarter activity included new debt
of $15.0 million and debt payments of $41.3 million under this
program. In August 1995, effective October 2, 1995, we called
$50.0 million of medium-term notes due September 1996 with an
interest rate of 6.4%.
RESULTS OF OPERATIONS
Sales in the first quarter grew 10 percent to $1,276.3 million. First
quarter earnings per share from continuing operations increased by 15
percent to $.86 compared to $.75 last year. The prior-year comparisons
exclude results for Gorton's, which was sold in May 1995, and the
restaurant operations that were spun off as an independent company (Darden
Restaurants, Inc.) at the end of the last fiscal year.
First-quarter results were at a record level and represented excellent
progress in restoring the company's growth momentum. The quarter
reflected strong unit volume growth across the company, continuing
benefits from productivity efforts, and improving profitability from
international activities. Total domestic retail packaged foods unit
volume grew more than 12 percent, and the company's expanding
international operations posted even stronger gains.
Big G cereals led first-quarter performance, posting strong profit growth
and an 18 percent unit volume increase. In the previous year's first
quarter, cereal volume was down 21 percent as the company temporarily
suspended shipments following an independent licensed contractor's
improper substitution of a pesticide in treating some raw oat supplies.
Virtually all of the current quarter's gain was generated by established
brands, including Honey Nut Cheerios, Lucky Charms, Cinnamon Toast Crunch,
and larger, twinpack sizes sold in nontraditional retail outlets. Big G's
pound market share for the quarter approached 23 percent, up more than 2
percentage points from the prior-year period. Shipments of new Frosted
Cheerios cereal began on September 11, and retailer response to this major
introduction has been very favorable.
Volume trends for General Mills' other dry grocery businesses reflected
renewed momentum following the company's January 1995 shift to new,
efficient promotional practices. Snack product volume increased 10
percent in the first quarter, led by new items including Sweet Rewards
snack bars, HBO Microwave popcorn and Color by the Foot fruit snacks. The
company's remaining domestic retail businesses posted 5 percent volume
growth, led by Helper dinner mixes. In addition, Foodservice operations
reported a 23 percent volume gain.
General Mills' Canadian food businesses reported a 15-percent increase in
total unit volume for the quarter. Cereal Partners Worldwide (CPW), the
company's strategic alliance with Nestle, achieved a 25 percent volume
gain for the period, which led to share gains in most markets. First-
quarter volume rose 15 percent for Snack Ventures Europe, the company's
joint venture with PepsiCo Foods International. That growth reflected
product line additions in established markets, as well as SVE's expansion
to new markets in Eastern Europe.
Quarterly net interest expense increased by $4.9 million compared to last
year, primarily due to higher interest rates.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 11 Statement of Computation of Earnings per Share.
Exhibit 12 Statement of Ratio of Earnings to Fixed Charges.
(b) Reports on Form 8-K
On June 12, 1995, the Company filed a report on Form 8-K
describing the spin-off distribution, as of May 28, 1995, of all
outstanding shares of common stock of Darden Restaurants, Inc. to
General Mills shareholders as of the Record Date, May 15, 1995.
On July 11, 1995, the Company filed a report on Form 8, Amendment
No. 1 to the aforementioned Form 8-K, providing certain financial
information.
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 October 6, 1995 /s/ S. S. Marshall
S. S. Marshall
Senior Vice President,
General Counsel and Secretary
Date October 6, 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)
Thirteen Weeks Ended
August 27, August 28,
1995 1994
Net Earnings $136.9 $150.8
Computation of Shares:
Weighted average number of shares outstanding,
excluding shares held in treasury (a) 158.4 158.1
Net shares resulting from the assumed exercise of
certain stock options (b) 2.7* 1.8*
Shares potentially issuable under compensation plans -* .1*
Total common shares and common share equivalents 161.1 160.0
Earnings per Share $ .86 $ .95
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 158.4 million and
158.1 million for the first quarter of fiscal 1996 and
1995, respectively.
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
Thirteen Weeks Ended Fiscal Year Ended
August 27, August 28, May 28, May 29, May 30, May 31, May 26,
1995 1994 1995 1994 1993 1992 1991
Ratio of Earnings
to Fixed Charges 7.59 7.47 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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from our Form
10-Q for the thirteen week period ended August 27, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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<PERIOD-END> AUG-27-1995
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<BONDS> 1,334,900,000
<COMMON> 381,000,000
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