SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended May 28, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
Reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of Common Stock held by non-
affiliates of the Registrant, based on the closing price of
$52.375 per share as reported on the New York Stock Exchange on
July 20, 1995: $8,297.9 million.
Number of shares of Common Stock outstanding as of July 20,
1995: 158,433,123 (excluding 45,720,209 shares held in the
treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 14, 1995
are incorporated by reference into Part III, and portions of
Registrant's 1995 Annual Report to Stockholders
are incorporated by reference into Parts I, II and IV.
PART I
Item 1. Business.
General Mills, Inc. was incorporated in Delaware in 1928.
The Company is engaged in the manufacture and marketing of
consumer foods products. The terms "General Mills,"
"Company" and "Registrant" mean General Mills, Inc. and its
subsidiaries unless the context indicates otherwise.
On May 18, 1995, the Company sold its Gorton's division.
Gorton's is a leading marketer of frozen and canned seafood
products to the grocery and food service markets in the
United States and Canada.
On May 28, 1995, the Company made a tax-free, pro rata
distribution of the shares of Darden Restaurants, Inc., a
newly established subsidiary containing the Company's
restaurant business, to the stockholders of General Mills,
Inc. The divested restaurant business includes Red Lobster
full-service seafood restaurants in the United States and
Canada, The Olive Garden full-service Italian restaurants in
the United States and Canada, and China Coast, a new Chinese
restaurant concept. As a result of the sale of Gorton's and
the distribution of Darden, the Company's consolidated
financial statements for fiscal 1995 treat Gorton's and the
Restaurant business as discontinued operations, and prior
years' consolidated financial statements have been restated
accordingly. See Note Two to Consolidated Financial
Statements appearing on page 20 in the Company's 1995 Annual
Report to Stockholders, incorporated herein by reference.
The Company is a leading producer of packaged consumer
foods and markets its packaged food products primarily
through its own sales organizations, supported by
advertising and other promotional activities. Such products
are primarily distributed directly to retail food chains, co-
operatives, membership stores and wholesalers. Certain food
products, such as yogurt and some food service products, are
sold through distributors and brokers.
The packaged consumer foods market is highly competitive,
with numerous competitors of varying sizes. The principal
methods of competition include product quality, advertising,
promotion and price. In most of its consumer foods lines,
described below, General Mills competes not only with other
widely advertised branded products, but also with generic
products and private label products, which are generally
distributed at lower prices.
Cereals. General Mills produces and sells a number of
ready-to-eat cereals, including such brands as: CHEERIOS,
HONEY NUT CHEERIOS, APPLE CINNAMON CHEERIOS, MULTI-GRAIN
CHEERIOS, WHEATIES, WHEATIES HONEY GOLD, LUCKY CHARMS, CORN
TOTAL, WHEAT TOTAL, TRIX, GOLDEN GRAHAMS, KIX, BERRY BERRY
KIX, FIBER ONE, COCOA PUFFS, CRISPY WHEATS 'N RAISINS,
CINNAMON TOAST CRUNCH, CLUSTERS, RAISIN NUT BRAN, TOTAL
RAISIN BRAN, OATMEAL CRISP, TRIPLES and BASIC 4. In fiscal
1995, the Company introduced REESE'S PEANUT BUTTER PUFFS and
SUN CRUNCHERS.
Desserts, Flour and Baking Mixes. General Mills makes
and sells a line of dessert mixes under the BETTY CROCKER
trademark, including SUPERMOIST layer cakes, CREAMY DELUXE
and WHIPPED DELUXE ready-to-spread frostings, SUPREME
BROWNIE MIX, SUPREME DESSERT BARS, muffin mixes, CREAMY
CHILLED DESSERTS and a new line, SWEET REWARDS fat-free
snack cake mixes. The Company markets a variety of baking
mixes under the BISQUICK trademark, sells pouch mixes under
the GOLD MEDAL name and produces family flour under the GOLD
MEDAL brand, introduced in 1880, and regional brands such as
LA PINA, ROBIN HOOD and RED BAND. The Company also engages
in grain merchandising, produces ingredient flour for
internal requirements and sells flour to bakery, foodservice
and manufacturing markets.
Dinner and Side Dish Products. General Mills
manufactures a line of BETTY CROCKER dry packaged dinner
mixes under the HAMBURGER HELPER, TUNA HELPER, and SKILLET
CHICKEN HELPER trademarks, and in June, 1995 introduced
DINNER SENSATIONS, a high value-added packaged dinner
product. Also under the BETTY CROCKER trademark, the
Company sells POTATO BUDS instant mashed potatoes, POTATO
SHAKERS flavorings and other potato and pasta specialty
mixes, such as SUDDENLY SALAD and BETTY CROCKER au gratin
and scalloped potatoes. The Company also sells BAC*O'S
garnish and salad topping.
Snack Products and Beverages. General Mills markets POP
SECRET and HBO microwave popcorn; a line of grain snacks
including NATURE VALLEY GRANOLA BARS, DUNKAROOS, and a new
lowfat chewy granola bar; a line of fruit snacks including
FRUIT ROLL-UPS, FRUIT BY THE FOOT, GUSHERS, FRUIT STRING
THING, BUGS BUNNY and TASMANIAN DEVIL; a line of fat-free
snack bars under the name SWEET REWARDS and a savory snack
marketed under the name BUGLES. The Company also produces
and sells a line of single-serving fruit juice drinks
marketed under the SQUEEZIT trademark and SQUEEZIT 100, a
100% juice beverage.
Yogurt Products. Yoplait USA manufactures and sells a
line of yogurt, including YOPLAIT ORIGINAL, YOPLAIT LIGHT,
CUSTARD STYLE, LIGHT CUSTARD STYLE, FAT FREE FRUIT ON THE
BOTTOM, TRIX, a layered yogurt for children, YOPLAIT FRUIT
ROLL-UPS, a children's yogurt with a soft core of fruit,
YOPLAIT CRUNCH 'N YOGURT and YOPLAIT LIGHT CRUNCH 'N YOGURT,
a lowfat yogurt with an overcap of crunchy toppings.
Yoplait USA also markets soft frozen yogurt in food service
channels and hardpack frozen yogurt and novelties under a
licensing arrangement. The Colombo yogurt business,
acquired in December 1993, manufactures and sells a variety
of refrigerated cup yogurt, soft frozen yogurt, and
superpremium hardpack frozen yogurt products under the
COLOMBO brand name.
International Food Operations. General Mills Canada,
Inc. manufactures and sells food products in Canada,
including BIG G ready-to-eat cereals, BETTY CROCKER dessert,
baking and packaged dinner mixes and snacks. The Company
also has an interest in a Latin American flour milling and
food operation, licenses food products for manufacture in
Europe and the Asia/Pacific region, and exports flour and
packaged products throughout the world.
International Dessert Partners L.L.C. ("IDP"), the
Company's joint venture with CPC International Inc., will
manufacture and sell baking mixes and desserts in Latin
America under a joint venture agreement executed in December
1994. The Company has a 50% equity interest in IDP. See
Note Four to Consolidated Financial Statements appearing on
page 21 of the Company's 1995 Annual Report to Stockholders,
incorporated herein by reference.
Cereal Partners Worldwide ("CPW"), the Company's joint
venture with Nestle, S.A. through various entities, competes
in more than 40 countries and republics, including, most
recently, Poland and Hong Kong. The following products
under the umbrella NESTLE trademark were marketed in fiscal
1995: TRIO, CLUSTERS, NESQUICK, MULTI-CHEERIOS, HONEY NUT
CHEERIOS, GOLDEN GRAHAMS, CINI MINIS, CHOCAPIC, TRIX,
SHREDDED WHEAT, SHREDDIES, COUNTRY CORN FLAKES, APPLE PUFFS,
HONEY STARS and KOKO KRUNCH. The Company has a 50% equity
interest in CPW. See Note Four to Consolidated Financial
Statements appearing on page 21 of the Company's 1995 Annual
Report to Stockholders, incorporated herein by reference.
Snack Ventures Europe ("SVE"), the Company's joint venture
with PepsiCo, Inc., manufactures and sells snack foods in
Holland, France, Belgium, Spain, Portugal, Greece, and
Italy, and late in fiscal 1995 began expansion into Estonia,
Hungary, Russia and Slovakia. The Company has a 40.5%
equity interest in SVE. See Note Four to Consolidated
Financial Statements appearing on page 21 of the Company's
1995 Annual Report to Stockholders, incorporated herein by
reference.
Foodservice. The Foodservice division markets General
Mills branded baking mixes, cereals, snacks and custom
products to the commercial and non-commercial sectors,
including airlines, schools, restaurants and food management
companies.
General
Trademarks and Patents. The Company's products are
marketed and businesses operated under trademarks and
service marks owned by or licensed to the Company.
Trademarks and service marks are vital to the Company's
business. The most significant trademarks and service marks
of the Company are contained in the business segment
discussions above.
The Company considers that, taken as a whole, the rights
under its various patents, which expire from time to time,
are a valuable asset, but the Company does not believe that
its businesses are materially dependent upon any single
patent or group of related patents. Outside its joint
venture activities, the Company's activities under licenses
or other franchises or concessions are not material.
Raw Materials and Supplies. The principal raw materials
used by General Mills are cereal grains, sugar, fruits,
other agricultural products, vegetable oils, and plastic and
paper for packaging materials. Although General Mills has
some long-term contracts, the bulk of such raw materials are
purchased on the open market. Although prices of most raw
materials will probably increase over the long term, General
Mills believes that it will be able to obtain an adequate
supply of such raw materials. Occasionally and where
possible, General Mills makes advance purchases of
commodities significant to its business in order to ensure
continuity of operations. The Company's objective is to
procure ingredients meeting both the Company's quality
standards and its production needs at the lowest total costs
to the Company. The Company's strategy is to buy these
ingredients at price levels which allow a targeted profit
margin. Since ingredients generally represent the largest
variable cost in manufacturing the Company's products, to
the extent possible, the Company hedges the risk associated
with adverse price movements of grains and vegetable oils
using exchange-traded futures and options and forward cash
contracts. These tools enable the Company to manage the
related commodity price risk over periods of time that
exceed the period of time in which the physical commodity is
available. Sugar is not hedged since there is no viable
derivative market that meets the Company's needs.
Accordingly, the Company uses hedging to mitigate the risks
associated with adverse price movements and not to speculate
in the marketplace. See also Note Seven to Consolidated
Financial Statements appearing on page 22 of the Company's
1995 Annual Report to Stockholders, incorporated herein by
reference.
Capital Expenditures. During the three fiscal years
ended May 28, 1995, General Mills expended $687 million for
capital expenditures, not including the cost of acquired
companies. The Company expects to spend approximately $170
million for such purposes in fiscal 1996.
Research and Development. The main research and
development facilities are located at the James Ford Bell
Technical Center in Golden Valley (suburban Minneapolis),
Minnesota. With a staff of approximately 750, the Center is
responsible for most of the food research for the Company.
Approximately one-half of the staff hold degrees in various
chemical, biological and engineering sciences. Research and
development expenditures (all Company-sponsored) amounted to
$59.8 million in fiscal 1995, $59.1 million in fiscal 1994
and $55.7 million in fiscal 1993. General Mills' research
and development resources are focused on new product
development, product improvement, process design and
improvement, packaging and exploratory research in new
business areas.
Employees. At May 28, 1995, General Mills had
approximately 9,900 employees.
Environmental Matters. As of June 30, 1995, the Company
has received notices advising it that there have been
releases or threatened releases of hazardous substances or
wastes at 11 sites, and alleging that the Company is
potentially responsible for cleaning up those sites and/or
paying certain costs in connection with those sites. These
matters involve several different procedural contexts,
including litigation initiated by governmental authorities
and/or private parties, administrative proceedings commenced
by regulatory agencies, and demand letters issued by
regulatory agencies and/or private parties. The Company
recognizes that its potential exposure with respect to any
of these sites may be joint and several, but has concluded
that its probable aggregate exposure is not material. This
conclusion is based upon, among other things, the Company's
payments and/or accruals with respect to each site; the
number, ranking, and financial strength of other potentially
responsible parties identified at each of the sites; the
status of the proceedings, including various settlement
agreements, consent decrees or court orders; allocations of
volumetric waste contributions and allocations of relative
responsibility among potentially responsible parties
developed by regulatory agencies and by private parties;
remediation cost estimates prepared by governmental
authorities or private technical consultants; and the
Company's historical experience in negotiating and settling
disputes with respect to similar sites.
Based on current facts and circumstances, General Mills
believes that neither the results of these proceedings nor
its compliance in general with environmental laws or
regulations will have a material effect upon the capital
expenditures, earnings or competitive position of the
Company.
Segment Information. Reporting financial information
relating to industry segments of General Mills was
discontinued as of May 28, 1995 with the distribution of the
restaurant business. For a description of the distribution,
see Note Two to Consolidated Financial Statements appearing
on page 20 of the Company's 1995 Annual Report to
Stockholders, incorporated herein by reference. Geographic
financial information is found in Note Eighteen to
Consolidated Financial Statements appearing on page 29 of
the Company's 1995 Annual Report to Stockholders,
incorporated herein by reference.
Executive Officers of the Registrant
The executive officers of the Company, together with their
ages and business experience, are set forth below.
Dean Belbas, age 63, is Senior Vice President, Investor
Relations. Mr. Belbas joined General Mills in 1956, was
elected Vice President in 1977 and was elected Senior Vice
President in 1995.
Edward K. Bixby, age 59, is Senior Vice President;
President, Consumer Foods Sales and Distribution, with
additional responsibility for Foodservice. Mr. Bixby joined
the Company in 1958 and served as General Manager of several
Consumer Foods divisions. Mr. Bixby was elected Senior Vice
President, General Manager, Grocery Products Sales Division
in 1987, named President, Consumer Foods Sales in 1989 and
named to his present position in 1994.
Michael E. Cushmore, age 55, is Senior Vice President;
President, Gold Medal, a division that includes Gold Medal
and other family flour, Bisquick baking mix and Betty
Crocker desserts and baking mixes. Mr. Cushmore joined the
Company in 1966 and was named Vice President, General
Manager for the Northstar Division in 1983, Chairman of
Leeann Chin's, Inc. in 1985 and Vice President, General
Manager for the Betty Crocker Division in 1987. He was
elected to his present position in 1993.
Randy G. Darcy, age 44, is Senior Vice President,
Operations. Mr. Darcy joined the Company in 1987 and was
named Vice President, Director of Manufacturing, Technology
and Operations in 1989 and named to his present position in
1994.
Jon L. Finley, age 41, is Senior Vice President, New
Business. Mr. Finley joined the Company in 1983 and was
named President, Yoplait USA in 1991, appointed a Vice
President of the Company in 1991, named President of China
Coast in 1992 and was elected Senior Vice President and
named to his present position in 1994.
Leslie M. Frecon, age 42, is Senior Vice President,
Corporate Finance. Ms. Frecon joined the Company in 1981 as
Manager of Acquisitions and was named Director of
Acquisitions in 1983, Controller of Foodservice in 1989 and
Controller of Sperry in 1991. She was named a Vice
President of the Company in 1991 and was elected to her
present position in 1993.
Charles W. Gaillard, age 54, is President, and has been a
director of the Company since 1993. Mr. Gaillard joined the
Company in 1966, became General Manager of the Golden Valley
Division and was appointed a Vice President in 1977. He was
appointed General Manager of the Big G Division in 1979, was
elected a Senior Vice President in 1985, was named Senior
Vice President, International Foods in 1988, was elected
Executive Vice President and President and Chief Executive
Officer of CPW, S.A. in 1989 and elected Vice Chairman in
1993. He was elected to his present position in 1995.
Stephen J. Garthwaite, age 51, is Senior Vice President,
Innovation and Technology. Mr. Garthwaite joined the
Company in 1982 as Vice President, Director of Corporate
Research and was named Vice President, Research and
Development for the Betty Crocker Division in 1986. He
assumed the position of Vice President, Research and
Development for Consumer Foods in 1987, was elected Senior
Vice President, Research and Development in 1989, was named
Senior Vice President, Technology and Operations in 1990 and
was named to his present position in 1994.
Siri S. Marshall, age 47, is Senior Vice President,
General Counsel and Secretary. Ms. Marshall joined the
Company in this position in 1994 from Avon Products, Inc.
where she held the positions of Senior Vice President,
General Counsel and Secretary from 1992 to 1994 and Vice
President-Legal and Government Affairs and Secretary from
1990 to 1992.
David D. Murphy, age 43, is Senior Vice President;
President, General Mills Canada and International Foods.
Mr. Murphy joined the Company in 1976, was appointed Vice
President of Marketing Services in 1986 and subsequently
Vice President, General Manager of the Minnetonka Division
in 1988. He assumed overall responsibility for Betty
Crocker Products in 1989, when the Minnetonka and Betty
Crocker Divisions were merged. He was elected a Senior Vice
President in 1991, named President of the Big G Division in
1992 and named President of General Mills Canada and
International Foods in 1993.
Michael A. Peel, age 45, is Senior Vice President,
Personnel. Mr. Peel joined the Company in this position in
1991 from PepsiCo, Inc. where he was Senior Vice President,
Personnel, responsible for PepsiCo Worldwide Foods from 1987
to 1991.
Gary M. Rodkin, age 43, is Senior Vice President;
President, Yoplait USA. Mr. Rodkin joined the Company in
1979 and was named Vice President, Director of Marketing and
Sales, Sperry Division in 1988, Vice President, General
Manager, Grain Snacks and Beverages in 1989, President,
General Mills New Ventures in 1989, President, Yoplait USA
in 1992 and was elected to his present position in 1994.
Jeffrey J. Rotsch, age 45, is Senior Vice President;
President, Big G. Mr. Rotsch joined the Company in 1974 and
was named Vice President, Director of Marketing for the
Betty Crocker Division in 1987, Vice President, General
Manager for Betty Crocker main meals and side dishes in
1989, elected Senior Vice President in 1993 and named to his
present position in 1994.
Stephen W. Sanger, age 49, was named Chairman of the Board
and Chief Executive Officer effective May 28, 1995. He has
been a director of the Company since 1992. Mr. Sanger
joined the Company in 1974 and was named Vice President,
General Manager of the Northstar Division in 1983. He was
appointed Vice President, General Manager of New Business
Development in 1986, President of Yoplait USA in 1986,
President of the Big G Division in 1988, elected Senior Vice
President in 1989, Executive Vice President in 1991, Vice
Chairman in 1992 and President in 1993.
Austin P. Sullivan, Jr., age 55, is Senior Vice President,
Corporate Relations. Mr. Sullivan joined the Company in
1976, was named a Vice President in 1978, named Director of
Public Affairs in 1979 and assumed responsibility for
Corporate Communications in 1993. He was named to his
present position in 1994.
Kenneth L. Thome, age 47, is Senior Vice President,
Financial Operations. Mr. Thome joined the Company in 1969
and was named Vice President, Controller for Convenience and
International Foods Group in 1985, Vice President,
Controller for International Foods in 1989, Vice President,
Director of Information Systems in 1991 and was elected to
his present position in 1993.
Item 2. Properties.
The Company's principal executive offices and main
research laboratory are Company-owned and located in the
Minneapolis, Minnesota metropolitan area. General Mills
operates numerous manufacturing facilities and maintains
many sales and administrative offices and warehouses, mainly
in the United States. Other facilities are also operated in
Canada.
General Mills operates ten major consumer foods plants for
the production of cereal products, prepared mixes,
convenience foods and other food products. These facilities
are located at Albuquerque, New Mexico; Buffalo, New York;
Cedar Rapids, Iowa; Chicago, Illinois area (3); Covington,
Georgia; Lodi, California; Toledo, Ohio; and Etobicoke,
Canada. The Company owns seven flour mills located at Avon,
Iowa; Buffalo, New York; Great Falls, Montana; Johnson City,
Tennessee; Kansas City, Missouri; Vallejo, California; and
Vernon, California. The Company operates seven terminal
grain elevators and has country grain elevators in 25
locations, primarily in Idaho and Montana.
General Mills also has eight other food and beverage
production facilities with total floor space of
approximately 555,000 square feet, including 231,000 square
feet of leased space. General Mills also owns or leases
warehouse space aggregating approximately 6,014,000 square
feet, of which approximately 3,846,000 square feet are
leased. A number of sales and administrative offices are
maintained in the United States and Canada, totaling
1,687,000 square feet.
Item 3. Legal Proceedings.
In management's opinion, there were no claims or
litigation pending at May 28, 1995, the outcome of which
could have a significant effect on the consolidated
financial position of General Mills, Inc. and its
subsidiaries. See the information contained under the
section entitled "Environmental Matters," supra, for a
discussion of environmental matters in which the Company is
involved.
Item 4. Submission of Matters to a Vote of Security
Holders. - Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information relating to the market prices and
dividends of the Company's common stock contained in Note
Nineteen to Consolidated Financial Statements appearing on
page 29 of Registrant's 1995 Annual Report to Stockholders
is incorporated herein by reference. As of July 20, 1995,
the number of record holders of common stock was 44,925.
The Company's common stock ($.10 par value) is listed on the
New York and Chicago Stock Exchanges.
Item 6. Selected Financial Data.
The information for fiscal years 1991 through 1995
contained in the Eleven-Year Financial Summary on page 30 of
Registrant's 1995 Annual Report to Stockholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
The information set forth in the section entitled
"Management's Discussion of Results of Operations and
Financial Condition" on pages 13 through 15 of Registrant's
1995 Annual Report to Stockholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
The information on pages 16 through 29 of Registrant's
1995 Annual Report to Stockholders is incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. - Not applicable.
PART III
Item 10. Directors and Executive Officers of the
Registrant.
The information contained in the sections entitled
"Information Concerning Nominees" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934"
contained in Registrant's definitive proxy materials dated
August 14, 1995 is incorporated herein by reference.
Item 11. Executive Compensation.
The information contained on pages 22 through 28 of
Registrant's definitive proxy materials dated August 14,
1995 is incorporated herein by reference. The information
appearing under the heading "Report of Compensation
Committee on Executive Compensation" is not incorporated
herein.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
The information contained in the section entitled "Share
Ownership of Directors and Executive Officers" contained in
Registrant's definitive proxy materials dated August 14,
1995 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
- Not applicable.
The Company's Annual Report on Form 10-K for the fiscal year
ended May 28, 1995, at the time of its filing with the
Securities and Exchange Commission, shall modify and
supersede all prior documents filed pursuant to Sections 13,
14 and 15(d) of the 1934 Act for purposes of any offers or
sales of any securities after the date of such filing
pursuant to any Registration Statement or Prospectus filed
pursuant to the Securities Act of 1933 which incorporates by
reference such Annual Report on Form 10-K.
AUDITORS' REPORT
The Stockholders and the Board of Directors
General Mills, Inc.:
Under date of June 27, 1995, we reported on the
consolidated balance sheets of General Mills, Inc. and
subsidiaries as of May 28, 1995 and May 29, 1994 and the
related consolidated statements of earnings and cash flows
for each of the fiscal years in the three-year period ended
May 28, 1995, as contained in the 1995 annual report to
stockholders. These consolidated financial statements and
our report thereon are incorporated by reference in the
annual report on Form 10-K for the fiscal year ended May 28,
1995. In connection with our audits of the aforementioned
consolidated financial statements, we have also audited the
related financial statement schedule as listed in the
accompanying index. This financial statement schedule is
the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
Our report covering the basic consolidated financial
statements refers to changes in the method of accounting for
investments in debt and equity securities in fiscal 1995 and
postemployment benefits and income taxes in fiscal 1994.
.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 27, 1995
AUDITORS' CONSENT
The Board of Directors
General Mills, Inc.:
We consent to incorporation by reference in the
Registration Statements (Nos. 2-49637, and 33-56032) on Form
S-3 and Registration Statements (Nos. 2-13460, 2-53523, 2-
66320, 2-91987, 2-95574, 33-24504, 33-27628, 33-32059, 33-
36892, 33-36893, and 33-50337) on Form S-8 of General Mills,
Inc. of our reports dated June 27, 1995, relating to the
consolidated balance sheets of General Mills, Inc. and
subsidiaries as of May 28, 1995 and May 29, 1994 and the
related consolidated statements of earnings, cash flows and
related financial statement schedule for each of the fiscal
years in the three-year period ended May 28, 1995, which
reports are included or incorporated by reference in the May
28, 1995 annual report on Form 10-K of General Mills, Inc.
Our report covering the basic consolidated financial
statements refers to changes in the method of accounting for
investments in debt and equity securities in fiscal 1995 and
postemployment benefits and income taxes in fiscal 1994.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 16, 1995
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) 1. Financial Statements:
Consolidated Statements of Earnings for the Fiscal
Years Ended May 28, 1995, May 29, 1994 and May 30, 1993
(incorporated herein by reference to page 17 of the
Registrant's 1995 Annual Report to Stockholders).
Consolidated Balance Sheets at May 28, 1995 and May 29,
1994 (incorporated herein by reference to page 18 of
the Registrant's 1995 Annual Report to Stockholders).
Consolidated Statements of Cash Flows for the Fiscal
Years Ended May 28, 1995, May 29, 1994 and May 30, 1993
(incorporated herein by reference to page 19 of the
Registrant's 1995 Annual Report to Stockholders).
Notes to Consolidated Financial Statements
(incorporated herein by reference to pages 20 through
29 of the Registrant's 1995 Annual Report to
Stockholders).
2. Financial Statement Schedules:
For the Fiscal Years Ended May 28, 1995, May 29, 1994
and May 30, 1993:
II - Valuation and Qualifying Accounts
3. Exhibits:
3.1 - Copy of Registrant's Restated Certificate
of Incorporation, as amended to date.
3.2 - Copy of Registrant's By-Laws, as amended
to date.
4 - Copy of Indenture between Registrant and
Continental Illinois National Bank and Trust
Company of Chicago, as amended to date by
Supplemental Indentures Nos. 1 through 8
(incorporated herein by reference to Exhibit 4
to Registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1992 and to
Exhibit 4(b) to Registrant's Current Report on
Form 8-K filed January 8, 1993).
*10.1 - Copy of Stock Option and Long-Term Incentive
Plan of 1988, as amended to date (incorporated
herein by reference to Exhibit 10.1 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 29, 1994).
*10.2 - Copy of Stock Option and Long-Term Incentive Plan
of 1984, as amended to date (incorporated herein
by reference to Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 29, 1994).
10.3 - Distribution Agreement with Darden Restaurants,
Inc. dated May 12, 1995 (incorporated herein by
reference to Exhibit 2 to Registrant's Transition
Report on Form 8-K dated May 28, 1995).
*10.4 - Copy of Executive Incentive Plan, as amended to date.
*10.5 - Copy of Management Continuity Agreement, as amended
to date (incorporated herein by reference to
Exhibit 10.5 to Registrant's Annual Report on
Form 10-K for the fiscal year ended May 29, 1994).
*10.6 - Copy of Supplemental Retirement Plan, as amended to
date (incorporated herein by reference to
Exhibit 10.6 to Registrant's Annual Report on
Form 10-K for the fiscal year ended May 29, 1994).
*10.7 - Copy of Executive Survivor Income Plan, as amended
to date (incorporated herein by reference to
Exhibit 10.8 to Registrant's Annual Report on
Form 10-K for the fiscal year ended May 26, 1991).
*10.8 - Copy of Executive Health Plan, as amended to date
(incorporated herein by reference to Exhibit 10.9
to Registrant's Annual Report on Form 10-K for the
fiscal year ended May 26, 1991).
*10.9 - Copy of Supplementa Savings Plan, as amended to
date (incorporated herein by reference to
Exhibit 10.9 to Registrant's Annual Report on
Form 10-K for the fiscal year ended May 29, 1994).
10.10 - Copy of Compensation Plan for Non-Employee
Directors, as amended to date (incorporated
herein by reference to Exhibit 10.10 to
Registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1992).
10.11 - Copy of Retirement Plan for Non-Employee Directors,
as amended to date (incorporated herein by
reference to Exhibit 10.11 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 30, 1993).
*10.12 - Copy of Deferred Compensation Plan, as amended
to date.
*10.13 - Copy of Supplemental Benefits Trust Agreement
dated February 9, 1987, as amended and restated
as of September 26, 1988 (incorporated herein
by reference to Exhibit 10.13 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 29, 1994).
*10.14 - Copy of Supplemental Benefits Trust Agreement
dated September 26, 1988 (incorporated herein
by reference to Exhibit 10.14 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 29, 1994).
10.15 - Agreements dated November 29, 1989 by and between
General Mills, Inc. and Nestle, S.A.
10.16 - Copy of Protocol and Addendum No. 1 to Protocol
of Cereal Partners Worldwide (incorporated
herein by reference to Exhibit 10.17 to
Registrant's Annual Report on Form 10-K for
the fiscal year ended May 26, 1991).
10.17 - Copy of Stock Plan for Non-Employee Directors,
as amended to date.
*10.18 - Copy of 1990 Salary Replacement Stock Option
Plan, as amended to date (incorporated herein
by reference to Exhibit 10.18 to Registrant's
Annual Report on Form 10-K for the fiscal year
ended May 29, 1994).
10.19 - Copy of Addendum No. 2 dated March 16, 1993 to
Protocol of Cereal Partners Worldwide
(incorporated herein by reference to
Exhibit 10.19 to Registrant's Annual Report
on Form 10-K for the fiscal year ended
May 30, 1993).
10.20 - Copy of Agreement dated July 31, 1992 by and
between General Mills, Inc. and PepsiCo, Inc.
(incorporated herein by reference to
Exhibit 10.20 to Registrant's Annual Report
on Form 10-K for the fiscal year ended
May 30, 1993).
*10.21 - Copy of Stock Option and Long-Term Incentive
Plan of 1993, as amended to date (incorporated
herein by reference to Exhibit 10.21 to
Registrant's Annual Report on Form 10-K for
the fiscal year ended May 29, 1994).
10.22 - Standstill Agreement with CPC International,
Inc. dated October 17, 1994 (incorporated
herein by reference to Exhibit 10(a) to
Registrant's Quarterly Report on Form 10-Q
for the period ended February 26, 1995.
10.23 - Copy of Addendum No. 3 effective as of
March 15, 1993 to Protocol of Cereal
Partners Worldwide (incorporated herein by
reference to Exhibit 10(b) to Registrant's
Quarterly Report on Form 10-Q for the period
ended February 26, 1995).
11 - Statement of Determination of Common Shares
and Common Share Equivalents (contained
on page 15 of this Report).
12 - Statement of Ratio of Earnings to Fixed
Charges (contained on page 16 of this
Report).
13 - 1995 Annual Report to Stockholders (only
those portions expressly incorporated by
reference herein shall be deemed filed with
the Commission).
21 - List of Subsidiarie of General Mills, Inc.
23 - Consent of KPMG Peat Marwick LLP (contained
on page 8 of this Report).
* Items that are management contracts or compensatory plans or
arrangements required to be filed as an exhibit pursuant to
Item 14(c) of Form 10-K.
(b) Reports on Form 8-K. - Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: August 16, 1995
By: /s/ S. S. MARSHALL
S. S. Marshall
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/ R.M. BRESSLER Director August 2, 1995
(Richard M. Bressler)
/s/ L. DE SIMONE Director August 3, 1995
(Livio D. DeSimone)
/s/ W.T. ESREY Director August 3, 1995
(William T. Esrey)
/s/ C. W. GAILLARD Director, August 9, 1995
(Charles W. Gaillard) President
/s/ JUDITH R. HOPE Director August 7, 1995
(Judith R. Hope)
/s/ KENNETH MACKE Director August 2, 1995
(Kenneth A. Macke)
/s/ GEORGE PUTNAM Director August 2, 1995
(George Putnam)
/s/ M.D. ROSE Director August 3, 1995
(Michael D. Rose)
/s/ S. W. SANGER Chairman of the Board and August 7, 1995
(Stephen W. Sanger) Chief Executive Officer
/s/ A. MICHAEL SPENCE Director August 2, 1995
(A. Michael Spence)
/s/ D. A. TERRELL Director August 4, 1995
(Dorothy A. Terrell)
/s/ C. ANGUS WURTELE Director August 3, 1995
(C. Angus Wurtele)
/s/ KENNETH L. THOME Senior Vice President, August 9, 1995
(Kenneth L. Thome) Financial Operations
(Principal Accounting Officer)
<TABLE>
GENERAL MILLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
<CAPTION>
Column A Column B Column C Column D Column E
Additions
Balance at charged to Deductions Balance
beginning costs and from at end of
Description of period expenses reserves period
Allowance for possible losses
on accounts receivable:
<S> <C> <C> <C> <C>
Year ended May 28, 1995 $3.6 $1.0 $ .8 (a) $4.1
(.3)(b)
Total $3.6 $1.0 $ .5 $4.1
Year ended May 29, 1994 $3.5 $ .9 $1.0 (a) $3.6
(.2)(b)
Total $3.5 $ .9 $ .8 $3.6
Year ended May 30, 1993 $5.6 $1.2 $2.4 (a) $3.5
.9 (b)
Total $5.6 $1.2 $3.3 $3.5
<FN>
Notes:
(a) Bad debt write-offs.
(b) Other adjustments and reclassifications.
</FN>
</TABLE>
<PAGE>
EXHIBIT 11
GENERAL MILLS, INC.
STATEMENT OF DETERMINATION OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS
(in millions)
Weighted average number of
common shares and common share
equivalents assumed outstanding
For the Fiscal Years Ended
May 28, 1995 May 29, 1994 May 30, 1993
Weighted average number of common
shares outstanding, excluding
common stock held in treasury (a) 158.0 159.1 163.1
Common share equivalents resulting
from the assumed exercise of certain
stock options (b) 2.1 * 2.4 * 3.3 *
Total common shares and common share
equivalents 160.1 161.5 166.4
Notes:
(a) Computed as the weighted average 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 of common shares outstanding of 158.0 million,
159.1 million and 163.1 million for fiscal 1995, 1994 and
1993, respectively.
<PAGE>
EXHIBIT 12
GENERAL MILLS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended
May 28, May 29, May 30, May 31, May 26,
1995 1994 1993 1992 1991
Ratio of Earnings to
Fixed Charges. . . . . 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.
<PAGE>
EXHIBIT INDEX
3.1 - Copy of Registrant's Restated Certificate of Incorporation,
as amended to date.
3.2 - Copy of Registrant's By-Laws, as amended to date.
10.4 - Copy of Executive Incentive Plan, as amended to date.
10.12 - Copy of Deferred Compensation Plan, as amended to date.
10.15 - Copy of Agreements dated November 29, 1989 by and between
General Mills, Inc. and Nestle, S.A.
10.17 - Copy of Stock Plan for Non-Employee Directors, as amended
to date.
11 - Statement of Determination of Common Shares and Common Share
Equivalents.
12 - Statement of Ratio of Earnings to Fixed Charges.
13 - 1995 Annual Report to Stockholders (only those portions expressly
incorporated by reference herein shall be deemed filed with the
Commission).
21 - List of Subsidiaries of General Mills, Inc.
23 - Consent of KPMG Peat Marwick.
27 - Financial Data Schedule.
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
of
GENERAL MILLS, INC.
General Mills, Inc. (the "Corporation"), a corporation
organized and existing under the laws of the State of Delaware,
does hereby certify as follows:
1. The name of the Corporation is General Mills, Inc.,
which is the name under which the Corporation was originally
incorporated.
2. The original Certificate of Incorporation of the
Corporation was filed in the Office of the Secretary of State of
the State of Delaware on June 20, 1928.
3. This Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242 and
245 of the General Corporation Law of the State of Delaware.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its
entirety as follows:
ARTICLE I
The name of this Corporation is General Mills, Inc.
ARTICLE II
The address of its registered office in the State of
Delaware is 1209 Orange Street in the City of Wilmington, County
of New Castle, and the name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of this Corporation is to engage in any lawful
act or activity for which corporations may be organized under
the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of capital stock which may be
issued by the Corporation is one billion five million
(1,005,000,000), of which one billion (1,000,000,000) shares
($.10 par value) shall be Common Stock and five million
(5,000,000) shares, without par value, shall be Cumulative
Preference Stock.
(1) PROVISIONS RELATING TO COMMON STOCK
(a) Each share of Common Stock shall, subject to paragraph
(f) of Section (2), have one vote and, except as provided by
resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of Cumulative Preference
Stock, the exclusive voting power for all purposes shall be
vested in the holders of the Common Stock.
(b) No holder of Common Stock as such shall have any
preemptive right to subscribe to stock, obligations, warrants,
rights to subscribe to stock or other securities of the
Corporation of any class, whether now or hereafter authorized.
(c) Subject to the provisions of law and preference of the
Cumulative Preference Stock, dividends may be paid on the Common
Stock of the Corporation at such time and in such amounts as the
Board of Directors may deem advisable.
(d) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
the holders of Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the
Corporation and the amounts to which holders of Cumulative
Preference Stock shall be entitled, to the remaining net assets
of the Corporation.
(2) PROVISIONS RELATING TO CUMULATIVE PREFERENCE STOCK
(a) The Cumulative Preference Stock may be issued from
time to time in one or more series, each of such series to have
such designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as are stated and expressed
herein and in the resolution or resolutions providing for the
issue of such series adopted by the Board of Directors as
hereinafter provided.
(b) Authority is hereby expressly granted to the Board of
Directors, subject to the provisions of this Article IV, to
authorize the issue of one or more series of Cumulative
Preference Stock and with respect to each series to fix by
resolution or resolutions providing for the issue of such
series:
(i) The number of shares to constitute such series
and the distinctive designation thereof;
(ii) The dividend rate or rates to which such shares
shall be entitled and the restrictions, limitations and
conditions upon the payment of such dividends, the date or dates
from which dividends shall accumulate and the quarterly dates on
which dividends, if declared, shall be payable;
(iii) Whether or not the shares of such series
shall be redeemable, the limitations and restrictions with
respect to such redemptions, the manner of selecting shares of
such series for redemption if less than all shares are to be
redeemed, and the amount, if any, in addition to any accrued
dividends thereon which the holder of shares of such series
shall be entitled to receive upon the redemption thereof, which
amount may vary at different redemption dates and may be
different with respect to shares redeemed through the operation
of any retirement or sinking fund and with respect to shares
otherwise redeemed;
(iv) The amount in addition to any accrued dividends
thereon which the holders of shares of such series shall be
entitled to receive upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, which
amount may vary depending on whether such liquidation,
dissolution or winding up is voluntary or involuntary and, if
voluntary, may vary at different dates (the amount so payable
upon such involuntary liquidation, dissolution or winding up,
exclusive of accrued dividends, being hereinafter sometimes
called the "involuntary liquidation value");
(v) Whether or not the shares of such series shall be
subject to the operation of a purchase, retirement or sinking
fund, and, if so, whether such retirement or sinking fund shall
be cumulative or non-cumulative, the extent to and the manner in
which such fund shall be applied to the purchase or redemption
of the shares of such series for retirement or to other
corporate purposes and the terms and provisions relative to the
operation thereof;
(vi) Whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or classes, or of any other series of the same
class, and if so convertible or exchangeable, the price or
prices or the rate or rates of conversion or exchange and the
method, if any, of adjusting the same;
(vii) The voting powers, if any, of such series in
addition to the voting powers provided in paragraph (f) of this
Section (2); and
(viii) Any other preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof as shall not
be inconsistent with this Section (2).
(c) All shares of any one series of Cumulative Preference
Stock shall be identical with each other in all respects, except
that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be
cumulative; and all series shall rank equally and be identical
in all respects, except as permitted by the foregoing provisions
of paragraph (b) of this Section (2).
(d) Before any dividends on any class or classes of stock
of the Corporation ranking junior to the Cumulative Preference
Stock (other than dividends payable in shares of any class or
classes of stock of the Corporation ranking junior to the
Cumulative Preference Stock) shall be declared or paid or set
apart for payment, the holders of shares of Cumulative
Preference Stock of each series shall be entitled to such cash
dividends, but only when and as declared by the Board of
Directors out of funds legally available therefor, as they may
be entitled to in accordance with the resolution or resolutions
adopted by the Board of Directors providing for the issue of
such series, payable quarterly on such dates as may be fixed in
such resolution or resolutions in each year. Such dividends
shall be cumulative from the date or dates fixed in the
resolution or resolutions adopted by the Board of Directors
providing for the issue of such series. Dividends in full shall
not be declared or paid or set apart for payment on the
Cumulative Preference Stock of any one series for any dividend
period unless dividends in full have been declared or paid or
set apart for payment on the Cumulative Preference Stock of all
series for all dividend periods terminating on the same or any
earlier date. When the dividends are not paid in full on all
series of the Cumulative Preference Stock, the shares of all
series shall share ratably in the payment of dividends,
including accumulations, if any, in accordance with the sums
which would be payable on said shares if all dividends were
declared and paid in full. A "dividend period" is the period
between any two consecutive dividend payment dates (or, when
shares are originally issued, the period from the date from
which dividends are cumulative to the first dividend payment
date) as fixed for a particular series. Accruals of dividends
shall not bear interest.
(e) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the
Corporation shall be made to or set apart for the holders of
shares of any class or classes of stock of the Corporation
ranking junior to the Cumulative Preference Stock, the holders
of the shares of each series of the Cumulative Preference Stock
shall be entitled to receive payment of the amount per share
fixed in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of the shares of such
series, plus an amount equal to all dividends accrued thereon to
the date of final distribution to such holders; but they shall
be entitled to no further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the
holders of the shares of the Cumulative Preference Stock shall
be insufficient to pay in full the preferential amount
aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the
respective amounts which would be payable on such shares if all
amounts payable thereon were paid in full. For the purposes of
this paragraph (e), the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration)
of all or substantially all of the property or assets of the
Corporation or a consolidation or merger of the Corporation with
one or more corporations shall not be deemed to be a
dissolution, liquidation or winding up, voluntary or
involuntary.
(f) So long as any of the Cumulative Preference Stock is
outstanding the Corporation
(i) will not declare or pay, or set apart for
payment, any dividends (other than dividends payable in shares
of any class or classes of stock of the Corporation ranking
junior to the Cumulative Preference Stock), or make any
distribution, on any class or classes of stock of the
Corporation ranking junior to the Cumulative Preference Stock,
and will not redeem, purchase or otherwise acquire, directly or
indirectly, whether voluntarily, for a sinking fund, or
otherwise, any shares of any class or classes of stock of the
Corporation ranking junior to the Cumulative Preference Stock,
if at the time of making such declaration, payment, setting
apart, distribution, redemption, purchase or acquisition the
Corporation shall be in default with respect to any dividend
payable on or any obligation to retire shares of Cumulative
Preference Stock, provided that notwithstanding the foregoing
the Corporation may at any time redeem, purchase or otherwise
acquire shares of stock of any such junior class in exchange
for, or out of the net cash proceeds from the concurrent sale
of, other shares of stock of any such junior class;
(ii) will not, without the affirmative vote or consent
of the holders of at least 66-2/3% of all the Cumulative
Preference Stock at the time outstanding, given in person or by
proxy, either in writing or by resolution adopted at a meeting
(which may be an annual meeting) called for the purpose, at
which the holders of the Cumulative Preference Stock, regardless
of series, shall vote separately as a class, amend, alter or
repeal (by any means, including, without limitation, merger or
consolidation) any of the provisions of this Section (2) so as
adversely to affect the preferences, rights or powers of the
Cumulative Preference Stock; and
(iii) will not, without the affirmative vote or
consent of the holders of at least 66-2/3% of any adversely
affected series of the Cumulative Preference Stock at the time
outstanding, given in person or by proxy, either in writing or
by resolution adopted at a meeting (which may be an annual
meeting) called for the purpose (the holders of such series of
the Cumulative Preference Stock consenting or voting, as the
case may be, separately as a class), amend, alter or repeal (by
any means, including, without limitation, merger or
consolidation) any of the provisions herein or in the resolution
or resolutions adopted by the Board of Directors providing for
the issue of such series so as adversely to affect the
preferences, rights or powers of the Cumulative Preference Stock
of such series; provided, however, that any vote or consent
required by subparagraph (ii) above may be given or made
effective by the filing of an appropriate amendment of the
Corporation's Restated Certificate of Incorporation without
obtaining the vote or consent of the holders of the Common Stock
of the Corporation, the right to give such vote or consent being
expressly waived by all holders of such Common Stock unless the
action to be taken would adversely affect the preferences,
rights or powers of the Common Stock; and provided further that
any vote or consent required by subparagraph (iii) above may be
given and made effective by the filing of an appropriate
amendment of the Corporation's Restated Certificate of
Incorporation without obtaining the vote or consent of the
holders of any other series of the Cumulative Preference Stock
or of the holders of the Common Stock of the Corporation, the
right to give such vote or consent being expressly waived by all
holders of such other series of Cumulative Preference Stock and
Common Stock unless the action to be taken would adversely
affect the preferences, rights or powers of such other series of
Cumulative Preference Stock or Common Stock, as the case may be.
(g) If in any case the amounts payable with respect to any
obligations to retire shares of the Cumulative Preference Stock
are not paid in full in the case of all series with respect to
which such obligations exist, the number of shares of each of
such series to be retired pursuant to any such obligations shall
be in proportion to the respective amounts which would be
payable on account of such obligations if all amounts payable in
respect of all such obligations if all amounts payable in
respect of all such series were discharged in full.
(h) The term "class or classes of stock of the Corporation
ranking junior to the Cumulative Preference Stock" shall mean
the Common Stock referred to in Section (1) of this Article IV
and any other class or classes of stock of the Corporation
hereinafter authorized which shall rank junior to the Cumulative
Preference Stock as to dividends or upon liquidation.
(i) Aggregate involuntary liquidation value of all shares
of Cumulative Preference Stock outstanding at any time shall
never exceed $300,000,000.
(j) No holder of Cumulative Preference Stock as such shall
have any preemptive right to subscribe to stock, obligations,
warrants, rights to subscribe to stock or other securities of
the Corporation of any class, whether now or hereafter
authorized.
(k) For the purposes of Section (2) of this Article IV or
of any resolution of the Board of Directors providing for the
issue of any series of Cumulative Preference Stock or of any
certificate filed with the Secretary of State of the State of
Delaware pursuant to any such resolution (unless otherwise
provided in any such resolution or certificate);
(i) The term "outstanding" when used in reference to
shares of stock shall mean issued shares, excluding shares held
by the Corporation and shares called for redemption, funds for
the redemption of which shall have been set aside or deposited
in trust:
(ii) The amount of dividends "accrued" on any share of
Cumulative Preference Stock as at any quarterly dividend date
shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including such quarterly dividend
date, whether or not earned or declared, and the amount of
dividends "accrued" on any share of Cumulative Preference Stock
as at any date other than a quarterly dividend date shall be
calculated as the amount of any unpaid dividends accumulated
thereon to and including the last preceding quarterly dividend
date, whether or not earned or declared, plus an amount
calculated on the basis of the annual dividend rate fixed for
the shares of such series for the period after such last
preceding quarterly dividend date to and including the date as
of which the calculation is made, based on a 360 day year of
twelve 30 day months.
(3) SERIES A PARTICIPATING CUMULATIVE PREFERENCE STOCK
The Board of Directors, pursuant to the authority expressly
vested in it by this Article IV, and pursuant to the provisions
of the General Corporation Law of the State of Delaware, has by
resolution adopted February 24, 1986 (which resolution was set
forth in a Certificate of Designation, Preferences and Rights of
Series A Participating Cumulative Preference Stock which was
filed with the Secretary of State of the State of Delaware on
May 20, 1986), fixed the designations, preferences and relative,
participating, optional and other special rights, and
qualifications, limitations or restrictions thereof of a series
of Cumulative Preference Stock, as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Participating Cumulative
Preference Stock," without par value, and the number of shares
constituting such series shall be 700,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Participating
Cumulative Preference Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable
in cash on the fifteenth day of March, June, September and
December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Participating
Cumulative Preference Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $10.00 or (b)
subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distribution other than a
dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $.10 per
share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A
Participating Cumulative Preference Stock. In the event the
Corporation shall at any time after February 24, 1986 (the
"Rights Declaration Date") (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A
Participating Cumulative Preference Stock were entitled
immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Participating Cumulative Preference
Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share
on the Series A Participating Cumulative Preference Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Cumulative
Preference Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A
Participating Cumulative Preference Stock, unless the date of
issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series A Participating
Cumulative Preference Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Cumulative
Preference Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of
Series A Participating Cumulative Preference Stock entitled to
receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 45 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. In addition to the voting
rights set forth in Article IV of the Restated Certificate of
Incorporation or otherwise required by law, the holders of
shares of Series A Participating Cumulative Preference Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Participating Cumulative
Preference Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of
Series A Participating Cumulative Preference Stock were entitled
immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Participating Cumulative
Preference Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A
Participating Cumulative Preference Stock shall be in arrears in
an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A
Participating Cumulative Preference Stock then outstanding shall
have been declared and paid or set apart for payment. During
each default period, all holders of Cumulative Preference Stock
(including holders of Series A Participating Cumulative
Preference Stock) with dividends in arrears in an amount equal
to six (6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right of
the holders of Series A Participating Cumulative Preference
Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting
right nor the right of the holders of any other series of
Cumulative Preference Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised
unless the holders of ten percent (10%) in number of shares of
Cumulative Preference Stock outstanding shall be present in
person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of
Cumulative Preference Stock of such voting right. At any
meeting at which the holders of Cumulative Preference Stock
shall exercise such voting right initially during the existing
default period, they shall have the right, voting as a class, to
elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of
the Cumulative Preference Stock shall have the right to make
such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After
the holders of the Cumulative Preference Stock shall have
exercised their right to elect Directors in any default period
and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of
the holders of Cumulative Preference Stock as herein provided or
pursuant to the rights of any equity securities ranking senior
to or pari passu with the Series A Participating Cumulative
Preference Stock.
(iii) Unless the holders of Cumulative Preference
Stock shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of Directors
may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of
shares of Cumulative Preference Stock outstanding, irrespective
of series, may request, the calling of a special meeting of the
holders of Cumulative Preference Stock, which meeting shall
thereupon be called by the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Cumulative Preference Stock
are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Cumulative Preference Stock
by mailing a copy of such notice to the holder at the holder's
last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order
or request or in default of the calling of such meeting within
60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in
the aggregate not less than ten percent (10%) of the total
number of shares of Cumulative Preference Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Cumulative Preference
Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right
(x) the Directors so elected by the holders of Cumulative
Preference Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration
of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Cumulative Preference
Stock as a class to elect Directors shall cease, (y) the term of
any Directors elected by the holders of Cumulative Preference
Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the
certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of
this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate
of incorporation or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A
Participating Cumulative Preference Stock shall have no special
voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A
Participating Cumulative Preference Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized
but unissued shares of Cumulative Preference Stock and may be
reissued as part of a new series of Cumulative Preference Stock
to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on
issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary liquidation, dissolution or winding
up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking (either as to dividends or
upon liquidation, dissolution or winding up) junior to the
Series A Participating Cumulative Preference Stock unless, prior
thereto, the holders of shares of Series A Participating
Cumulative Preference Stock shall have received $100 per share,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the
holders of shares of Series A Participating Cumulative
Preference Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment
of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of
Series A Participating Cumulative Preference Stock and Common
Stock, respectively, holders of Series A Participating
Cumulative Preference Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Cumulative
Preference Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preference of all
other series of Cumulative Preference Stock, if any, which rank
on a parity with the Series A Participating Cumulative
Preference Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available
to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of
Common Stock.
(C) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by
a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(D) Notwithstanding anything contained herein to the
contrary, and so long as Paragraph (2)(f)(i) of the Restated
Certificate of Incorporation shall so require, the aggregate
involuntary liquidation value of all shares of Cumulative
Preference Stock outstanding at any time shall not exceed
$300,000,000 and the aggregate involuntary liquidation value of
all shares of Series A Participating Cumulative Preference Stock
outstanding at any time shall not exceed an amount equal to (i)
$300,000,000, minus (ii) the aggregate involuntary liquidation
value of all shares of any other series of Cumulative Preference
Stock then outstanding. The aggregate involuntary liquidation
value of the Series A Participating Cumulative Preference Stock
otherwise payable shall be reduced, if necessary, to comply with
the preceding sentence.
Section 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged or changed into other stock or securities,
cash and/or any other property, then in any such case the shares
of Series A Participating Cumulative Preference Stock shall at
the same time be similarly exchanged or changed in an amount per
share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series A Participating Cumulative Preference Stock shall be
adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. No Redemption. The shares of Series A
Participating Cumulative Preference Stock shall not be
redeemable.
Section 8. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in
any manner which would materially alter or change the powers,
preferences or special rights of the Series A Participating
Cumulative Preference Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series A Participating
Cumulative Preference Stock, voting separately as a class.
Section 9. Fractional Shares. Series A Participating
Cumulative Preference Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such
holders of fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Participating
Cumulative Preference Stock.
(4) PROVISIONS RELATING TO ALL CLASSES OF STOCK
The shares of Cumulative Preference Stock and Common Stock
may be issued by the Corporation from time to time for such
consideration (not less than the par value thereof in the case
of Common Stock) as may be fixed from time to time by the Board
of Directors. Any and all shares without nominal or par value
for which the consideration so fixed shall have been paid or
delivered shall be deemed fully paid stock and shall not be
liable for any further call or assessment thereon; and the
holders of such shares shall not be liable for any further
payments in respect of such shares.
ARTICLE V
(1) For purposes of this Article V:
(a) "Affiliate" and "beneficial owner" are used
herein as defined in Rule 12b-2 and Rule 13d-3, respectively,
under the Securities Exchange Act of 1934 as in effect on the
date of adoption of this Article V by the stockholders of the
Corporation ("1934 Act"). The term "Affiliate" as used herein
shall exclude the Corporation, but shall include the definition
of "Associate" as contained in said Rule 12b-2.
(b) An "Interested Stockholder" is a Person other
than the Corporation who is (i) the beneficial owner of 10% or
more of the stock of the Corporation entitled to vote for the
election of directors ("Voting Stock"), or (ii) an Affiliate of
the Corporation and (A) at any time within a two-year period
prior to the record date to vote on a Business Combination was
the beneficial owner of 10% or more of the Voting Stock, or (B)
at the completion of the Business Combination will be the
beneficial owner of 10% or more of the Voting Stock.
(c) A "Person" is a natural person or a legal entity
of any kind, together with any Affiliate of such person or
entity, or any person or entity with whom such person, entity or
an Affiliate has any agreement or understanding relating to
acquiring, voting, or holding Voting Stock.
(d) A "Disinterested Director" is a member of the
Board of Directors of the Corporation (other than the Interested
Stockholder) who was a director prior to the time the Interested
Stockholder became an Interested Stockholder, or any director
who was recommended for election by the Disinterested Directors.
Any action to be taken by the Disinterested Directors shall
require the affirmative vote of at least two-thirds of the
Disinterested Directors.
(e) A "Business Combination" is (i) a merger or
consolidation of the Corporation or any of its subsidiaries with
an Interested Stockholder; (ii) the sale, lease, exchange,
pledge, transfer or other disposition (A) by the Corporation or
any of its subsidiaries of all or a Substantial Part of the
Corporation's Assets to an Interested Stockholder, or (B) by an
Interested Stockholder of any of its assets, except in the
ordinary course of business, to the Corporation or any of its
subsidiaries; (iii) the issuance of stock or other securities of
the Corporation or any of its subsidiaries to an Interested
Stockholder, other than on a pro rata basis to all holders of
Voting Stock of the same class held by the Interested
Stockholder pursuant to a stock split, stock dividend or
distribution of warrants or rights; (iv) the adoption of any
plan or proposal for the liquidation or dissolution of the
Corporation proposed by or on behalf of an Interested
Stockholder; (v) any reclassification of securities,
recapitalization, merger or consolidation or other transaction
which has the effect, directly or indirectly, of increasing the
proportionate share of any Voting Stock beneficially owned by an
Interested Stockholder; or (vi) any agreement, contract or other
arrangement providing for any of the foregoing transactions.
(f) A "Substantial Part of the Corporation's Assets"
shall mean assets of the Corporation or any of its subsidiaries
in an amount equal to 50% or more of the fair market value, as
determined by the Disinterested Directors, of the total
consolidated assets of the Corporation and its subsidiaries
taken as a whole as of the end of its most recent fiscal year
ended prior to the time the determination is made.
(2) The affirmative vote of not less than 51% of the
Voting Stock, excluding the Voting Stock of an Interested
Stockholder who is a party to the Business Combination, shall be
required for the adoption or authorization of a Business
Combination, unless the Disinterested Directors determine that:
(a) The Interested Stockholder is the beneficial
owner of not less than 80% of the Voting Stock and has declared
its intention to vote in favor of or approve such Business
Combination; or
(b) (i) The fair market value of the consideration
per share to be received or retained by the holders of each
class or series of stock of the Corporation in a Business
Combination is equal to or greater than the consideration per
share (including brokerage commissions and soliciting dealer's
fees) paid by such Interested Stockholder in acquiring the
largest number of shares of such class of stock previously
acquired in any one transaction or series of related
transactions, whether before or after the Interested Stockholder
became an Interested Stockholder; and (ii) the Interested
Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any
loans, advances, guarantees, pledges or other financial
assistance provided by the Corporation, whether in anticipation
of or in connection with such Business Combination or otherwise.
(3) In the event any vote of holders of Voting Stock is
required for the adoption or approval of any Business
Combination, a proxy or information statement describing the
Business Combination and complying with the requirements of the
1934 Act shall be mailed at a date determined by the
Disinterested Directors to all stockholders of the Corporation
whether or not such statement is required under the 1934 Act.
The statement shall contain any recommendations as to the
advisability of the Business Combination which the Disinterested
Directors, or any of them, may choose to state and, if deemed
advisable by the Disinterested Directors, an opinion of an
investment banking firm as to the fairness of the terms of such
Business Combination. Such firm shall be selected by the
Disinterested Directors and paid a fee for its services by the
Corporation as approved by the Disinterested Directors.
ARTICLE VI
The following provisions are inserted for the regulation
and conduct of the affairs of the Corporation, but it is
expressly provided that the same are intended to be and shall be
construed to be in furtherance and not in limitation or
exclusion of the powers conferred by law:
(1) Subject always to such by-laws as may be adopted from time
to time by the stockholders, the Board of Directors is expressly
authorized to adopt, alter, amend and repeal the by-laws of this
Corporation, but any by-law adopted by the Board of Directors
may be altered, amended or repealed by the stockholders.
(2) The business of this Corporation shall be managed by its
Board of Directors. Directors need not be stockholders. The by-
laws may prescribe the number of directors, not less than three;
may provide for the increase or reduction thereof but not less
than three; and may prescribe the number necessary to constitute
a quorum, which number may be less than a majority of the whole
Board of Directors, but not less than the number required by
law. No director shall be personally liable to the Corporation
or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding
the foregoing, a director shall be liable to the extent provided
by applicable law (i) for breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of these provisions
shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to
such amendment.
(3) Upon the affirmative vote of not less than 66-2/3% of the
shares of Common Stock voting thereon at any meeting of
stockholders, the Board of Directors may adopt and carry out
profit sharing, stock option and/or restricted stock plans for
any or all of the Corporation's directors, officers or
employees, and for any or all of the officers and employees of
its subsidiaries.
ARTICLE VII
(a) Any action by stockholders of the Corporation shall be
taken at a meeting of stockholders and no action may be taken by
written consent of stockholders entitled to vote upon such
action except as provided in Article IV, Section (2)(f)(ii) and
(iii) hereof.
(b) No amendment to the Certificate of Incorporation shall
amend, alter, change or repeal any of the provisions of Article
V hereof or of this Article VII unless such amendment shall
receive the affirmative vote of not less than 51% of the Voting
Stock, excluding the Voting Stock of any Interested Stockholder,
as defined in Article V.
IN WITNESS WHEREOF, General Mills, Inc. has caused this
Certificate to be executed by Stephen W. Sanger, its President,
and attested by C. L. Whitehill, its Secretary, this 19th day of
September, 1994.
GENERAL MILLS, INC.
By: /s/ S. W. Sanger
Stephen W. Sanger
President
Attest:
/s/ C. L. Whitehill
C. L. Whitehill, Secretary
EXHIBIT 3.2
BY-LAWS
of
GENERAL MILLS, INC.
as amended
through
September 19, 1994
INDEX OF BY-LAWS
Page
ARTICLE I. STOCKHOLDERS 1
Section 1. Place of Holding Meeting 1
Section 2. Quorum 1
Section 3. Adjournment of Meetings 1
Section 4. Annual Election of Directors 2
Section 5. Special Meetings: How Called 2
Section 6. Voting at Stockholders' Meetings 2
Section 7. Notice of Stockholders' Meetings 3
ARTICLE II. DIRECTORS. 3
Section 1. Organization 3
Section 2. Election of Officers 3
Section 3. Regular Meetings 3
Section 4. Special Meetings: How Called: Notice 3
Section 5. Number: Qualifications: Quorum: Term 4
Section 6. Place of Meetings 4
Section 7. Powers of Directors 4
Section 8. Vacancies. 4
Section 9. Resignation and Removal of Directors 4
Section 10. Compensation of Directors 5
Section 11. Executive Committee 5
Section 12. Executive Committee: Powers 5
Section 13. Executive Committee:Organization: Meetings,
Etc. 6
Section 14. Resignation and Removal of Member of
Executive Committee 6
Section 15. Vacancies in the Executive Committee 6
ARTICLE III. OFFICERS 6
Section 1. Titles 6
Section 2. Chairman 7
Section 3. Vice Chairman 7
Section 4. President 7
Section 5. Vice President(s) 7
Section 6. Secretary 7
Section 7. Assistant Secretary 8
Section 8. Senior Vice President, Corporate Finance 8
Section 9. Director of Finance 8
Section 10. Senior Vice President, Financial Operations 8
Section 11. Resignation and Removal of Officers 9
Section 12. Salaries 9
ARTICLE IV. CAPITAL STOCK 9
Section 1. Issue of Certificates of Stock 9
Section 2. Transfer of Shares 9
Section 3. Dividends 10
Section 4. Lost Certificates 10
Section 5. Rules as to Issue of Certificates 10
Section 6. Holder of Record Deemed Holder in Fact 10
Section 7. Closing of Transfer Books or Fixing Record
Date 10
ARTICLE V. CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC 11
Section 1. Contracts, Etc.: How Executed 11
Section 2. Loans 11
Section 3. Deposits 11
Section 4. Checks, Drafts, Etc 11
Section 5. Transaction of Business 12
ARTICLE VI. MISCELLANEOUS PROVISIONS 12
Section 1(a) Fiscal Year 12
Section 1(b) Staff and Divisional Titles. 12
Section 2. Notice and Waiver of Notice 12
Section 3. Inspection of Books 13
Section 4. Construction 13
Section 5. Adjournment of Meetings.. 13
Section 6. Indemnification 13
Section 7. Resolution of Board of Directors Providing for
Issuance of Cumulative Preference Stock 15
ARTICLE VII. AMENDMENTS 15
Section 1. Amendment of By-Laws 15
BY-LAWS
of
GENERAL MILLS, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Holding Meeting: Meetings of
stockholders may be held within or without the State of
Delaware, and, unless otherwise determined by the board of
directors or the stockholders, all meetings of the stockholders
shall be held at the principal office of the corporation in the
City of Minneapolis in the State of Minnesota. The place of
meeting of the stockholders for the election of directors shall
not be changed within sixty (60) days next before the day on
which the election is to be held. A notice of any change shall
be given to each stockholder entitled to vote, at least twenty
(20) days before the election is held, in person or by letter
mailed to him at his last-known post office address.
SECTION 2. Quorum: Any number of stockholders together
holding one-half (1/2) in amount of the stock issued and
outstanding entitled to vote, who shall be present in person or
represented by proxy at any meeting duly called, shall
constitute a quorum for the transaction of business, except as
may be otherwise provided by law, by the certificate of
incorporation, or by these by-laws. At any meeting of
stockholders for the election of directors at which any class or
classes of stock or any one or more series of any class or
classes of stock shall have a separate vote as such class or
series for the election of directors by such class or series,
the absence of a quorum of any other class of stock or of any
other series of any class of stock shall not prevent the
election of the directors to be elected by such class or series.
SECTION 3. Adjournment of Meetings: If less than a quorum
shall be in attendance at the time for which the meeting shall
have been called, the meeting may be adjourned from time to time
by a majority vote of the stockholders present or represented,
without any notice other than by announcement at the meeting,
until a quorum shall attend. Any meeting at which a quorum is
present may also be adjourned, in like manner, for such time, or
upon such call, as may be determined by vote. At any such
adjourned meeting at which a quorum may be present any business
may be transacted which might have been transacted at the
meeting as originally called. In the absence of a quorum of any
class or classes of stock or any one or more series of any class
or classes of stock at any meeting of stockholders at which more
than one class or series of stock shall be entitled to vote
separately as a class or series for the election of directors, a
majority in interest of the stockholders present in person or by
proxy of the class or classes or one or more series of stock
which lack a quorum shall also have the power to adjourn the
meeting for the election of directors which they are entitled to
elect, from time to time, without notice other than by
announcement at the meeting, until a quorum of such class or
classes or one or more series of stock shall be present.
SECTION 4. Annual Election of Directors: The annual
meeting of stockholders for the election of directors and the
transaction of other business shall be held on the fourth Monday
of September in each year at 1:00 o'clock in the afternoon,
standard time, unless, by a resolution adopted not later than
sixty (60) days before such date, the board of directors fixes
another date or time in the months of September or October for
the holding of such annual meeting. If the election of
directors shall not be had on the day designated herein for the
annual meeting or at an adjournment thereof, the board of
directors shall cause a meeting of the stockholders for the
election of a board of directors to be held as soon thereafter
as conveniently may be. At such meeting the stockholders may
elect the directors and transact other business with the same
force and effect as at an annual meeting duly called and held.
After the first election of directors no stock shall be
voted on at any election which shall have been transferred on
the books of the corporation within twenty (20) days next
preceding such election, except where the transfer books of the
corporation shall have been closed or a date shall have been
fixed as a record date for the determination of the stockholders
entitled to vote, as hereinafter in article IV, section 7 of
these by-laws provided.
The directors elected annually shall hold office until the
next annual election and until their successors are respectively
elected and qualified; provided, however, in the event that the
holders of any class or classes of stock or any one or more
series of any class or classes of stock have the right to elect
directors separately as a class or series and such right shall
have vested, such right may be exercised as provided in the
certificate of incorporation of the corporation.
The secretary shall prepare, or cause to be prepared, at
least ten (10) days before every election, a complete list of
stockholders entitled to vote, arranged in alphabetical order,
and such list shall be open at the place where the election is
to be held, for such ten (10) days, to the examination of any
stockholder, and shall be produced and kept at the time and
place of election during the whole time thereof, subject to the
inspection of any stockholder who may be present.
SECTION 5. Special Meetings: How Called: Special meetings
of the stockholders for any purpose or purposes may be called by
the chairman of the board of directors or by any three (3)
directors or by the holders of not less than one-third (1/3) in
interest of the stock of the corporation entitled to vote, or by
resolution of the board of directors. Special meetings of the
holders of any class or classes of stock or any one or more
series of any class or classes of stock for the purpose of
electing directors in accordance with a special right as a class
or series shall be called as provided in the certificate of
incorporation of the corporation.
SECTION 6. Voting at Stockholders' Meetings: The board of
directors shall determine the voting power of any cumulative
preference stock in accordance with article IV of the
certificate of incorporation. Each stockholder entitled to vote
shall have one (1) vote for each share of voting stock
registered in his name on the books of the corporation. At all
meetings of stockholders all questions, except as otherwise
provided by law or the certificate of incorporation, shall be
determined by a majority vote in interest of the stockholders
entitled to vote present in person or represented by proxy;
provided, however, that any qualified voter may demand a stock
vote, and in that case, such stock vote shall immediately be
taken. A stock vote shall be by ballot and each ballot shall be
signed by the stockholder voting, or by his proxy, if there be
such proxy, and shall state the number of shares voted. Shares
of its own capital stock belonging to the corporation shall not
be voted upon directly or indirectly. The vote on stock of the
corporation may be given by the stockholder entitled thereto in
person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto
authorized, and delivered to the secretary of the meeting. No
proxy shall be voted on after three (3) years from its date,
unless said proxy provides for a longer period.
SECTION 7. Notice of Stockholders' Meetings: Written
notice, stating the time and place of the meeting and, in case
of a special meeting, stating also the general nature of the
business to be considered, shall be given by the secretary by
mailing, or causing to be mailed, such notice, postage prepaid,
to each stockholder entitled to vote, at his post office address
as the same appears on the stock books of the corporation, or by
delivering such notice to him personally, at least ten (10) days
before the meeting.
ARTICLE II
DIRECTORS
SECTION 1. Organization: The board of directors may hold
a meeting for the purpose of organization and the transaction of
other business, if a quorum be present, immediately before or
after the annual meeting of the stockholders and immediately
before or after any special meeting at which directors are
elected. Notice of such meeting need not be given. Such
organizational meeting may be held at any other time or place,
which shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or in a
consent and waiver of notice thereof signed by all the
directors.
SECTION 2. Election of Officers: At such meeting the
board of directors may elect from among its number a chairman of
the board of directors, one or more persons to serve as a vice
chairman; a president and one or more corporate and company vice
presidents, a secretary, a treasurer, a controller, one or more
assistant secretaries, and one or more assistant treasurers who
need not be directors. Such officers shall hold office until
the next annual election of officers and until their successors
are respectively elected and qualified, unless removed by the
board of directors as provided in section 11 of article III.
SECTION 3. Regular Meetings: Regular meetings of the
board of directors shall be held on such dates as are
designated, from time to time, by resolutions of the board, and
shall be held at the principal office of the corporation,
or at such other location as the board selects. Each regular
meeting shall commence at the time designated by the Chairman of
the Board on at least five (5) days' written notice to each
director when sent by mail and on at least three (3) days'
notice when sent by private express carrier or transmitted by
telex, facsimile or similar means.
SECTION 4. Special Meetings: How Called: Notice:
Special meetings of the board of directors may be called by the
chairman of the board, a vice chairman of the board, the
president or by any three (3) directors who are not salaried
officers or salaried employees of the corporation. Written
notice of the time, place and purposes of each special meeting
shall be sent by private express carrier or transmitted by
telex, facsimile or similar means to each director at least
twenty-four (24) hours prior to such meeting. Notwith-standing
the preceding, any meeting of the board of directors shall be a
legal meeting without any notice thereof if all the members of
the board shall be present, or if all absent members waive
notice thereof.
SECTION 5. Number: Qualifications: Quorum: Term:
(a) The Board of Directors shall consist of fifteen (15)
members.
(b) No person shall be eligible to become or to remain a
director of the corporation unless he shall be a stockholder
in the corporation. Not more than six (6) of the members of
the board of directors shall be officers or employees of the
corporation, but the chairman of the board shall not be
deemed such an officer or employee.
(c) Subject to the provisions of the certificate of
incorporation, as amended, one-third (1/3) of the total
number of the directors (but in no event less than two (2))
shall constitute a quorum for the transaction of business.
The affirmative vote of the majority of the directors
present at a meeting at which a quorum is constituted shall
be the act of the board of directors, unless the certificate
of incorporation shall require a vote of a greater number.
(d) Except as otherwise provided in these by-laws,
directors shall hold office until the next succeeding annual
stockholders' meeting and thereafter until their successors
are respectively elected and qualified.
(e) Except as otherwise provided in the certificate of
incorporation or these by-laws, the number of directors may
by altered from time to time by amendment to the above sub-
section (a).
SECTION 6. Place of Meetings: The board of directors may
hold its meetings and keep the books of the corporation outside
of the State of Delaware, at any office or offices of the
corporation, or at any other place, as it may from time to time
by resolution determine.
SECTION 7. Powers of Directors: The board of directors
shall have the management of the business of the corporation,
and, subject to the restrictions imposed by law, by the
certificate of incorporation or by these by-laws, may exercise
all the powers of the corporation.
SECTION 8. Vacancies: Except as otherwise provided in the
certificate of incorporation, any vacancy in the board of
directors because of death, resignation, disqualification,
increase in number of directors, or any other cause may be
filled by a majority of the remaining directors, though less
than a quorum, at any regular or special meeting of the
directors; or any such vacancy resulting from any cause
whatsoever may be filled by the stockholders at the first annual
meeting held after such vacancy shall occur or at a special
meeting thereof called for the purpose.
SECTION 9. Resignation and Removal of Directors: Any
director of the corporation may resign at any time by giving
written notice to the chairman of the board or to the secretary
of the corporation. Such resignation shall take effect at the
time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to
make it effective. Except as otherwise provided in the
certificate of incorporation, any director may be removed,
either with or without cause, at any time, by the affirmative
vote of a majority in interest of the stockholders of the
corporation entitled to vote, given at a special meeting of the
stockholders called for the purpose; and the vacancy in the
board caused by any such removal may be filled by the
stockholders at such meeting.
SECTION 10. Compensation of Directors: The board of
directors shall have the authority to fix the compensation of
directors. In addition, each director shall be entitled to be
reimbursed by the corporation for his expenses incurred in
attending meetings of the board of directors or of any committee
of which he is a member. Nothing herein contained shall be
construed to preclude any director from serving the corporation
in any other capacity and receiving compensation for such
services from the corporation; provided, however, that any
person who is receiving a stated compensation as an officer of
the corporation for his services as such officer shall not
receive any additional compensation for services as a director
during such period. A director entitled to receive stated
compensation for his services as director, who shall serve for
only a portion of a year, shall be entitled to receive only that
portion of his annual stated compensation on which the period of
his service during the year bears to the entire year. The
annual compensation of directors shall be paid at such times and
in such installments as the board of directors may determine.
SECTION 11. Executive Committee:
(a) The board of directors may appoint from its number an
executive committee of not less than eight (8) members.
(b) Not more than four (4) members shall be officers or
employees of the corporation but the chairman of the board
shall not be deemed such an officer or employee.
(c) A majority shall constitute a quorum, and in every
case the affirmative vote of a majority of all the members
of the committee shall be necessary for the adoption of any
motion, provided that in order to procure and maintain a
quorum at any meeting of the executive committee in the
absence or disqualification of any member of such committee,
the member or members thereof present at such meeting and
not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member
of the board of directors (subject always to the limitations
of subsection (b) above) to act at the meeting in the place
of any such absent or disqualified member.
(d) Each member of the executive committee, if appointed,
shall hold office until the election at the next succeeding
annual meeting of the stockholders of the corporation of a
new board of directors; subject to the provisions of section
14 of this article.
SECTION 12. Executive Committee: Powers: During the
intervals between the meetings of the board of directors, the
executive committee shall have and may exercise all the powers
of the board of directors in the management of the business and
affairs of the corporation, including power to authorize the
execution of any papers and to authorize the seal of the
corporation to be affixed
to all papers which may require it, in such manner as such
committee shall deem best for the interests of the corporation,
in all cases in which specific directions shall not have been
given by the board of directors.
SECTION 13. Executive Committee: Organization: Meetings,
Etc.: The chairman of the executive committee shall preside at
all meetings of the executive committee and the secretary of the
corporation shall act as secretary of the executive committee.
In the absence of the chairman of the executive committee the
committee shall appoint another member thereof to act as
chairman of the meeting, and in the absence of the secretary, an
assistant secretary of the corporation shall act as secretary of
the meeting. In the absence of all of such persons, the
committee shall appoint a chairman or a secretary of the
meeting, as the case may be. If an executive committee shall be
appointed it shall hold regular meetings without notice on each
day excepting only Sundays and holidays at 9:00 o'clock in the
forenoon and at 2:30 o'clock in the afternoon. Failure of such
committee to meet at such hours on any day or for a series of
days shall not invalidate any subsequent meeting of the
committee held on any day at an hour herein specified. Such
regular meetings of such committee shall be held at the
principal office of the corporation, or at such other office of
the corporation as such committee by resolution may from time to
time designate as the place for the holding of such regular
meetings, in which latter event the place so designated shall
constitute the place at which such meetings shall be held until
such committee shall by resolution designate a different place
for the holding of such regular meetings. A special meeting of
the executive committee may be called by the chairman of the
board, the chairman of the executive committee or the secretary
of the corporation upon such notice as may be given for special
meetings of the board of directors. Any meeting of the
executive committee shall be a legal meeting without notice
thereof if all the members of the committee shall be present or
if all absent members waive notice thereof. The committee shall
keep a record of its acts and proceedings and report thereon to
the board of directors at the regular meeting thereof held next
after they shall have been taken.
SECTION 14. Resignation and Removal of Member of Executive
Committee: Any member of the executive committee may resign at
any time or may be removed at any time either with or without
cause by resolution adopted by a majority of the whole board of
directors at any meeting of the board of directors at which a
quorum is present.
SECTION 15. Vacancies in the Executive Committee: Any
vacancy in the executive committee shall be filled in the manner
prescribed by these by-laws for the original appointment of such
committee.
ARTICLE III
OFFICERS
SECTION 1. Titles: The corporate and company officers to be
elected by the board of directors shall be a chairman of the
board of directors and one or more persons to serve as a vice
chairman, and a president, who shall be directors, and one or
more corporate or company vice presidents, a secretary, a senior
vice president, corporate finance, a senior vice president,
financial operations, one or more assistant secretaries, and one
or more directors of finance who need not be directors. The
board shall designate one of the corporate officers to serve as
chief executive officer.
SECTION 2. Chairman: The chairman of the board of directors
shall preside at all meetings of the board, all meetings of the
stockholders, as well as all meetings of the executive
committee. The chairman, upon being designated the chief
executive officer, shall have supervisory authority over the
policies of the corporation as well as the management and
control of the business and affairs of the corporation. He
shall also exercise such other powers as the board of directors
may from time to time direct or which may be required by law.
SECTION 3. Vice Chairman: The officer or officers serving
as vice chairman shall have such duties and responsibilities
relating to the management of the corporation as may be defined
and designated by the chief executive officer or the board of
directors.
SECTION 4. President: The president shall have
responsibility for the management of the operating businesses of
the corporation and shall do and perform all acts incident to
the office of president or which are authorized by the chief
executive officer, the board of directors or as may be required
by law.
SECTION 5. Vice President(s): Each corporate vice president
shall have such designations and such powers and shall perform
such duties as may be assigned by the board of directors or the
chief executive officer. The board of directors may designate
one or more corporate vice presidents to be a senior executive
vice president, executive vice president, senior vice president,
or group vice president.
Each company vice president shall have such designations and
such powers, and shall perform such duties as may be assigned to
him by the board of directors, the chief executive officer or by
a corporate vice president.
SECTION 6. Secretary: The secretary shall:
(a) keep the minutes of the meetings of the stockholders,
of the board of directors and of the executive committee in
books provided for the purpose;
(b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law;
(c) be custodian of the records and have charge of the
seal of the corporation and see that it is affixed to all
stock certificates prior to their issuance and to all
documents the execution of which on behalf of the
corporation under its seal is duly authorized in accordance
with the provisions of these by-laws;
(d) have charge of the stock books of the corporation and
keep or cause to be kept the stock and transfer books in
such manner as to show at any time the amount of the stock
of the corporation issued and outstanding, the manner in
which and the time when such stock was paid for, the names,
alphabetically arranged, and the addresses of the holders of
record thereof, the number of shares held by each, and the
time when each became such holder of record; exhibit or
cause to be exhibited at all reasonable times to any
director, upon application, the original or duplicate stock
ledger;
(e) see that the books, reports, statements, certificates
and all other documents and records required by law are
properly kept, executed and filed; and
(f) in general, perform all duties incident to the office
of secretary, and such other duties as from time to time may
be assigned to him by the board of directors.
SECTION 7. Assistant Secretary: The board of directors may
elect an assistant secretary or more than one assistant
secretary. At the request of the secretary, or in his absence
or disability, an assistant secretary may perform all the duties
of the secretary, and, when so acting, he shall have all the
powers of, and be subject to all the restrictions upon, the
secretary. Each assistant secretary shall have such other
powers and shall perform such other duties as may be assigned to
him by the board of directors.
SECTION 8. Senior Vice President, Corporate Finance: The
senior vice president, corporate finance, if required so to do
by the board of directors, shall give a bond for the faithful
discharge of his duties in such sum, and with such sureties, as
the board of directors shall require. The senior vice
president, corporate finance shall:
(a) have charge and custody of, and be responsible for,
all funds and securities of the corporation coming into his
hands (until he has deposited the same to the credit or
account of the corporation with an authorized depositary)
and deposit all such funds in the name of the corporation in
such banks, banking firms, trust companies or other
depositaries as shall be selected in accordance with the
provisions of article V of these by-laws;
(b) exhibit at all reasonable times his books of account
and records to any of the directors of the corporation upon
application during business hours at the office of the
corporation where such books and records are kept;
(c) receive, and give receipt for, moneys due and payable
to the corporation from any source whatsoever; and
(d) in general, perform all the duties incident to the
office of senior vice president, corporate finance and such
other duties as from time to time may be assigned to him by
the board of directors.
SECTION 9. Director of Finance: The board of directors may
elect a director of finance or more than one director of
finance. At the request of the senior vice president, corporate
finance, or in his absence or disability, a director of finance
may perform all the duties of the senior vice president,
corporate finance, and, when so acting, he shall have all the
powers of, and be subject to all the restrictions upon, the
senior vice president, corporate finance. Each director of
finance shall have such other powers and shall perform such
other duties as may be assigned to him by the board of
directors.
SECTION 10. Senior Vice President, Financial Operations:
The senior vice president, financial operations shall perform
all of the duties incident to the office of senior vice
president, financial operations, as such duties may from time to
time be designated or approved by the board of directors.
Included in such duties shall be the establishment and
maintenance of sound accounting and auditing policies and
practices, in respect to which duties he shall be responsible
directly to the board of directors through its chairman.
SECTION 11. Resignation and Removal of Officers: Any
officer of the corporation may resign at any time by giving
written notice to the chairman of the board or to the secretary.
Such resignation shall take effect at the time specified
therein, and unless otherwise specified therein the acceptance
of such resignation shall not be necessary to make it effective.
Any officer may be removed for cause at any time by a
majority of the board of directors and any officer may be
removed summarily without cause by such vote.
SECTION 12. Salaries: The salaries of officers shall be
fixed from time to time by the board of directors or the
executive committee or other committee appointed by the board.
The board of directors or the executive committee of the board
may authorize and empower the chief executive officer, any vice
chairman, or any vice president of the corporation designated by
the board of directors or by the executive committee to fix the
salaries of all officers of the corporation who are not
directors of the corporation. No officer shall be prevented
from receiving a salary by reason of the fact that he is also a
director of the corporation.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Issue of Certificates of Stock: Certificates for
the shares of the capital stock of the corporation shall be in
such forms as shall be approved by the board of directors. Each
stockholder shall be entitled to a certificate for his shares of
stock under the seal of the corporation, signed by the chairman,
a vice chairman or a vice president and also by the secretary or
an assistant secretary or by the senior vice president,
corporate finance or a director of finance; provided, however,
that where a certificate is countersigned by a transfer agent,
other than the corporation or its employee, or by a registrar,
other than the corporation or its employee, the corporate seal
and any other signature on such certificate may be a facsimile,
engraved, stamped or printed. In case any officer, transfer
agent or registrar of the corporation who shall have signed, or
whose facsimile signature shall have been used on any such
certificate, shall cease to be such officer, transfer agent or
registrar, whether because of death, resignation, or otherwise,
before such certificate shall have been delivered by the
corporation, such certificate shall nevertheless be deemed to
have been adopted by the corporation and may be issued and
delivered as though the person who signed such certificate or
whose facsimile signature shall have been used thereon had not
ceased to be such officer, transfer agent or registrar.
SECTION 2. Transfer of Shares: The shares of stock of the
corporation shall be transferable upon its books by the holders
thereof in person or by their duly authorized attorneys or legal
representatives, and upon such transfer the old certificates
shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and
ledgers, or to such other person as the board of directors may
designate, by whom they shall be cancelled, and new certificates
shall thereupon be issued for the shares so transferred to the
person entitled thereto. A record shall be made of each
transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the
entry of the transfer.
SECTION 3. Dividends: The board of directors may declare
lawful dividends as and when it deems expedient. Before
declaring any dividend, there may be reserved out of the
accumulated profits such sum or sums as the board of directors
from time to time, in its discretion, thinks proper for working
capital or as a reserve fund to meet contingencies or for
equalizing dividends, or for such other purposes as the board of
directors shall think conducive to the interests of the
corporation.
SECTION 4. Lost Certificates: Any person claiming a
certificate of stock to be lost or destroyed shall make an
affidavit or affirmation of that fact, and if requested to do so
by the board of directors of the corporation shall advertise
such fact in such manner as the board of directors may require,
and shall give to the corporation, its transfer agent and
registrar, if any, a bond of indemnity in such sum as the board
of directors may direct, but not less than double the value of
stock represented by such certificate, in form satisfactory to
the board of directors and to the transfer agent and registrar
of the corporation, if any, and with or without sureties as the
board of directors with the approval of the transfer agent and
registrar, if any, may prescribe; whereupon the chairman, a vice
chairman or a vice president and the senior vice president,
corporate finance or a director of finance or the secretary or
an assistant secretary may cause to be issued a new certificate
of the same tenor and for the same number of shares as the one
alleged to have been lost or destroyed. The issuance of such
new certificates shall be under the control of the board of
directors.
SECTION 5. Rules as to Issue of Certificates: The board of
directors may make such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of
certificates of stock of the corporation. It may appoint one or
more transfer agents and/or registrars of transfers, and may
require all certificates of stock to bear the signature of
either or both. Each and every person accepting from the
corporation certificates of stock therein shall furnish the
corporation with a written statement of his or her residence or
post office address, and in the event of changing such residence
shall advise the corporation of such new address.
SECTION 6. Holder of Record Deemed Holder in Fact: The
board of directors shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any
equitable or other claim to, or interest in, such share or
shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided
by law.
SECTION 7. Closing of Transfer Books or Fixing Record Date:
The board of directors shall have the power to close the stock
transfer books of the corporation for a period not exceeding
sixty (60) days preceding the date of any meeting of
stockholders or the date for payment of any dividend or the date
for the allotment of rights or the date when any change or
conversion or exchange of capital stock shall go into effect;
provided, however, that in lieu of closing the stock transfer
books as aforesaid, the board of directors may fix in advance a
date, not exceeding sixty (60) days preceding the date of any
meeting of stockholders or the date for the payment of any
dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall
go into effect, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital
stock, and in such case only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, such meeting, or to receive
payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Contracts, Etc.: How Executed: The board of
directors or such officer or person to whom such power shall be
delegated by the board of directors by resolution, except as in
these by-laws otherwise provided, may authorize any officer or
officers, agent or agents, either by name or by designation of
their respective offices, positions or class, to enter into any
contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be
general or confined to specific instances; and, unless so
authorized, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or
engagement, or to pledge its credit or to render it liable
pecuniarily for any purpose or in any amount.
SECTION 2. Loans: No loans shall be contracted on behalf of
the corporation and no negotiable paper shall be issued in its
name, unless and except as authorized by the vote of the board
of directors or by such officer or person to whom such power
shall be delegated by the board of directors by resolution.
When so authorized by the board of directors or by such officer
or person to whom such power shall be delegated by the board of
directors by resolution, any officer or agent of the corporation
may obtain loans and advances at any time for the corporation
from any bank, banking firm, trust company or other institution,
or from any firm, corporation or individual, and for such loans
and advances may make, execute and deliver promissory notes,
bonds or other evidences of indebtedness of the corporation,
and, when authorized as aforesaid to give security for the
payment of any loan, advance, indebtedness or liability of the
corporation, may pledge, hypothecate or transfer any and all
stocks, securities and other personal property at any time held
by the corporation, and to that end endorse, assign and deliver
the same, but only to the extent and in the manner authorized by
the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. Deposits: All funds of the corporation shall be
deposited from time to time to the credit of the corporation
with such banks, banking firms, trust companies or other
depositaries as the board of directors may select or as may be
selected by any officer or officers, agent or agents of the
corporation to whom such power may be delegated from time to
time by the board of directors.
SECTION 4. Checks, Drafts, Etc.: All checks, drafts or
other orders for the payment of money, notes, acceptances, or
other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall be
determined from time to time by resolution of the board of
directors or by such officer or person to whom such power of
determination shall be delegated by the board of directors by
resolution. Endorsements for deposit to the credit of the
corporation in any of its authorized depositaries may be made,
without any countersignature, by the chairman of the board, a
vice chairman, or any vice president, or the senior vice
president, corporate finance or any director of finance, or by
any other officer or agent of the corporation appointed by any
officer of the corporation to whom the board of directors, by
resolution, shall have delegated such power of appointment, or
by hand-stamped impression in the name of the corporation.
SECTION 5. Transaction of Business: The corporation, or any
division or department into which any of the business or
operations of the corporation may have been divided, may
transact business and execute contracts under its own corporate
name, its division or department name, a trademark or a trade
name.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1.
(a) Fiscal Year: The fiscal year of the corporation
shall end with the last Sunday of May of each year.
(b) Staff and Divisional Titles: The chief executive
officer may appoint at his discretion such persons to hold
the title of staff vice president, divisional president or
divisional vice president or other similar designation.
Such persons shall not be officers of the corporation and
shall retain such title at the sole discretion of the chief
executive officer who may at his will and from time to time
make or revoke such designation.
SECTION 2. Notice and Waiver of Notice: Whenever any notice
is required by these by-laws to be given, personal notice to the
person is not meant unless expressly so stated; and any notice
so required shall be deemed to be sufficient if given by
depositing the same in a post office or post box in a sealed
postpaid wrapper, addressed to the person entitled thereto at
his post office address as shown on the stock books of the
corporation, in case of a stockholder, and at his last known
post office address in case of an officer or director who is not
a stockholder; and such notice shall be deemed to have been
given on the day of such deposit. In the case of notice by
private express carrier, telex, facsimile or similar means,
notice shall be deemed to be sufficient if transmitted or sent
to the person entitled to notice or to any person at the
residence or usual place of business of the person entitled to
notice who it is reasonably believed will convey such notice to
the person entitled thereto; and notice shall be deemed to have
been given at the time of receipt at such residence or place of
business. Any notice required by these by-laws may be given to
the person entitled thereto personally and attendance of a
person at a meeting shall constitute a waiver of notice of such
meeting. Whenever notice is required to be given under these by-
laws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall
be deemed equivalent to notice.
SECTION 3. Inspection of Books: The board of directors
shall determine from time to time whether and, if allowed, when
and under what conditions and regulations the accounts, records
and books of the corporation (except such as may, by statute, be
specifically open to inspection), or any of them, shall be open
to the inspection of the stockholders, and the stockholders'
rights in this respect are and shall be restricted and limited
accordingly.
SECTION 4. Construction: All references herein (i) in the
plural shall be construed to include the singular, (ii) in the
singular shall be construed to include the plural and (iii) in
the masculine gender shall be construed to include the feminine
gender, if the context so requires.
SECTION 5. Adjournment of Meetings: If less than a quorum
shall be present at any meeting of the board of directors of the
corporation, or of the executive committee of the board, or
other committee, the meeting may be adjourned from time to time
by a majority vote of members present, without any notice other
than by announcement at the meeting, until a quorum shall
attend. Any meeting at which a quorum is present may also be
adjourned in like manner, for such time or upon such call, as
may be determined by vote. At any such adjourned meeting at
which a quorum may be present, any business may be transacted
which might have been transacted at the meeting originally held
if a quorum had been present thereat.
SECTION 6. Indemnification:
(a) The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b), or in defense of any
claim, issue or matter therein, he shall be indemnified or
reimbursed against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under sub-sections (a) and (b)
(unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in sub-sections (a)
and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending a civil, criminal,
administrative or investigative action, suit or proceeding
shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be
indemnified by the corporation as authorized in this
section. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections
of this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement
of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office.
(g) The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of
this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is
or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request
of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or
surviving corporation as he would have with respect to such
constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to am employee benefit
plan; and references to "serving at the request of the
corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be
in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
SECTION 7. Resolution of Board of Directors Providing for
Issuance of Cumulative Preference Stock: For purposes of these
by-laws the certificate of incorporation shall be deemed to
include any certificate filed and recorded in accordance with
section 151(g) of the Delaware Corporation Law which, in
accordance with said section, sets forth the resolution or
resolutions adopted by the board of directors providing for the
issuance of cumulative preference stock or any series thereof.
ARTICLE VII
AMENDMENTS
SECTION 1. Amendment of By-Laws: All by-laws of the
corporation shall be subject to alteration or repeal, and new by-
laws may be made, either by the stockholders at an annual
meeting or at any special meeting, provided notice of the
proposed alteration or repeal or of the proposed new by-laws be
included in the notice of any such special meeting, or by the
affirmative vote of a majority of the whole board of directors
of the corporation at any regular meeting or at any special
meeting of the board of directors, provided that notice of the
proposed alteration or repeal or of the proposed new by-laws be
included in the notice of any such special meeting; but the time
and place for the election of directors shall not be changed
within sixty (60) days next before the day on which the election
is to be held, as in these by-laws provided; and provided
further that no by-law shall be adopted which shall be in
conflict with the provisions of the certificate of incorporation
or any amendment thereto. By-laws made or altered by the
stockholders or by the board of directors shall be subject to
alteration or repeal either by the stockholders or by the board
of directors; provided, however, that the board of directors
shall have no power or authority to alter or repeal sub-section
(b) of section 5 or sub-section (b) of section 11 of article II
of these by-laws respecting eligibility of officers or employees
of the corporation as members of the board of directors and of
the executive committee of the board, or to make any alteration
in sub-section (a) of section 5 or in sub-section (a) of section
11 of said article II which would reduce the number composing
the board of directors below twelve (12) or the number composing
the executive committee below eight (8); the sole right to make
any such change being reserved to the stockholders. So long as
any class or classes of stock or any one or more series of any
class or classes of stock which have a separate vote as such
class or series for the election of directors by such class or
series shall be outstanding, no alteration, amendment, or repeal
of the provisions of sections 2, 3, 4, 5 and 6 of article I,
sections 1, 5, 8 and 9 of article II, section 7 of article VI,
and article VII of these by-laws which affects adversely the
rights or preferences of any such outstanding class or series of
stock shall be made without the consent or affirmative vote of
the holders of at least two-thirds (2/3) of each such class or
series entitled to vote; provided, however, that any increase or
decrease in the number of directors set forth in the first
sentence of sub-section (a) of section 5 of article II shall not
be deemed adversely to affect such rights or preferences.
EXHIBIT 10.4
GENERAL MILLS, INC.
EXECUTIVE INCENTIVE PLAN
As Amended Through June 1, 1995
GENERAL MILLS, INC.
EXECUTIVE INCENTIVE PLAN
PART I
GENERAL PROVISIONS
A. OBJECTIVE OF THE PLAN
It is the intent of General Mills, Inc. (the "Company") to provide
financial rewards to key executives in recognition of individual
contributions to the success of the Company under the provisions of
this Executive Incentive Plan (the "Plan").
Participant awards shall be based on the comparative impact of the
position to the overall corporate results as measured by the
position level, salary of the Participant, and the degree to which
the individual impacts division/ subsidiary, group and corporate
results.
B. ELIGIBILITY
Any active key management employee of the Company or any of its
subsidiaries, including such members of the Board and the Chairman
as are actively employed by the Company or its subsidiaries, shall
be eligible to participate in the Plan. Eligibility shall not carry
any rights to participation nor to any fixed awards under the Plan.
Employees on a commission basis, those who are members of any other
Company incentive compensation plan, except the Stock Option and
Long-Term Incentive Plans of General Mills, Inc., and persons acting
in a consulting capacity shall not be eligible.
C. PARTICIPATION
As early as possible in each fiscal year (the "Plan Year"),
management shall recommend from those eligible a list of proposed
Participants in the Plan, and the Compensation Committee of the
Board of Directors (the "Committee") thereupon shall determine and
cause to be notified those who have been selected as Participants
for the current Plan Year. Participants shall be those persons
holding positions which most significantly affect operating results
and provide the greatest opportunity to contribute to current
earnings and the future success of the Company. During the year,
other Participants may be added because of promotion or for other
reasons warranting their inclusion, or Participants may be excluded
from active participation because of demotion or other reasons
warranting their exclusion.
PART II
BASE CASH AWARDS
The size of a Participant's base cash incentive award ("Base Cash
Award") under this Plan shall be preliminarily determined by the
following formula:
(Eligible Base Salary Earnings) x (Target Incentive Percent) x
(Individual Performance Rating) x (Corporate/Unit Composite Rating) =
(Base Cash Award)
A. ELIGIBLE BASE SALARY EARNINGS
The Eligible Base Salary Earnings is the total amount of regular
base pay actually paid to a Plan Participant during the portion of
the year the Participant is covered by the Plan.
B. TARGET INCENTIVE PERCENT
The Target Incentive Percent shall be determined by the Senior Vice
President - Personnel using the following guidelines:
1. For Participants in evaluated jobs, the Target Incentive
Percent will be determined based on job level at the time
participation in the Plan commences. Persons transferred to
a higher or lower job level during a Plan Year will have
their Target Incentive Percent revised as of the effective
date of the change in position.
2. For Participants in unevaluated jobs, the Target Incentive
Percent shall be established in a manner consistent with the
Target Incentive Percent established for evaluated jobs.
C. INDIVIDUAL PERFORMANCE RATING
Individual performance for the Plan Year will be determined as
follows:
1. At the beginning of each Plan Year, each Participant will
develop written objectives for the year which are directly
related to specific job accountabilities.
2. The individual objectives will be reviewed with each
Participant's superior for acceptance and will become the
primary basis for establishing the Individual Performance
Rating for the year. For the Chief Executive Officer, such
objectives will be reviewed and approved by the Committee.
3. Near the end of each Plan Year, each Participant will submit
to his or her superior, a Summary of Accomplishments related
to individual performance during the year. Based on this
information and other information related to individual
performance or job accountabilities, the superior will
assign an individual rating from the following range:
.0 - .50 Unsatisfactory
.50 - .90 Improvement Needed
.90 - 1.20 Satisfactory
1.20 - 1.40 Superior
1.40 - 1.50 Outstanding & Exceptional
D. UNIT/CORPORATE PERFORMANCE RATING
1. Unit Rating
Near the end of the Plan Year, each Participant will submit
to his or her superior, a Unit Achievement Summary, which
outlines the performance of his or her respective unit
during the Plan Year and relates directly to annual program,
the Company's long-range plans and other key operating
objectives. This Unit Achievement Summary will be used,
along with other information related to unit performance, in
establishing a unit rating with a range of .0 (Unacceptable)
to 1.8 (Outstanding and Exceptional).
2. Corporate Rating
At the beginning of each Plan Year, the Committee shall
establish a rating schedule based upon the Company's growth
in Earnings Per Share (Pre-LIFO) and the Company's Return on
Capital for the Plan Year. Based on this schedule, the
Committee will, at the end of each Plan Year, establish a
corporate rating for the year.
Individual and unit ratings will be recommended by the
Participant's manager and reviewed by one additional level
of management. All individual and unit ratings for Plan
Participants will be submitted to the Company's Incentive
Committee for review and approval.
3. Unit/Corporate Weightings
The ratings established in 1. and 2. above shall be weighted
based on job level according to the following schedule:
Corporate Unit
Portion Portion
Senior Corporate Officers 100% N/A
Operating General Managers 50% 50%
and Corporate Staff Officers
All Other Officers 25% 75%
E. REVIEW AND APPROVAL OF RATINGS
All individual and unit ratings will be determined by the
Participant's manager and reviewed and approved by one
additional level of management. In addition, the Incentive
Committee shall review and approve all ratings prior to their
submissions to the Committee.
The final ratings and incentive award amounts shall be reviewed
and approved by the Committee which shall have full authority
and discretion to set all final Base Cash Awards.
All awards under this Plan for corporate officers and that
portion of the award related to corporate performance of all
other Participants (including amounts attributable to stock
matching under Part III) shall be subject to the 1933
Shareholder Resolution on Profit Sharing, as amended. All other
awards, if any, under this Plan shall be considered ordinary
bonuses under the terms and conditions of the 1933 Resolution.
PART III
STOCK MATCHING PROVISIONS
A. ALTERNATIVES FOR PARTICIPATION IN STOCK MATCHING
Subject to the provisions set forth below (the "Stock Matching
Provisions"), Participants under age 55 are eligible to receive
additional incentive compensation in the form of common stock of
General Mills, Inc. ("Common Stock") contributed by the Company
("Stock Matching"), and Participants age 55 or over may elect to
receive all or a portion of their additional incentive compensation
in the form of Stock Matching and/or an "Additional Cash Award."
1. Participants under age 55 as of the last day of the Plan
Year are eligible to participate in the Stock Matching
Provisions of the Plan by depositing shares of Common Stock
with a Fair Market Value equal to 25% of their Base Cash
Award.
2. Participants age 55 or over as of the last day of the Plan
Year may elect full, partial, or no participation in the
Stock Matching Provisions according to the following
schedule:
Fair Market
Value of Shares
Level of to be Deposited
Stock Matching as % of Base Additional
Participation Cash Award Cash Award
Full Participation 25% 0%
15% 6%
Partial Participation 10% 9%
5% 12%
No Participation
in Stock Matching 0% 15%
3. On or before the December 31 immediately preceding the end of
the Plan Year, Participants must notify the Company in writing
of the applicable participation alternatives elected under the
Stock Matching Provisions. Elections regarding Stock Matching
participation are effective for the current Plan Year.
Dividends may be paid to the Participant or reinvested, at the
election of the Participant, under the Company's Automatic
Dividend Reinvestment Plan.
B. PARTICIPATION IN STOCK MATCHING
1. The Company shall notify each Participant who participates in
the Stock Matching Provisions of the maximum number of shares
of Common Stock which they are permitted to deposit under the
Plan, and Participants may choose to deposit all or any
portion of the number of shares so permitted to be deposited
(the "Original Deposit"). Participants can make their
Original Deposit at any time after they receive their Base
Cash Award, but Participants must deposit such shares with the
Company (the "Agent") no later than the December 1 immediately
following the end of the Plan Year.
2. Any Participant who dies, retires on or after age 65, elects
early retirement after age 55, or is permanently disabled and
unable to work as determined by the Corporate Medical
Director, either during a Plan Year or prior to the final date
for depositing the Original Deposit shares for such Plan Year
(December 1), shall not be eligible to participate in the
Stock Matching Provisions, but instead, such Participant, or
the Participant's legal representative, shall receive an
Additional Cash Award for the Plan Year in an amount equal to
twenty-five percent (25%) of any Base Cash Award paid or
payable for that Plan Year.
C. DISTRIBUTIONS AND WITHDRAWALS
1. Restricted Stock
As soon as practical following the Original Deposit by a
Participant, the Company shall match these shares and deposit
with the Agent for the Participant's account one share of
Common Stock for each share of the Original Deposit. The
shares deposited by the Company shall vest and be delivered to
the Participant fifty percent (50%) after year three and fifty
percent (50%) after year six, provided the Participant's
Original Deposit has been left on deposit through the three-
year and six-year periods and all other provisions of the Plan
have been met (the "Restricted Stock").
2. Temporary Withdrawal for Option Exercise
A Participant may temporarily withdraw all or a portion of the
shares on deposit for all Plan Years (other than Restricted
Stock) in order to exercise Company stock options, subject to
an equal number of shares of Common Stock being promptly
redeposited with the Agent after such exercise.
3. Maximum Shares
Subject to the provisions in III.C.4. hereof, and subject to
the limitations contained in the 1933 Shareholder Resolution on
Profit Sharing, as amended, the maximum value, at the time of
the award, of the shares for which Restricted Stock may be
granted under the Plan in respect of any fiscal year is one and
one quarter percent (1.25%) of the earnings before taxes on
income (excluding extraordinary items) of the Company for such
fiscal year; provided, however, that in no event shall such
maximum value be greater than two and one-half percent (2.5%)
of the amount, if any, by which such earnings exceed ten
percent (10%) of total stockholders' equity of the Company as
of the beginning of such fiscal year.
4. Share Adjustment
The number of shares subject to the Plan and the outstanding
Restricted Stock may be appropriately adjusted by the Committee
in the event that:
(i) the number of outstanding shares of Common Stock
of the Company shall be changed by reason of split-ups,
combinations or reclassifications of shares;
(ii) any stock dividends are distributed to the holders
of Common Stock of the Company; or
(iii) the Common Stock of the Company is converted into
or exchanged for other shares as a result of any merger
or consolidation (including a sale of assets) or other
recapitalization.
5. Share Price
The value of the shares of Common Stock which are required for
deposit shall be equal to one hundred percent (100%) of the
Fair Market Value of the shares as of the first business day of
June of such year of deposit. "Fair Market Value," for the
purpose of the Plan, shall equal the mean of the high and low
price of the Common Stock on the New York Stock Exchange on
such date.
D. DEFINITION OF PLAN YEAR
For stock matching purposes, the Plan Year shall be defined as the
period beginning June 1 and ending May 31 of the following year.
E. VESTING AND DELIVERY OF RESTRICTED STOCK
1. Three-Year Vesting
The requirement for shares to be on deposit for three years
shall be considered to have been fulfilled if such shares are
left on deposit with the Agent until the first business day of
June of the third year following the year of deposit for such
Plan Year, on which date the three-year vesting shall occur
(except as otherwise provided in Section F of Part III).
Delivery of the shares will be made at the time the Base Cash
Awards are distributed at the end of June.
2. Six-Year Vesting
The six-year vesting requirement shall be considered to have
been fulfilled as of the first business day of June, three
years after the third-year vesting and delivery for the Plan
Year, provided the Original Deposit has been left on deposit
with the Agent until the first business day of June of the
sixth-year following the year of deposit for such Plan Year, on
which date the six-year vesting shall occur (except as
otherwise provided in Section F of Part III). Delivery of the
shares will be made at the time the Base Cash Awards are
distributed at the end of June.
F. RESTRICTED STOCK VESTING AND DELIVERY UNDER SPECIAL CONDITIONS
1. Normal Retirement, Late Retirement or Permanent Disability for
Work
Vesting and delivery of all Restricted Stock shall be made to a
Participant who retires on or after age 65 or who is
permanently disabled and unable to work (as determined by the
Corporate Medical Director) while a Participant under the Plan.
2. Early Retirement
(a) A Participant taking early retirement (after age 55) may
elect to leave stock on deposit until the Participant
reaches age 65, or, if earlier, the fulfillment of the
three-year and/or six-year vesting requirements of
Section E. of Part III.
(b) When the Participant attains age 65, if the Participant has
left the original stock on deposit, all Restricted Stock
shall vest and be delivered, unless such Restricted Stock
shall have vested and have been delivered at an earlier
date pursuant to Section E. of Part III.
(c) In the event that the Participant elects to withdraw the
Original Deposit from the account prior to age 65, and
before the three-year or six-year vesting dates, the
Participant shall vest in a proportionate number of shares
of such Restricted Stock. Such proportionate vesting shall
be the percentage of the three-year or six-year period, as
the case may be, which has already expired.
3. Death
The heirs or estate of any Participant who dies before the
three-year or six-year vesting shall vest in a proportionate
number of shares of Restricted Stock. Such proportionate
vesting shall be the pro-rata share, based on full months, of
the three-year or six-year period, as the case may be, which
has already expired.
4. Voluntary Resignation
No Participant in a Plan Year who resigns voluntarily (unless
for the convenience of the Company) shall vest in Restricted
Stock.
5. Change of Control
All Restricted Stock shall vest and be delivered to the
Participant if there is a change of control as provided in
Part V.
G. ASSIGNMENT OF PARTICIPANT'S ACCOUNTS
Participants' interests in the Original Deposit or the Restricted
Stock may not be sold, pledged, assigned or transferred in any
manner, other than by will or the laws of descent and distribution,
so long as such shares are held by the Agent, and any such sale,
pledge, assignment or other transfer shall be null and void.
PART IV
DEFERRAL OF PAYMENT OF CASH INCENTIVE AWARDS
A Participant may elect to defer all or a portion of a Base Cash Award
and any additional cash award received (collectively "Cash Award")
during each calendar year from and after January 1, 1982 in accordance
with the terms and conditions of the General Mills, Inc. Deferred
Compensation Plan.
In order to defer all or a portion of the Cash Award for a particular
calendar year, a Participant must make a valid election by executing
and filing a Deferral Election Form with the Company on or before the
December 31 immediately preceding the end of the Plan Year. If a
Participant elects to defer all or a portion of the Cash Award for a
particular year, the Participant shall automatically become a
participant in the General Mills, Inc. Deferred Compensation Plan, and
any amounts so deferred shall be subject to the provisions of such
plan.
PART V
PLAN ADMINISTRATION
This Plan shall be effective in each fiscal year of the Company and
shall be administered by the Committee and the Committee shall have
full authority to interpret the Plan. Such interpretations of the
Committee shall be final and binding on all parties, including the
Participants, survivors of the Participant, and the Company.
The Committee shall have the authority to delegate the duties and
responsibilities of administering the Plan, maintaining records,
issuing such rules and regulations as it deems appropriate, and making
the payments hereunder to such employees or agents of the Company as it
deems proper, but only to the extent such delegation does not adversely
affect the ability of the Plan to comply with the conditions for
exemption from Section 16 of the Securities Exchange Act of 1934 (or
any successor provisions).
The Board, or if specifically delegated, its delegate, may amend,
modify or terminate the Plan at any time, provided, however, that no
such amendment, modification or termination shall adversely affect any
accrued benefit under the Plan to which a Participant, or the
Participant's beneficiary, is entitled prior to the date of such
amendment or termination, unless the Participant, or the Participant's
beneficiary, becomes entitled to an amount equal to the value of such
benefit under another plan, program or practice adopted by the Company.
Notwithstanding the above, no amendment, modification, or termination
which would affect benefits accrued under this Plan prior to such
amendment, modification or termination may occur after a Change of
Control without the written consent of a majority of the Participants
determined as of the day before such Change of Control.
A Change of Control shall mean the occurrence of any of the following
events:
(a) any person (including a group as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934) becoming, directly or
indirectly, the beneficial owner of twenty percent (20%) or
more of the shares of stock of General Mills, Inc. entitled to
vote for the election of directors;
(b) as a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination, sale of
assets or contested election, or combination of the foregoing,
the persons who were directors of the Company just prior to
such event shall cease to constitute a majority of the
Company's Board of Directors; or
(c) the stockholders of the Company approve an agreement providing
for a transaction in which the Company will cease to be an
independent publicly-owned corporation or a sale or other
disposition of all or substantially all of the assets of the
Company occurs.
In the event the Company shall effect one or more changes, split-ups
or combinations of shares of Common Stock or one or more other like
transactions, the Board or the Committee may make such adjustment,
upward or downward, in the number of shares of Common Stock to be
deposited by the Participants as shall appropriately reflect the
effect of such transactions.
In the event the Company shall distribute shares of a subsidiary of
the Company to its stockholders in a spin-off transaction, the shares
of stock of the subsidiary distributed to
Participants which are attributable to Restricted Stock shall be
vested and delivered to the Participants subject to any specific
instructions of the Committee.
Neither any benefit payable hereunder nor the right to receive any
future benefit under the Plan may be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge
or legal process, and if any attempt is made to do so, or a person
eligible for any benefits becomes bankrupt, the interest under the
Plan of the person affected may be terminated by the Committee which,
in its sole discretion, may cause the same to be held or applied for
the benefit of one or more of the dependents of such person or make
any other disposition of such benefits that it deems appropriate.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934 ("1934 Act"), transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by
the Committee.
All questions pertaining to the construction, validity and effect of
the Plan shall be determined in accordance with the laws of the United
States and the laws of the State of Minnesota.
EXHIBIT 10.12
GENERAL MILLS, INC.
DEFERRED COMPENSATION PLAN
As Amended Through January 1, 1995
GENERAL MILLS, INC.
DEFERRED COMPENSATION PLAN
1. PURPOSE OF PLAN
General Mills, Inc. (the "Company") hereby establishes
a Deferred Compensation Plan (the "Plan") for a select
group of its key management employees of the Company
and its affiliates as a means of sheltering a portion
of income from current taxation while accumulating
resources for future investments or retirement.
Participants shall earn a "rate of return" on the
deferred amounts which track the investment return
achieved under the Voluntary Investment Plan of General
Mills, Inc. (the "VIP") and/or rates equivalent to
investment results of other funds or portfolios as may
be made available from time to time pursuant to the
provisions of the Plan. Under current tax law, amounts
properly deferred and the "rate of return" credited to
such amounts are not taxable (except for FICA taxation,
as required) as income until they are paid. Under
current tax law, proceeds from this Plan will be taxed
as ordinary income in the year in which they are
received.
2. ELIGIBILITY
An individual is a Participant in the Plan if such
individual (i) is a Participant in the Executive
Incentive Plan, (ii) has been selected by management to
participate in "Compensation Plus," or (iii) has an
individual agreement, approved by the Minor Amendment
Committee, which provides for participation in this
Plan and has elected to defer compensation pursuant to
the provisions of any of these programs or the
agreement.
3. PLAN ADMINISTRATION
(i) Minor Amendment Committee.
This Plan shall be administered by the Minor
Amendment Committee (the "Minor Amendment
Committee"). The Minor Amendment Committee shall
act by affirmative vote of a majority of its
members at a meeting or in writing without a
meeting. The Minor Amendment Committee shall
appoint a secretary who may be but need not be one
of its own members. The secretary shall keep
complete records of the administration of the
Plan. The Minor Amendment Committee may authorize
each and any one of its members to perform routine
acts and to sign documents on its behalf.
(ii) Plan Administration.
The Minor Amendment Committee may appoint such
persons or establish such subcommittees, employ
such attorneys, agents, accountants or investment
advisors necessary or desirable to advise or
assist it in the performance of its duties
hereunder, and the Minor Amendment Committee may
rely upon their respective written opinions or
certifications.
Administration of the Plan shall consist of
interpreting and carrying out the provisions
of the Plan. The Minor Amendment Committee shall
determine the eligibility of employees to participate
in the Plan, their rights while Participants in the
Plan and the nature and amount of benefits to be
received therefrom. The Minor Amendment Committee
shall decide any disputes which may arise under the
Plan. The Minor Amendment Committee may provide
rules and regulations for the administration of the
Plan consistent with its terms and provisions. Any
construction or interpretation of the Plan and any
determination of fact in administering the Plan
made in good faith by the Minor Amendment
Committee shall be final and conclusive for all
Plan purposes.
(iii) Claims Procedure.
(a) The Minor Amendment Committee shall prescribe
a form for the presentation of claims under the
terms of the Plan.
(b) Upon presentation to the Minor Amendment Committee
of a claim on the prescribed form, the Minor
Amendment Committee shall make a determination of
the validity thereof. If the determination is
adverse to the claimant, the Minor Amendment
Committee shall furnish to the claimant within a
reasonable period of time after the receipt of
the claim a written notice setting forth the
following:
(1) The specific reason or reasons for the
denial;
(2) Specific reference to pertinent provisions of
the Plan on which the denial is based;
(3) A description of any additional material or
information necessary for the claimant to
perfect the claim and an explanation of why
such material or information is necessary;
and
(4) An explanation of the Plan's claim review
procedure.
(c) In the event of a denial of a claim, the claimant
may appeal such denial to the Minor Amendment
Committee for a full and fair review of the adverse
determination. The claimant's request for review
must be in writing and be made to the Minor Amendment
Committee within 60 days after receipt by the
claimant of the written notification required
under subsection (b) above. The claimant or
his or her duly authorized representative may
submit issues and comments in writing which
shall be given full consideration by the Minor
Amendment Committee in its review.
(d) The Minor Amendment Committee may, in its sole
discretion, conduct a hearing. A request for a
hearing will be given full consideration. At
such hearing, the claimant shall be entitled to
appear and present evidence and be represented
by counsel.
(e) A decision on a request for review shall be made
by the Minor Amendment Committee not later than
60 days after receipt of the request; provided,
however, in the event of a hearing or other
special circumstances, such decision shall be
made not later than 120 days after receipt of
such request.
(f) The Minor Amendment Committee's decision on
review shall state in writing the specific reasons
and references to the Plan provisions on which
it is based. Such decision shall be immediately
provided to the claimant. In the event the
claimant disagrees with the findings of the Minor
Amendment Committee, the matter shall be referred
to arbitration in accordance with Section 13 hereof.
(g) The Minor Amendment Committee may allocate its
responsibilities among its several members, except
that all matters involving the hearing of and
decision on claims and the review of the
determination of benefits shall be made by the
full Minor Amendment Committee. No member of the
Minor Amendment Committee shall participate in any
matter relating solely to himself.
4. DEFERRAL AND PAYMENT OF COMPENSATION
(i) Deferral Election. A Participant can elect to
defer incentive compensation by completing and
submitting to the Company a deferral election form
by December 31 of each year. Such election shall
apply to the Participant's incentive compensation,
if any, to be paid in the next calendar year. A
Participant's deferral election may apply to:
(a) 100% of the incentive compensation,
(b) any amount in excess of a specified
dollar amount,
(c) any amount up to a specified dollar
amount, or
(d) a specified percentage (in whole
numbers) of the incentive compensation.
If eligible to participate in the Unit Performance
Fund as specified in Section 5(d), a Participant may
elect to defer base salary by completing and
submitting to the Company a deferral election form
prior to the start of the deferral period and
pursuant to existing Unit Performance Fund
guidelines.
(ii) Payment of Deferred Amounts. At the time of a
Participant's deferral election, a Participant must
also select a distribution date and a form of
payment. The distribution date may be any date that
is at least one year subsequent to the date the
compensation would otherwise be payable. With
respect to any deferral election made or amended on
or after December 1, 1994, the deferral election
must provide that distribution shall be made or
commenced as of the date the Participant attains age
70.
A Participant may elect to have deferred amounts
paid in a single payment, in substantially equal
annual installments for a period not to exceed ten
(10) years, or up to fifteen (15) years for
elections made until December 31, 1985, or in
another form requested by the Participant, in
writing, and approved by the Minor Amendment
Committee. Notwithstanding the above, the following
provisions shall apply:
(a) If the employment of a Participant
terminates prior to the date of any incentive
compensation award, then any deferral election
made with respect to such incentive compensation
award shall not become effective.
(b) In the event of the termination of a
Participant other than by retirement, the Minor
Amendment Committee may, with sole and complete
discretion, if it determines that such payment
is in the best interest of the Company, require
that full payment of all amounts due be
accelerated and paid as of the first business
day of the calendar year next following the date
of termination, or, if a Participant has elected
a "rate of return" in a Unit Performance Fund as
specified in Section 4(d), after the end of the
last applicable Unit Performance Fund period.
(c) As to all previous and future Plan
years, a Participant who (A) has elected a
distribution date and distribution in either a
lump sum or substantially equal installments and
(B) is not within twelve (12) months of the date
that such deferred amount or the first
installment thereof would be paid under this
Plan, shall be permitted to make no more than
two amendments to the initial election to defer
payments such that his or her distribution date
is either in the same calendar year as the date
of the distribution which would have been made
in the absence of such election amendment(s) or
is at least one year after the date of the
distribution which would have been made in the
absence of such election amendment(s). A
Participant satisfying the conditions set forth
in the preceding sentence may also amend such
election so that his or her form of payment is
changed to substantially equal annual
installments for a period not to exceed ten (10)
years or is changed to a lump sum.
(d) A Participant may, at any time prior
or subsequent to the commencement of benefit
payments under this Plan, elect in writing to
have his or her form of payment of any or all
amounts due under this Plan changed to an
immediate lump-sum distribution which shall be
paid within one (1) business day of receipt by
the Company of such request; provided that the
amount of any such lump-sum distribution shall
be reduced by an amount equal to the product of
(X) the total lump-sum distribution otherwise
payable (based on the value of the account as of
the first day of the month in which the lump-sum
amount is paid, adjusted by a pro-rata portion
of the rate of return for the prior month in
which the lump-sum is paid, determined by
multiplying the actual rate of return for such
prior month by a fraction, the numerator of
which is the number of days in the month in
which the request is received prior to the date
of payment, and the denominator of which is the
number of days in the month), and (Y) the rate
set forth in Statistical Release H.15(519), or
any successor publication, as published by the
Board of Governors of the Federal Reserve System
for one-year U.S. Treasury notes under the
heading "Treasury Constant Maturities" for the
first day of the calendar month in which the
request for a lump-sum distribution is received
by the Company.
(iii) Rabbi Trust. The Company has established
a Supplemental Benefits Trust with Norwest Bank
Minneapolis, N.A. as Trustee to hold assets of the
Company under certain circumstances as a reserve for
the discharge of the Company's obligations under the
Plan and certain other plans of deferred
compensation of the Company. In the event of a
"Change in Control" (as defined in Section 12
below), the Company shall be obligated to
immediately contribute such amounts to the Trust as
may be necessary to fully fund all benefits payable
under the Plan. Any Participant in the Plan shall
have the right to demand and secure specific
performance of this provision. All assets held in
the Trust remain subject only to the claims of the
Company's general creditors whose claims against the
Company are not satisfied because of the Company's
bankruptcy or insolvency (as those terms are defined
in the Trust Agreement). No Participant has any
preferred claim on, or beneficial ownership interest
in, any assets of the Trust before the assets are
paid to the Participant and all rights created under
the Trust, as under the Plan, are unsecured
contractual claims of the Participant against the
Company.
5. DEFERRED ACCOUNTS AND INVESTMENT RETURNS ON AMOUNTS IN
DEFERRED ACCOUNTS
A deferred incentive compensation account ("Deferred
Account") will be established on behalf of each
Participant, and the amount of deferred incentive
compensation will be credited to each Participant's
Deferred Account as of the first of the month
coincident with or next following the month in which a
deferral becomes effective. Each Participant's
Deferred Account will be credited monthly with a "rate
of return" on the total deferred amount accruing as of
the first of the month coincident with or next
following the date deferred incentive compensation is
credited to the Participant's Deferred Account. Such
"rate of return" shall be based upon the actual
investment performance of funds in the VIP, or at such
other rates as may be made available to Participants
from time to time pursuant to the provisions of the
Plan. A Participant may elect to have the "rate of
return" credited to his or her Deferred Account at any
of the following rates:
(a) the rate of return as from time to time earned by
the Fixed Income Fund of the VIP;
(b) the rate of return as from time to time earned by
the Equity Fund of the VIP;
(c) any other rates of return of other funds or
portfolios established under a qualified benefit
plan maintained by the Company which the Minor
Amendment Committee may establish as an available
rate of return under this Plan; or
(d) as to select management employees approved by the
Senior Vice President, Personnel, the rates of
return of the Unit Performance Funds as
established pursuant to the rules of the Minor
Amendment Committee.
Participants may elect to have any combination of the
above "rates of return" accrue on amounts in their
Deferred Account, from 1% to 100%, provided that the
sum of the percentages attributable to such rates
equals 100%. A Participant may change the "rate(s) of
return" to be credited to his or her Deferred Account,
except as to a Unit Performance Fund, as of the first
day of any month by notifying the Company, in writing,
of such election by the last business day of the
preceding month.
Each Participant's Deferred Account will be credited
monthly with the "rate(s) of return" elected by the
Participant until the amount in each Participant's
Deferred Account is distributed to the Participant on
the distribution date(s) elected by the Participant.
Each Participant shall receive a quarterly statement of
the balance of his or her Deferred Account.
6. COMPANY CONTRIBUTIONS TO DEFERRED ACCOUNTS
As of the first of the month coincident with or next
following the month in which a deferral is made
hereunder, each Participant's Deferred Account will be
credited with hypothetical interest in an amount equal
to 2-1/2% of the Participant's deferred incentive
compensation, or such amount as will otherwise equal
the value of the "Base Allocation" (as that term is
defined in the VIP) which would have been allocated to
the Participant if the Participant had contributed such
deferred incentive compensation amount to the VIP. In
addition, as soon as practicable following the end of
each fiscal year, each Participant's Deferred Account
may be credited with hypothetical interest in an amount
not to exceed 2-1/2% of the Participant's deferred
incentive compensation, or such amount as will
otherwise equal the value of the "Variable Allocation"
(as that term is defined in the VIP) which would have
been allocated to the Participant if the Participant
had contributed such deferred incentive compensation
amount to the VIP.
7. SHORT-TERM DEFERRALS
Notwithstanding the foregoing provisions of the Plan,
the Company may also permit Participants to elect to
defer all or part of incentive compensation, if any, to
a date certain selected by the Company within the
taxable year it would otherwise be paid, upon written
notice to the Company received by December 31 of the
preceding calendar year. Interest shall be credited on
such deferred amount at a rate selected by the Company
and communicated to the Participants at the same time
the availability of any such short-term deferral
opportunity is communicated to Participants.
8. FINANCIAL HARDSHIP PAYMENTS
In the event of a severe financial hardship occasioned
by an emergency, including, but not limited to,
illness, disability or personal injury sustained by the
Participant or a member of the Participant's immediate
family, a Participant may apply to receive a
distribution earlier than initially elected. The Minor
Amendment Committee may, in its sole discretion, either
approve or deny the request. The determination made by
the Minor Amendment Committee will be final and binding
on all parties. If the request is granted, the
payments will be accelerated only to the extent
reasonably necessary to alleviate the financial
hardship.
9. DEATH OF A PARTICIPANT
If the death of a Participant occurs before a full
distribution of the Participant's Deferred Account is
made, a lump sum payment shall be made to the
beneficiary designated by the Participant to receive
such amounts. This payment shall be made as soon as
practical following notification that death has
occurred. In the absence of any such designation,
payment shall be made to the personal representative,
executor or administrator of the Participant's estate.
10. IMPACT ON OTHER BENEFIT PLANS
The Company may maintain life, disability, retirement
and/or savings plans under which benefits earned or
payable are related to earnings of a Participant.
Life and disability plan benefits will generally be
based upon the earnings that a Participant would have
earned in a given calendar year in the absence of any
deferral hereunder.
Retirement benefits under a qualified pension plan
maintained by the Company or an affiliate will be based
upon earnings actually paid to a Participant during any
given Plan year. If a person terminates employment
with a right to a vested benefit under a qualified plan
maintained by the Company or an affiliate, and if the
actual income for pension purposes was reduced because
of a deferral under this Plan, the Company will provide
a supplemental pension equal to the difference between
the actual benefit payable from the pension plan and
the benefit that such Participant would have been
received had income not been deferred. If such a
supplemental benefit is due, such benefit would be
subject to all of the provisions and in accordance with
the terms and conditions of the Supplemental Retirement
Plan of General Mills, Inc. This supplemental
retirement benefit will not apply to Participants who
terminate before becoming vested under the qualified
pension plan.
11. NON-ASSIGNABILITY OF INTERESTS
The interests herein and the right to receive
distributions under this Plan may not be anticipated,
alienated, sold, transferred, assigned, pledged,
encumbered, or subjected to any charge or legal
process, and if any attempt is made to do so, or a
Participant becomes bankrupt, the interests of the
Participant under the Plan may be terminated by the
Minor Amendment Committee, which, in its sole
discretion, may cause the same to be held or applied
for the benefit of one or more of the dependents of
such Participant or make any other disposition of such
interests that it deems appropriate. Notwithstanding
the foregoing, in the event a Participant has received
an overpayment from the Supplemental Retirement Plan of
General Mills, Inc. and has failed to repay such
amounts upon written demand of the Company, the Company
shall be authorized and empowered, at the discretion of
the Company, to deduct such amount from the
Participant's Deferred Accounts.
12. AMENDMENTS TO PLAN
The Company, or if specifically delegated, its
delegate, reserves the right to suspend, amend or
otherwise modify or terminate this Plan at any time,
without notice. However, this Plan may not be
suspended, amended, otherwise modified, or terminated
after a Change in Control without the written consent
of a majority of Participants determined as of the day
before such Change in Control occurs. A "Change in
Control" shall mean the occurrence of any of the
following events:
(a) any person (including a group as defined in
Section 13(d)(3) of the Securities Exchange Act of
1934) becomes the beneficial owner, directly or
indirectly, of twenty percent (20%) or more of the
shares of the Company entitled to vote for the
election of directors;
(b) as a result of or in connection with any cash
tender offer, exchange offer, merger or other
business combination, sales of assets or contested
election, or combination of the foregoing, the
persons who were directors of the Company just
prior to such event shall cease to constitute a
majority of the Company's Board of Directors; or
(c) the shareholders of the Company approve an
agreement providing for a transaction in which the
Company will cease to be an independent publicly-
owned corporation or a sale or other disposition
of all or substantially all of the assets of the
Company occurs.
Notwithstanding any other provision of this Plan to the
contrary, the Minor Amendment Committee may, in its
sole discretion, direct that payments be made before
such payments are otherwise due if, for any reason
(including, but not limited to a change in the tax or
revenue laws of the United States of America, a
published ruling or similar announcement issued by the
Internal Revenue Service, a regulation issued by the
Secretary of the Treasury or his delegate, or a
decision by a court of competent jurisdiction involving
a Participant or beneficiary), such Committee believes
that Participants or their beneficiaries have
recognized or will recognize income for federal income
tax purposes with respect to amounts that are or will
be payable to such Participants under the Plan before
such amounts are scheduled to be paid. In making this
determination, the Minor Amendment Committee shall take
into account the hardship that would be imposed on
Participants or their beneficiaries by the payment of
federal income taxes under such circumstances.
13. ARBITRATION
(i) Any controversy or claim arising out of or
relating to this Plan, or any alleged breach
of the terms or conditions contained herein,
shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA")
as such rules may be modified herein.
(ii) An award rendered in connection with an
arbitration pursuant to this Section shall
be final and binding and judgment upon such an
award may be entered and enforced in any court of
competent jurisdiction.
(iii) The forum for arbitration under this Plan
shall be Minneapolis, Minnesota and the governing
law for such arbitration shall be laws of the
State of Minnesota.
(iv) Arbitration under this Section shall be
conducted by a single arbitrator selected
jointly by the Company and the Participant or
Beneficiary, as applicable (the "Complainant").
If within thirty (30) days after a demand for
arbitration is made, the Company and the
Complainant are unable to agree on a single
arbitrator, three arbitrators shall be appointed.
Each party shall select one arbitrator and those
two arbitrators shall then select a third neutral
arbitrator within thirty (30) days after their
appointment. In connection with the selection of
the third arbitrator, consideration shall be given
to familiarity with executive compensation plans
and experience in dispute resolution between
parties, as a judge or otherwise. If the
arbitrators selected by the parties cannot agree
on the third arbitrator, they shall discuss the
qualifications of such third arbitrator with the
AAA prior to selection of such arbitrator, which
selection shall be in accordance with the
Commercial Arbitration Rules of the AAA.
(v) If an arbitrator cannot continue to serve,
a successor to an arbitrator selected
by a party shall be also selected by the
same party, and a successor to a neutral
arbitrator shall be selected as specified in
subsection (d) of this Section. A full rehearing
will be held only if the neutral arbitrator is
unable to continue to serve or if the remaining
arbitrators unanimously agree that such a
rehearing is appropriate.
(vi) The arbitrator or arbitrators shall be
guided, but not bound, by the Federal Rules
of Evidence and by the procedural rules,
including discovery provisions, of the Federal
Rules of Civil Procedure. Any discovery shall be
limited to information directly relevant to the
controversy or claim in arbitration.
(vii) The parties shall each be responsible for their
own costs and expenses, except for the fees and
expenses of the arbitrators, which shall be
shared equally by the Company and the Complainant.
14. EFFECTIVE DATE AND PLAN YEAR
This Plan became effective as of May 1, 1984. It shall
operate on a calendar year basis thereafter. The Plan
has been amended and restated effective as of January 1,
1986; and amended as of February 9, 1987; July 1,
1987; June 21, 1990; April 29, 1991; May 1, 1991;
November 15, 1991; December 15, 1992, December 1, 1994
and January 1, 1995.
EXHIBIT 10.15
AGREEMENT
AGREEMENT, dated November 29, 1989, by and between General Mills,
Inc. a Delaware corporation ("Protected") and Nestle S.A., a
Swiss corporation ("Limited"), (Protected and Limited
collectively, the "Parties").
WHEREAS, the Parties propose to enter into certain negotiations
concerning a possible joint venture between them (the "Joint
Venture") and, in connection with such negotiations and with the
formation and operation of the Joint Venture in the event
agreement is reached in that connection, Limited has requested
access to certain confidential business information of Protected.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in consideration of Protected's disclosure
of the above-referenced confidential business information to
Limited (the scope and other terms of which disclosure are not
governed by this instrument), the Parties hereto agree, with the
intention of being legally bound, as follows:
1. Certain Definitions
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations, as currently in effect (the "Exchange
Act Rules"), under the Securities Exchange Act of 1934, as
amended, as currently in effect (the "Exchange Act").
(b) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the Exchange Act Rules, and, for the
purposes of this Agreement, a Person shall have "Beneficial
Ownership" of securities of which such Person is the
Beneficial Owner.
(c) "Common Stock" shall mean the common stock $.75 par value,
of Protected.
(d) "Protected Security" shall mean any equity or debt security
of Protected, or right to acquire any such equity or debt
security, including by purchase, conversion or exchange,
including, but not limited to, Common Stock, preferred
stock, notes, debentures and other evidences of
indebtedness.
(e) "Group" shall mean any partnership, limited partnership,
syndicate or other group within the meaning of Section
13(d)(3) of the Exchange Act.
(f) "Participant" shall have the meaning ascribed to such term
in Regulation 14A of the Exchange Act Rules.
(g) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(h) "Proxies" shall have the meaning ascribed to such term in
Regulation 14A of the Exchange Act Rules.
(i) "Solicitation" shall have the meaning ascribed to such term
in Regulation 14A of the Exchange Act Rules.
(j) "Subsidiary" shall mean, with respect to any Person, any
corporation which is controIled by such Person, by ownership
of securities or otherwise.
2. Representation and Warranty by Limited
Limited represents and warrants to Protected that as of the
date of this Agreement neither Limited nor any of its
Affiliates or Associates, (other than employee benefit plans
or pension trusts holding Protected Securities solely for
investment purposes), is either the Beneficial Owner or has
any control of any Protected Securities.
3. Certain Agreements by Limited
Limited covenants with Protected that, without the prior
written consent of Protected, Limited and its Affiliates and
Associates, (other than employee benefit plans or pension
trusts holding Protected Securities solely for investment
purposes), singly or acting together, in concert, or as a
Group with each other or any other Person, directly or
indirectly through one or more intermediaries or otherwise,
shall not:
(a) acquire, offer to acquire or agree to acquire, by purchase
or otherwise, Beneficial Ownership of, or become the
Beneficial Owner of, or acquire an interest in, any
Protected Securities or any of the assets of either
Protected or any Subsidiary of Protected;
(b) (i) directly or indirectly solicit proxies or become a
participant in a solicitation of proxies with respect to any
matter presented to Protected's stockholders for the
exercise of their voting rights, or (ii) engage in any
course of conduct for the purpose of influencing or
affecting the stockholders of Protected with respect to the
exercise of their voting rights on any matter presented for
a vote by Protected's stockholders;
(c) otherwise act to seek control of, or to influence, the Board
of Directors, management, policies or affairs of either
Protected or any Subsidiary of Protected;
(d) publicly (or in a manner requiring Protected to disclose
publicly)
(i) propose any acquisition of any or all of the assets of
Protected or any of its Subsidiaries, or any acquisition of
any Protected Securities, or any merger, consolidation,
business combination or similar transaction with, or change
of control of, Protected or any of its Subsidiaries or its
or their assets, (ii) make or propose a tender or exchange
offer for any Protected Securities, (iii) propose or suggest
the possibility of any of the other actions set forth in
this Section 3, or (iv) propose any amendment to, or
modification or waiver of, any provision of this Agreement.
(e) solicit, initiate, encourage, finance or assist any other
Person, Persons or Group to take or seek to take any action
which Limited is precluded hereunder from taking itself.
4. Term of Agreement
The term of this Agreement shall be the longer of (a) ten
(10) years from the last date on which both Protected and
Limited have an interest in the Joint Venture, or (b) ten
(10) years from the date of the termination of negotiations
between the Parties with respect to the formation of the
Joint Venture in the event no such Joint Venture results
therefrom.
5. Miscellaneous
(a) Applicable Law. This Agreement and the rights and
liabilities of the Parties hereto shall be governed by and
construed in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed
therein.
(b) Submission to Jurisdiction. Each of the Parties hereby
agrees to submit to the exclusive jurisdiction of the United
States District Court for the District of Minnesota, sitting
in Minneapolis, Minnesota, in any legal action or proceeding
relating to or arising out of this Agreement and all actions
contemplated hereby. The Parties agree that service of
process in any such legal action or proceeding in the manner
provided in Section 5(e) hereof, in addition to any other
means of service permitted by the laws and rules applicable
to such court, shall be deemed valid service thereof.
(c) Specific Performance. Limited agrees and acknowledges that
in the event of any breach by it of the terms of this
Agreement, Protected would be irreparably harmed and could
not be made whole by monetary damages. It is accordingly
agreed that Protected, in addition to any other remedy to
which it may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement,
and shall be entitled to mandatory injunctive or other
relief, including the divestiture of Protected Securities by
Limited, as may be necessary or appropriate to carry out the
intent of the Parties with respect to this Agreement, in any
action instituted in any court having subject matter
jurisdiction thereof.
(d) Counterparts. This Agreement may be executed in any number
of counterparts. Any single counterpart or set of
counterparts signed by the Parties shall constitute a full
and original Agreement for all purposes.
(e) Notices. In any case where any notice, service of process
or other communication is required or permitted to be given
hereunder, such notice, service of process or other
communication shall be in writing and (i) personally
delivered, (ii) sent by postage prepaid registered first
class post (if inland) or airmail (if overseas) or (except
for service of process) (iii) transmitted by telex, telecopy
or cable (with postage prepaid confirmation) at the
following addresses (or such other address as the Parties
may designate from time to time to each other by due notice
pursuant to this Section 5(e)):
If to Protected: General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, MN 55426
Attention : General Counsel
If to Limited: Nestle S.A.
Avenue Nestle 55
CH - 1800 Vevey
Attention: Legal Department
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective
directors, officers, legal representatives, attorneys,
successors and assigns, including any Person who may succeed
to the assets or business of either Party by way of a
consolidation, merger, sale of substantially all of such
Party's assets or purchase of substantially all of such
Party's stock. This Agreement shall not be assigned without
the prior written consent of all the Parties hereto.
(g) Entire Agreement. The terms and conditions contained herein
constitute the entire agreement between the Parties relating
to the subject matter of this Agreement and shall supersede
all previous communications between the Parties with respect
to the subject matter of this Agreement.
(h) Amendment. This Agreement may be varied, amended or
extended only by the written agreement of the Parties
through their duly authorized officers or representatives.
(i) Expenses. Each of the Parties shall pay its own legal and
other costs, charges and expenses connected with this
Agreement and the perfomance of their obligations hereunder.
(j) Severability. If any provision (or any part thereof) of
this Agreement is held illegal or unenforceable in a
judicial.proceeding, such provision (or the affected part
thereof) shall be severed from this Agreement to that extent
and shall be inoperative so long as such judicial
determination shall remain in effect, and the remainder of
this Agreement shall otherwise remain binding on the Parties
hereto, it being the intention of the Parties, in the event
any such provision is held illegal or unenforceable in part,
that such provision be enforced to the fullest scope and
extent permissible consistent with the original intent of
such provision and the ruling of such judicial authority.
(k) Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part
of this Agreement.
(l) No Waiver of Rights. No failure or delay on the part of any
Partv in the exercise of any power of right hereunder shall
operate as a waiver thereof. No single or partial exercise
of any right or power hereunder shall operate as a waiver of
such right or power or of any other right or power. The
waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of
any other or subsequent breach hereunder. All rights and
remedies existing under this Agreement are cumulative with,
and not exclusive of, any rights or remedies otherwise
available.
(m) Choice of Language. In the event of an inconsistency
between any of the terms of this Agreement and any
translation thereof into another language, the English
language version shall control.
(n) No Third-Party Rights. This Agreement shall not be deemed
or construed in any way to result in the creation of any
rights in any Person not a Party to this Agreement.
(o) Further Assurances. At the request of either Party hereto,
the other Party hereto shall execute and deliver (and shall
cause their Affiliates and Associates to execute and
deliver) to such Party such other documents and instruments
as may be reasonably necessary to implement or evidence the
foregoing.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by their respective duly authorized officers as of
the day and year first written above.
Witness: GENERAL MILLS, INC.
/s/ C. L. Whitehill by: /s/ M. H. Willes
Witness: NESTLE S.A.
/s/ O. Dupont by: /s/ Reto F. Domeniconi
Reto F. Domeniconi
Executive Vice President
AGREEMENT
AGREEMENT, dated November 29, 1989, by and between Nestle S.A., a
Swiss corporation ("Protected") and General Mills, Inc., a
Delaware corporation ("Limited"), (Protected and Limited
collectively, the "Parties").
WHEREAS, the Parties propose to enter into certain negotiations
concerning a possible joint venture between them (the "Joint
Venture") and, in connection with such negotiations and with the
formation and operation of the Joint Venture in the event
agreement is reached in that connection, Limited has requested
access to certain confidential business information of Protected.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in consideration of Protected's disclosure
of the above-referenced confidential business information to
Limited (the scope and other terms of which disclosure are not
governed by this instrument), the Parties hereto agree, with the
intention of being legally bound, as follows :
1. Certain Definitions
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations, as currently in effect (the "Exchange
Act Rules"), under the Securities Exchange Act of 1934, as
amended, as currently in effect (the "Exchange Act").
(b) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the Exchange Act Rules, (whether or
not the relevant security shall be registered und the
Exchange Act), and, for the purposes of this Agreement, a
Person shall have "Beneficial Ownership" of securities of
which such Person is the Beneficial Owner.
(c) "Shares" shall mean the shares, having a nominal value of
100 Swiss francs each, of Protected, whether in bearer form
or registered form.
(d) "Protected Security" shall mean any equity or debt security
of Protected, or right to acquire any such equity or debt
security, including by purchase, conversion or exchange,
including, but not limited to, Shares, depositary receipts
evidencing the right to receive Shares, preferred stock,
notes, debentures and other evidences of indebtedness.
(e) "Group" shall mean any partnership, limited partnership,
syndicate or other group within the meaning of Section
13(d)(3) of the Exchange Act, (whether or not the relevant
security shall be registered under the Exchange Act).
(f) "Participant" shall have the meaning ascribed to such term
in Regulation 14A of the Exchange Act Rules, (whether or not
the relevant security shall be registered under the Exchange
Act).
(g) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(h) "Proxies" shall have the meaning ascribed to such term in
Regulation 14A of the Exchange Act Rules, (whether or not
the relevant security shall be registered under the Exchange
Act).
(i) "Solicitation" shall have the meaning ascribed to such term
in Regulation 14A of the Exchange Act Rules, (whether or not
the relevant security shall be registered under the Exchange
Act).
(j) "Subsidiary" shall mean, with respect to any Person, any
corporation which is controlled by such Person, by ownership
of securities or otherwise.
2. Representation and Warranty by Limited
Limited represents and warrants to Protected that as of the
date of this Agreement neither Limited nor any of its
Affiliates or Associates, (other than employee benefit plans
or pension trusts holding Protected Securities solely for
investment purposes), is either the Beneficial Owner or has
any control of any Protected Securities.
3. Certain Agreements by Limited
Limited covenants with Protected that, without the prior
written consent of Protected, Limited and its Affiliates and
Associates, (other than employee benefit plans or pension
trusts holding Protected Securities solely for investment
purposes), singly or acting together, in concert, or as a
Group with each other or any other Person, directly or
indirectly through one or more intermediaries or otherwise,
shall not:
(a) acquire, offer to acquire or agree to acquire, by purchase
or otherwise, Beneficial Ownership of, or become the
Beneficial Owner of, or acquire an interest in, any
Protected Securities or any of the assets of either
Protected or any Subsidiary of Protected;
(b) (i) directly or indirectly solicit proxies or become a
participant in a solicitation of proxies with respect to any
matter presented to Protected's stockholders for the
exercise of their voting rights, or (ii) engage in any
course of conduct for the purpose of influencing or
affecting the stockholders of Protected with respect to the
exercise of their voting rights on any matter presented for
a vote by Protected's stockholders;
(c) otherwise act to seek control of, or to influence, the Board
of Directors, management, policies or affairs of either
Protected or any Subsidiary of Protected;
(d) publicly (or in a manner requiring Protected to disclose
publicly) (i) propose any acquisition of any or all of the
assets of Protectedor any of its Subsidiaries, or any
acquisition of any Protected Securities, or any merger,
consolidation, business combination or similar transaction
with, or change of control of, Protected or any of its
Subsidiaries or its or their assets, (ii) make or propose a
tender or exchange offer for any Protected Securities, (iii)
propose or suggest the possibility of any of the other
actions set forth in this Section 3, or (iv) propose any
amendment to, or modification or waiver of, any provision of
this Agreement.
(e) solicit, initiate, encourage, finance or assist any other
Person, Persons or Group to take or seek to take any action
which Limited is precluded hereunder from taking itself.
4. Term of Agreement
The term of this Agreement shall be the longer of (a) ten
(10) years from the last date on which both Protected and
Limited have an interest in the Joint Venture, or (b) ten
(10) years from the date of the termination of negotiations
between the Parties with respect to the formation of the
Joint Venture in the event no such Joint Venture results
therefrom.
5. Miscellaneous
(a) Applicable Law. This Agreement and the rights and
liabilities of the Parties hereto shall be governed by and
construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed
therein.
(b) Submission to Jurisdiction. Each of the Parties hereby
irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New
York and of the United States of America located in the City
of New York for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions
contemplated hereby (and each Party agrees not to commence
any such action, suit or proceeding except in such courts),
and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its address
set forth below shall be effective service of process for
any action, suit or proceeding brought against such Party in
any such court. Each of the Parties hereby irrevocably and
unconditionally waives any objection to the laying of venue
of any action, suit or proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby in
the courts of the State of New York or the United States of
America located in the City of New York, and hereby further
irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Specific Performance. Limited agrees and acknowledges that
in the event of any breach by it of the terms of this
Agreement, Protected would be irreparably harmed and could
not be made whole by monetary damages. It is accordingly
agreed that Protected, in addition to any other remedy to
which it may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement,
and shall be entitled to mandatory injunctive or other
relief, including the divestiture of Protected Securities by
Limited, as may be necessary or appropriate to carry out the
intent of the Parties with respect to this Agreement, in any
action instituted in any court having subject matter
jurisdiction thereof.
(d) Counterparts. This Agreement may be executed in any number
of counterparts. Any single counterpart or set of
counterparts signed by the Parties shall constitute a full
and original Agreement for all purposes.
(e) Notices. In any case where any notice, service of process
or other communication is required or permitted to be given
hereunder, such notice, service of process or other
communication shall be in writing and (i) personally
delivered, (ii) sent by postage prepaid registered first
class post (if inland) or airmail (if overseas) or (except
for service of process) (iii) transmitted by telex, telecopy
or cable (with postage prepaid confirmation) at the
following addresses (or such other address as the Parties
may designate from time to time to each other by due notice
pursuant to this Section 5(e)):
If to Protected: Nestle S.A.
Avenue Nestle 55
CH - 1800 Vevey
Attention: Legal Department
If to Limited: General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, MN 55426
Attention : General Counsel
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective
directors, officers, legal representatives, attorneys,
successors and assigns, including any Person who may succeed
to the assets or business of either Party by way of a
consolidation, merger, sale of substantially all of such
Party's assets or purchase of substantially all of such
Party's stock. This Agreement shall not be assigned without
the prior written consent of all the Parties hereto.
(g) Entire Agreement. The terms and conditions contained herein
constitute the entire agreement between the Parties relating
to the subject matter of this Agreement and shall supersede
all previous communications between the Parties with respect
to the subject matter of this Agreement.
(h) Amendment. This Agreement may be varied, amended or
extended only by the written agreement of the Parties
through their duly authorized officers or representatives.
(i) Expenses. Each of the Parties shall pay its own legal and
other costs, charges and expenses connected with this
Agreement and the performance of their obligations
hereunder.
(j) Severability. If any provision (or any part thereof) of
this Agreement is held illegal or unenforceable in a
judicial proceeding, such provision (or the affected part
thereof) shall be severed from this Agreement to that extent
and shall be inoperative so long as such judicial
determination shall remain in effect, and the remainder of
this Agreement shall otherwise remain binding on the Parties
hereto, it being the intention of the Parties, in the event
any such provision is held illegal or unenforceable in part,
that such provision be enforced to the fullest scope and
extent permissible consistent with the original intent of
such provision and the ruling of such judicial authority.
(k) Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part
of this Agreement.
(l) No Waiver of Rights. No failure or delay on the part of any
Party in the exercise of any power of right hereunder shall
operate as a waiver thereof. No single or partial exercise
of any right or power hereunder shall operate as a waiver of
such right or power or of any other right or power. The
waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of
any other or subsequent breach hereunder. All rights and
remedies existing under this Agreement are cumulative with,
and not exclusive of, any rights or remedies otherwise
available.
(m) Choice of Language. In the event of an inconsistency
between any of the terms of this Agreement and any
translation thereof into another language, the English
language version shall control.
(n) No Third-Party Rights. This Agreement shall not be deemed
or construed in any way to result in the creation of any
rights in any Person not a Party to this Agreement.
(o) Further Assurances. At the request of either Party hereto,
the other Party hereto shall execute and deliver (and shall
cause their Affiliates and Associates to execute and
deliver) to such Party such other documents and instruments
as may be reasonably necessary to implement or evidence the
foregoing.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by their respective duly authorized officers as of
the day and year first written above.
Witness: NESTLE S.A.
/s/ O. Dupont by: s/ Reto F. Domeniconi
Reto F. Domeniconi
Executive Vice President
Witness: GENERAL MILLS, INC.
/s/ C. L. Whitehill by: /s/ M. H. Willes
EXHIBIT 10.17
GENERAL MILLS, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended Through June 26, 1995
GENERAL MILLS, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose. The purpose of the General Mills, Inc. Stock
Plan for Non-Employee Directors (the "Plan") is to increase the
proprietary interest of Non-Employee Directors in General Mills,
Inc. (the "Company") by granting them non-qualified options to
purchase common stock of the Company ("Common Stock") and shares
of Common Stock subject to the restrictions described herein
("Restricted Stock") that will promote long-term shareholder
value through ownership of Common Stock.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company.
Grants of options to purchase Common Stock under the Plan and the
amount and nature of the awards of Restricted Stock shall be made
automatically as provided in Section 4. However, the
Compensation Committee shall have full authority to interpret the
Plan, to promulgate such rules and regulations with respect to
the Plan as it deems desirable and to make all other
determinations necessary or appropriate for the administration of
the Plan, and such determinations shall be final and binding upon
all persons having an interest in the Plan.
3. Participation. Each member of the Board of Directors of
the Company who is not an employee of the Company or any of its
subsidiaries at the date of each grant or award (a "Non-Employee
Director") shall be eligible to participate in the Plan.
4. Awards under the Plan. The number of shares of Common
Stock originally authorized for grants under the Plan was 50,000
shares, subject to adjustment as provided in Section 5. As of
June 1, 1992, and subject to the adjustment as provided in
Section 5, there remain 62,400 shares authorized to be issued
under the Plan (as adjusted for stock splits).
(a) Non-qualified Stock Options
(i) Grant of Options. Each Non-Employee Director
on the effective date of the Plan shall be awarded an
option (an "Option") to purchase 1,250 shares of Common
Stock. Each person who becomes a Non-Employee Director
for the first time after the effective date of the Plan
shall be awarded an Option to purchase 2,500 shares of
Common Stock, effective as of the date such person
becomes a Non-Employee Director. The written agreement
evidencing each Option granted under the Plan shall be
dated as of the applicable date of grant. Each Non-
Employee Director accepting an Option grant shall execute
and return a copy of the agreement to the Company. Any
shares issued pursuant to Options may consist, in whole
or in part, of authorized and unissued shares of Common
Stock or shares of Common Stock in the Company's
treasury. All Options granted under the Plan shall be
non-statutory options not entitled to special tax
treatment under Section 422A of the Internal Revenue Code
of 1986, as amended.
(ii) Option Exercise Price. The per share price
to be paid by the Non-Employee Director at the time an
option is exercised shall be 100% of the Fair Market
Value of the Common Stock on the date of grant. "Fair
Market Value" shall equal the mean of the high and low
price for the Common Stock on the New York Stock Exchange
on the relevant date or, if the New York Stock Exchange
is closed on that date, on the last preceding date on
which the Exchange was open for trading.
(iii) Term of Option. Each Option shall expire ten
(10) years from the date of grant.
(iv) Exercise of Option. Each Option shall not be
exercisable before the expiration of one year from the
date the Option is granted; provided, however, that
notwithstanding any other provision of this Plan, no
Option shall be exercisable within six months from its
grant date, or such greater or lesser period as may be
prescribed by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "1934 Act"), or any successor
rule thereto.
(v) Method of Exercise and Tax Obligations. Each
notice of exercise shall be accompanied by the full
purchase price of the shares being purchased. Such
payment may be made in cash, check, shares of Common
Stock valued using the Fair Market Value as of the
exercise date or a combination thereof. The Company may
also require payment of the amount of any federal, state
or local withholding tax attributable to the exercise of
an Option or the delivery of shares of Common Stock upon
lapse of the Restricted Period described below.
(vi) Non-transferability. An Option shall be non-
assignable and non-transferable by a Non-Employee
Director other than by will or the laws of descent and
distribution. A Non-Employee Director shall forfeit any
Option assigned or transferred, voluntarily or
involuntarily, other than as permitted under this
subsection. An Option may be exercised during the Non-
Employee Director's lifetime only by such person or his
or her guardian or legal representative.
(b) Restricted Stock.
(i) Awards. Each Non-Employee Director on the
effective date of the Plan shall be granted an award of
two hundred (200) shares of Common Stock, restricted as
described below ("Restricted Stock"). At the close of
business on each successive annual stockholders' meeting
date thereafter, each Non-Employee Director then elected
to the Board shall be granted an award of four hundred
(400) shares of Restricted Stock. All Restricted Stock
shall be issued from the Company's treasury and shall not
be newly-issued Common Stock. Each award shall be
evidenced by a written agreement executed by or on behalf
of the Company and the Non-Employee Director.
(ii) Restricted Period. The restrictions set
forth shall apply from the date of each grant until the
later of the following: (1) the last day on which the
New York Stock Exchange is open for trading immediately
prior to the annual stockholders meeting next succeeding
the grant of such Restricted Stock, or (2) completion of
the Non-Employee Director's term of service on the Board
of Directors by resignation, retirement, death or
otherwise (the "Restricted Period"). Until the
expiration of the Restricted Period, none of the
Restricted Stock may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of, and all
of the Restricted Stock shall be forfeited and all
further rights of the Non-Employee Director to or with
respect to such Restricted Stock shall terminate without
any obligation on the part of the Company unless the Non-
Employee Director has remained a Non-Employee Director
throughout the Restricted Period applicable to such
Restricted Stock.
(iii) Other Terms and Conditions. A stock
certificate representing the number of shares of
Restricted Stock granted shall be registered in the Non-
Employee Director's name but shall be held in custody by
the Company. Each such certificate shall bear a legend
giving notice of the restrictions. Each Non-Employee
Director must also endorse in blank and return to the
Company a stock power for each Restricted Stock
certificate. During the Restricted Period, each Non-
Employee Director shall have all the rights and
privileges of a shareholder with respect to the
Restricted Stock, including the right to vote the shares
and to receive dividends thereon. At the expiration of
the Restricted Period, a stock certificate free of all
restrictions for the number of shares of Restricted Stock
so registered shall be delivered to the Non-Employee
Director or his or her estate.
(c) Change of Control.
The Options granted hereunder shall become
exercisable and the restrictions on the Restricted Stock
shall lapse upon the occurrence of a "Change of Control."
Each of the following shall constitute a "Change of
Control":
(a) if any person (including a group as
defined in Section 13(d)(3) of the 1934 Act)
becomes, directly or indirectly, the
beneficial owner of 20% or more of the shares
of the Company entitled to vote for the
election of directors;
(b) as a result of or in connection with any
cash tender offer, exchange offer, merger or
other business combination, sale of assets or
contested election, or combination of the
foregoing, the persons who were Directors of
the Company just prior to such event cease to
constitute a majority of the Company's Board
of Directors; or
(c) the stockholders of the Company approve an
agreement providing for a transaction in
which the Company will cease to be an
independent publicly-owned corporation or a
sale or other disposition of all or
substantially all of the assets of the
Company occurs.
5. Adjustments. In the event of a stock dividend or stock
split, or combination or other reduction in the number of issued
shares of Common Stock, a merger, consolidation, reorganization,
recapitalization, sale or exchange of substantially all assets or
dissolution of the Company, then appropriate adjustments shall be
made in the shares and number of shares of Common Stock subject
to and authorized by this Plan and the Option prices specified,
in order to prevent dilution or enlargement of the rights of the
Non-Employee Directors under the Plan.
6. Amendment of the Plan. The Board of Directors may suspend
or terminate the Plan or any portion thereof at any time, and the
Board of Directors may amend the Plan from time to time as may be
deemed to be in the best interests of the Company; provided,
however, that no such amendment, alteration or discontinuation
shall be made (a) that would impair the rights of a Non-Employee
Director with respect to Options and Restricted Stock theretofore
awarded, without such person's consent, or (b) without the
approval of the stockholders (i) if such approval is necessary to
comply with any legal, tax or regulatory requirement, including
any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the 1934 Act; or (ii) to increase
the maximum number of shares subject to this Plan, increase the
maximum number of shares issuable to any Non-Employee Director
under this Plan, or change the definition of persons eligible to
receive awards under this Plan, or (c) if the Plan has been
amended within the preceding six months, unless such amendment is
necessary to comply with changes in the Internal Revenue Code of
1986, as amended, or the Employment Retirement Income Security
Act of 1974, as amended, or rules promulgated thereunder.
7. Miscellaneous Provisions. Neither the Plan nor any action
taken hereunder shall be construed as giving any Non-Employee
Director any right to be nominated for re-election to the Board.
The Plan shall be governed by the laws of the state of Delaware.
8. Effective Date and Duration of Plan. The Plan shall,
subject to approval of the stockholders at the 1990 Annual
Meeting, be deemed effective September 17, 1990. No awards shall
be made hereunder after September 30, 1998.
9. Section 16. With respect to persons subject to Section 16
of the Securities Exchange Act of 1934 ("1934 Act"), transactions
under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the
Committee.
Effective September 17, 1990
Amended June 1, 1991
Amended June 1, 1992
Amended June 26, 1995
EXHIBIT 11
<TABLE>
GENERAL MILLS, INC.
STATEMENT OF DETERMINATION OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS
(in millions)
<CAPTION>
Weighted average number of
common shares and common share
equivalents assumed outstanding
For the Fiscal Years Ended
May 28, 1995 May 29, 1994 May 30, 1993
<S> <C> <C> <C>
Weighted average number of common
shares outstanding, excluding
common stock held in treasury (a) 158.0 159.1 163.1
Common share equivalents resulting
from the assumed exercise of certain
stock options (b) 2.1 * 2.4 * 3.3 *
Total common shares and common share
equivalents 160.1 161.5 166.4
<FN>
Notes:
(a) Computed as the weighted average 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 of common shares outstanding of 158.0 million,
159.1 million and 163.1 million for fiscal 1995, 1994 and
1993, respectively.
</FN>
</TABLE>
EXHIBIT 12
GENERAL MILLS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended
May 28, May 29, May 30, May 31, May 26,
1995 1994 1993 1992 1991
Ratio of Earnings to
Fixed Charges. . . . . 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.
EXHIBIT 13
MANAGEMENTS DISCUSSION OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
In fiscal 1995 the General Mills Board of Directors decided to
separate the Company into two independent public corporations, one
for consumer foods and one for restaurants. The Board's decision
was based on the belief that separate corporations with highly
integrated strategies, organizations and incentive programs will
produce the strongest growth performance and thereby enhance long-
term shareholder value. General Mills completed the spin-off
distribution of the Restaurant operations as a separate, free-
standing company, Darden Restaurants, Inc. (Darden), to our
shareholder on May 28, 1995. Also in May 1995, General Mills sold
the Gorton's frozen and canned seafood products business to allow
management to sharpen its focus on the best growth and return
opportunities in Foods.
Both the Restaurant operations and Gorton's are presented as
discontinued operations within these financial statements for all
periods presented.
Results of Operations
For the year ended May 28, 1995, combined earnings for continuing
and discontinued operations before unusual items totaled $3.12 per
share, down 11 percent from $3.50 per share in 1994, as various
operating actions taken to benefit future performance curtailed
current-year results. These fiscal 1995 combined earnings were
reduced by a net after-tax charge of $125.3 million, or $.79 per
share, related to the costs of various restructuring actions
partially offset by the gain on the sale of Gorton's. Fiscal 1994
results included an unusual after-tax charge of $87.1 million, or
$.55 per share to cover estimated costs associated with improper
use of a pesticide by an independent contractor treating some of
the Company's oat supplies. Including these charges, net earnings
totaled $367.4 million, or $2.33 per share, in 1995 and $469.9
million, or $2.95 per share in 1994.
Continuing Operations
In 1995, earnings for continuing Consumer Foods operations totaled
$371.3 million, or $2.35 per share, before restructuring charges,
down 13 percent from $427.1 million, or $2.69 per share in the
prior year. The profit results reflect the oats disruption
experienced in the first quarter, when cereal shipments declined 21
percent, as well as lower shipments of domestic snack products and
the impact of strategic trade-promotion changes that we expect will
increase future efficiency but that resulted in unit volume
declines during 1995. Total domestic unit volume was down 4
percent, and sales for continuing operations of $5.03 billion were
6 percent lower.
In the United States, Yoplait and Colombo yogurts, Foodservice
operations, family and bakery flour, and Betty Crocker dinner mix
products each recorded excellent performance, with volume gains and
profits at an all-time high. Big G cereal unit volume was down 8
percent for the year, and sales declined 12 percent, reflecting
both the lower volume and Big G's lower selling prices instituted
in April 1994. Profits declined by a lesser percentage than sales.
Big G's pound market share in fiscal 1995 was 22 percent,
reflecting steady rebuilding over the year from a first-quarter low
of 20 percent to over 23 percent in recent months. Snack product
sales were down 11 percent and profits were down significantly.
Outside the U.S., Canadian food operations recorded a 12 percent
unit volume gain and increased their cereal market share by nearly
1 percentage point to 15 percent. CPW, the company's cereal joint
venture with Nestle, reported 21 percent volume growth for the 12
months ended in March and sales increased 28 percent to about $500
million. Combined results for CPW's initial four European markets,
entered in 1991, reached profitability during the year. The Snack
Ventures Europe (SVE) joint venture with PepsiCo Foods
International recorded good profit growth and 15 percent volume
growth in 1995, and sales increased to about $830 million.
Restructuring charges for continuing operations in 1995 totaled
$111.6 million, or 71 cents per share, and primarily related to
elimination of the company's least-efficient manufacturing capacity
and to sales organization restructuring. Collectively, the
restructuring actions taken in 1995 are expected to generate annual
after-tax earnings improvements of about $20 million beginning in
1996. In 1994 there was an unusual after-tax charge of $87.1
million, or 55 cents per share, related to the improper pesticide
application noted above. After unusual charges, earnings from
continuing operations were $259.7 million, or $1.64 per share, in
1995 and $340.0 million, or $2.14 per share, in 1994.
Sales for continuing Consumer Foods operations grew 4 percent in
1994 to $5.33 billion with domestic packaged foods unit volume
increasing 3 percent. Earnings were $427.1 million, or $2.69 per
share in 1994 as compared to $441.4 million, or $2.71 per share in
1993, excluding unusual items from both years. Big G's profit
declined in 1994 reflecting the year-long cereal market promotional
escalation and the fourth-quarter impact of our pricing and
promotional actions (reduced prices on largest cereal brands and
reduced spending on inefficient consumer cereal coupons and trade
promotions). Yoplait yogurt, Betty Crocker Products, Canada Foods
and SVE posted profit increases in 1994. Including unusual items
for both years, net earnings totaled $340.0 million, or $2.14 per
share, in 1994 and $411.0 million, or $2.52 per share in 1993.
Net interest expense in 1995 was $101.2 million, an increase of
$22.4 million from 1994, primarily due to increased working
capital, higher interest rates, and previous borrowings associated
with the company's share repurchase program. The 1994 net interest
expense of $78.8 million was $22.8 million greater than 1993,
primarily due to funding required for the share repurchase program.
The effective income tax rates in 1995, 1994, and 1993 were 35.8%,
38.0%, and 39.2%, respectively. Excluding unusual items in all
years, the rates were 36.8%, 38.5%, and 38.1%, respectively. The
lower rate in 1995 was due to a number of factors, including a
lower impact from state income taxes. The effective rate in fiscal
1996 is expected to be closer to 38%.
It is management's view that changes in the rate of inflation have
not had a significant effect on profitability from continuing
operations over the three most recent years. Management attempts
to minimize the effects of inflation through appropriate planning
and operating practices.
During the first quarter of fiscal 1995, the company adopted SFAS
#115, "Accounting for Certain Investments in Debt and Equity
Securities," with no impact on net earnings.
Discontinued Operations
In 1995, earnings from discontinued operations before nonrecurring
items totaled $121.4 million, or 77 cents per share, compared with
$129.7 million, or 81 cents per share, in the prior year. Net
results for discontinued operations include a net gain of $53.3
million, or 34 cents per share, from the sale of Gorton's less
costs associated with the conversion of the Red Lobster Japan joint
venture to a royalty agreement. This net gain was offset by
charges totaling $67.0 million, or 42 cents per share, related to
selected restaurant-unit closings and the expenses associated with
separation into two companies. Fiscal 1994 results for
discontinued operations include a $3.7 million, 2-cent per share,
gain from accounting changes. Including these nonrecurring items
in both years, net earnings from discontinued operations were
$107.7 million, or 69 cents per share, in 1995 and $133.4 million,
or 83 cents per share, in 1994. The earnings from discontinued
operations in 1994 before nonrecurring items of $129.7 million, or
81 cents per share, compares with $122.0 million, or 75 cents per
share, before unusual items in 1993. The unusual charge in 1993 of
$26.9 million, or 17 cents per share, related primarily to
restaurant closings in the U.S. and Canada. See note two to the
Consolidated Financial Statements for discussion of the
discontinued operations.
Financial Condition
The Company intends to manage its businesses and financial ratios
so as to maintain a strong "A" bond rating, which allows access
to financing at reasonable costs. Currently, General Mills'
publicly issued long-term debt carries "A2" (Moody's Investors
Services, Inc.) and "A+" (Standard & Poor's Corporation) ratings.
Our commercial paper has ratings of "P-1" (Moody's) and "A-1"
(Standard & Poor's) in the United States and "R-1 (middle)" in
Canada from Dominion Bond Rating Service.
As a result of the spin-off of Darden Restaurants, Inc., General
Mills' stockholders' equity was significantly reduced. The
difference between General Mills' $1.6 billion investment in the
restaurant business and the total debt of $.4 billion on Darden's
balance sheet at spin-off was capitalized as stockholders' equity
in the new company, with the offset being a reduction in
stockholders' equity of approximately $1.2 billion on General
Mills' balance sheet. Consequently, the debt to capital ratio
increased to 93%. However, it is management's view that the most
important measures of financial strength are cash flow to debt
and fixed charge coverage. The cash flow to debt ratio measures
the amount of cash that the Company generates each year as a
percentage of its total debt. The fixed charge coverage ratio
measures the number of times each year that the company earns
enough to cover its fixed charges. Based on these ratios,
General Mills' financial condition remains strong, with a cash
flow to debt ratio of 38% and a fixed charge coverage of 4.1
times. Because of the strong cash flow characteristics of the
Company's continuing businesses, management expects these ratios
to further strengthen.
The composition of the Company's capital structure is shown in
the accompanying table.
Capital Structure
May 28,
In Millions 1995
Notes payable $ 112.9
Current portion of long-term debt 93.7
Long-term debt 1,400.9
Deferred income taxes - tax leases 169.1
Total debt 1,776.6
Debt adjustments:
Leases - debt equivalent 165.0
Marketable investments, at cost (169.2)
Adjusted debt 1,772.4
Stockholders' equity 141.0
Total capital $1,913.4
We selectively use derivatives to hedge financial risks,
primarily interest rate volatility and foreign currency
fluctuations. The derivatives are generally treated as hedges
for accounting purposes. We manage our debt structure through
both issuance of fixed and floating-rate debt, and the use of
derivatives. The debt equivalent of our leases and deferred
income taxes related to tax leases are both fixed-rate
obligations. The accompanying table, when reviewed in
conjunction with the capital structure table, shows the
composition of our debt structure including the impact of
derivatives.
Debt Structure
$ in Millions May 28, 1995
Floating-rate debt $ 347.9 20%
Fixed-rate debt 1,090.4 61
Leases - debt equivalent 165.0 9
Deferred income taxes - tax leases 169.1 10
Total debt $1,772.4 100%
Commercial paper has historically been our primary source of
short-term financing. Bank credit lines are maintained to ensure
availability of short-term funds on an as-needed basis. In June
1995, our fee-paid credit lines were decreased from $650.0
million to $500.0 million.
Our shelf registration statement permits issuance of up to $97.1
million net proceeds in unsecured debt securities. The shelf
registration authorizes a medium-term note program that provides
additional flexibility in accessing the debt markets.
Sources and uses of cash in the past three fiscal years are shown
in the accompanying table.
Cash Sources (Uses)
In Millions 1995 1994 1993
From continuing operations $ 457.4 $ 561.3 $ 619.8
From discontinued operations 210.1 259.3 237.0
Fixed assets and other
investments, net-continuing (231.6) (395.8) (404.1)
Change in marketable securities 27.4 (50.1) (69.7)
Proceeds from disposition of
businesses 188.3 - -
Investment activities,
net-discontinued operations (357.5) (336.3) (310.3)
Increase (decrease) in outstanding
debt-net (312.6) 287.7 585.7
Financing activities-discontinued
operations 347.9 - -
Common stock issued 24.3 13.3 32.3
Treasury stock purchases (57.7) (145.7) (420.2)
Dividends paid (297.2) (299.4) (274.8)
Other (13.6) (4.2) (7.4)
Decrease in cash
and cash equivalents $ (14.8) $(109.9) $ (11.7)
Continuing operations generated $103.9 million less cash in 1995
than in the previous year primarily due to an increase in the
change in working capital. Capital expenditures in 1995 were
$156.5 million as compared to $212.5 million in 1994. Capital
expenditures in 1996 are estimated to be approximately $170
million. Proceeds from disposition of businesses of $188.3
million in 1995 includes the sale of Gorton's and certain Latin
American operations. Prior to the spin-off, the restaurant
operations initiated their own borrowings and the funds were used
to reduce the Company's notes payable.
REPORT OF MANAGEMENT RESPONSIBILITIES
The management of General Mills, Inc. is responsible for the
fairness and accuracy of the consolidated financial statements. The
consolidated financial statements have been prepared in accordance
with generally accepted accounting principles, using management's
best estimates and judgments where appropriate. The financial
information throughout this report is consistent with our
consolidated financial statements.
Management has established a system of internal controls that
provides reasonable assurance that assets are adequately
safeguarded, and transactions are recorded accurately, in all
material respects, in accordance with management's authorization.
We maintain a strong audit program that independently evaluates the
adequacy and effectiveness of internal controls. Our internal
controls provide for appropriate separation of duties and
responsibilities, and there are documented policies regarding
utilization of company assets and proper financial reporting. These
formally stated and regularly communicated policies demand highly
ethical conduct from all employees.
The Audit Committee of the Board of Directors meets regularly to
determine that management, internal auditors and independent
auditors are properly discharging their duties regarding internal
control and financial reporting. The independent auditors, internal
auditors and employees have full and free access to the Audit
Committee at any time.
KPMG Peat Marwick LLP, independent certified public accountants,
are retained to audit the consolidated financial statements. Their
report follows.
S. W. Sanger
Chairman of the Board and Chief Executive Officer
C. W. Gaillard
President
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of six
outside directors. Its primary function is to oversee the
Company's system of internal controls, financial reporting
practices and audits to ensure their quality, integrity and
objectivity are sufficient to protect stockholder assets.
The Audit Committee met twice during 1995 to review the
overall audit scope, plans and results of the internal auditors
and independent auditors, the Company's internal controls,
emerging accounting issues, officer and director expenses, audit
fees, goodwill and other intangible values, and the audits of
the pension plans. The Committee also met separately without
management present and with the independent auditors to discuss
the audit. Acting with the other Board members, the Committee
reviewed the Company's annual financial statements and approved
them before issuance. Audit Committee meeting results were
reported to the full Board of Directors. The Audit Committee
recommended to the Board that KPMG Peat Marwick LLP be
reappointed for 1996, subject to the approval of stockholders at
the annual meeting.
The Audit Committee is satisfied that the internal control
system is adequate and that the stockholders of General Mills
are protected by appropriate accounting and auditing procedures.
M. D. Rose
Chairman, Audit Committee
INDEPENDENT AUDITORS' REPORT
The Stockholders and the Board of Directors of
General Mills, Inc.:
We have audited the accompanying consolidated balance sheets of
General Mills, Inc. and subsidiaries as of May 28, 1995 and May 29,
1994, and the related consolidated statements of earnings and cash
flows for each of the fiscal years in the three-year period ended
May 28, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of General Mills, Inc. and subsidiaries as of May 28, 1995
and May 29, 1994, and the results of their operations and their cash
flows for each of the fiscal years in the three-year period ended
May 28, 1995 in conformity with generally accepted accounting principles.
As discussed in notes five, fourteen and sixteen, respectively, to
the consolidated financial statements, the Company adopted the
provisions of the Financial Accounting Standards Board's Statement
No. 115, Accounting for Certain Investments in Debt and Equity
Securities, in fiscal 1995, and Statements No. 112, Employers'
Accounting for Postemployment Benefits, and No. 109, Accounting for
Income Taxes, in fiscal 1994.
Minneapolis, Minnesota
June 27, 1995
CONSOLIDATED STATEMENTS OF EARNINGS
Fiscal Year Ended
May 28, May 29, May 30,
In Millions, Except per Share Data 1995 1994 1993
Continuing Operations:
Sales $5,026.7 $5,327.2 $5,138.4
Costs and Expenses:
Cost of sales 2,023.0 2,012.5 2,002.6
Selling, general and administrative 2,123.3 2,367.1 2,213.7
Depreciation and amortization 191.4 173.8 153.3
Interest, net 101.2 78.8 56.0
Unusual items 183.2 146.9 36.4
Total Costs and Expenses 4,622.1 4,779.1 4,462.0
Earnings from Continuing Operations before Taxes 404.6 548.1 676.4
Income Taxes 144.9 208.1 265.4
Earnings from Continuing Operations 259.7 340.0 411.0
Discontinued Operations after Taxes 107.7 133.4 95.1
Cumulative Effect to May 31, 1993
of Continuing Operations Accounting Changes - (3.5) -
Net Earnings $ 367.4 $ 469.9 $ 506.1
Earnings per Share:
Continuing operations $ 1.64 $ 2.14 $ 2.52
Discontinued operations .69 .83 .58
Cumulative effect of accounting changes - (.02) -
Net Earnings per Share $ 2.33 $ 2.95 $ 3.10
Average Number of Common Shares 158.0 159.1 163.1
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
May 28, May 29,
In Millions 1995 1994
Assets
Current Assets:
Cash and cash equivalents $ 13.0 $ 27.8
Receivables, less allowance for doubtful
accounts of $4.1 in 1995 and $3.6 in 1994 277.3 266.0
Inventories 372.0 339.3
Prepaid expenses and other current assets 80.8 80.4
Deferred income taxes 153.8 198.1
Total Current Assets 896.9 911.6
Land, Buildings and Equipment, at cost 1,456.6 1,503.2
Net Assets of Discontinued Operations - 1,508.1
Other Assets 1,004.7 881.1
Total Assets $3,358.2 $4,804.0
Liabilities and Equity
Current Liabilities:
Accounts payable $ 494.0 $ 513.9
Current portion of long-term debt 93.7 115.1
Notes payable 112.9 433.3
Accrued taxes 108.8 147.0
Accrued payroll 118.2 121.3
Other current liabilities 293.3 210.7
Total Current Liabilities 1,220.9 1,541.3
Long-term Debt 1,400.9 1,413.3
Deferred Income Taxes 248.6 209.5
Deferred Income Taxes -- Tax Leases 169.1 189.8
Other Liabilities 177.7 176.9
Total Liabilities 3,217.2 3,530.8
Common Stock Subject to Put Options - 122.0
Stockholders' Equity:
Cumulative preference stock, none issued - -
Common stock, 204.2 shares issued 379.5 251.0
Retained earnings 1,233.3 2,457.9
Less common stock in treasury, at cost,
shares of 46.3 in 1995 and 45.7 in 1994 (1,372.1) (1,334.4)
Unearned compensation and other (57.9) (160.2)
Cumulative foreign currency adjustment (41.8) (63.1)
Total Stockholders' Equity 141.0 1,151.2
Total Liabilities and Equity $3,358.2 $4,804.0
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
May 28, May 29, May 30,
In Millions 1995 1994 1993
Cash Flows - Operating Activities:
Earnings from continuing operations $ 259.7 $336.5 $411.0
Adjustments to reconcile earnings to cash flow:
Depreciation and amortization 191.4 173.8 153.3
Deferred income taxes 59.0 (34.0) 34.7
Change in current assets and liabilities, net
of effects from business acquired (227.8) (79.1) 11.2
Unusual expenses 183.2 146.9 36.4
Other, net (8.1) 17.2 (26.8)
Cash provided by continuing operations 457.4 561.3 619.8
Cash provided by discontinued operations 210.1 259.3 237.0
Net Cash Provided by Operating Activities 667.5 820.6 856.8
Cash Flows - Investment Activities:
Purchases of land, buildings and equipment (156.5) (212.5) (317.2)
Investments in businesses, intangibles and
affiliates, net of dividends (48.8) (140.7) (53.3)
Purchases of marketable securities (21.7) (83.8) (82.8)
Proceeds from sale of marketable securities 49.1 33.7 13.1
Proceeds from disposal of land, buildings
and equipment 1.2 3.3 4.9
Proceeds from disposition of businesses 188.3 - -
Other, net (27.5) (45.9) (38.5)
Discontinued operations investment activities, net (357.5) (336.3) (310.3)
Net Cash Used by Investment Activities (373.4) (782.2) (784.1)
Cash Flows - Financing Activities:
Increase (decrease) in notes payable (330.4) 93.2 207.6
Issuance of long-term debt 135.0 273.6 422.6
Payment of long-term debt (117.2) (79.1) (44.5)
Common stock issued 24.3 13.3 32.3
Purchases of common stock for treasury (57.7) (145.7) (420.2)
Dividends paid (297.2) (299.4) (274.8)
Other, net (13.6) (4.2) (7.4)
Discontinued operations financing activities 347.9 - -
Net Cash Used by Financing Activities (308.9) (148.3) (84.4)
Decrease in Cash and Cash Equivalents (14.8) (109.9) (11.7)
Cash and Cash Equivalents - Beginning of Year 27.8 137.7 41.2
Reclassification of Marketable Securities - - 108.2
Cash and Cash Equivalents - End of Year $ 13.0 $ 27.8 $137.7
Cash Flow from Changes in Current Assets and Liabilities:
Receivables $ (11.9) $(11.5) $(43.4)
Inventories (52.7) (76.1) 37.6
Prepaid expenses and other current assets (11.9) (22.2) 19.0
Accounts payable (18.1) (5.7) 3.1
Other current liabilities (133.2) 36.4 (5.1)
Change in Current Assets and Liabilities $(227.8) $(79.1) $ 11.2
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note One: Summary of Significant Accounting Policies
A. Principles of Consolidation
The consolidated financial statements include the following domestic
and foreign operations: parent company and 100% owned subsidiaries,
and General Mills' investment in and share of net earnings or losses
of 20-50% owned companies.
Our fiscal year ends on the last Sunday in May. Years 1995, 1994
and 1993 each consisted of 52 weeks.
B. Land, Buildings, Equipment and Depreciation
Buildings and equipment are depreciated over estimated useful lives
ranging from three to 50 years, primarily using the straight-line
method. Accelerated depreciation methods are generally used for
income tax purposes.
When an item is sold or retired, the accounts are relieved of its
cost and related accumulated depreciation; the resulting gains and
losses, if any, are recognized.
C. Inventories
Inventories are valued at the lower of cost or market. Certain
domestic inventories are valued using the LIFO method, while other
inventories are generally valued using the FIFO method.
D. Intangible Assets
Goodwill represents the difference between purchase prices of
acquired companies and the related fair values of net assets acquired
and accounted for by the purchase method of accounting. Goodwill
acquired after October 1970 is amortized on a straight-line basis
over 40 years or less.
Intangible assets include an amount that offsets a minimum liability
recorded for a pension plan with assets less than accumulated
benefits as required by Financial Accounting Standard No. 87.
The costs of patents, copyrights and other intangible assets are
amortized evenly over their estimated useful lives.
The Audit Committee of the Board of Directors annually reviews
goodwill and other intangibles. At its meeting on April 24, 1995,
the Board of Directors affirmed that the remaining amounts of these
assets have continuing value.
E. Research and Development
All expenditures for research and development are charged against
earnings in the year incurred. The charges for 1995, 1994 and 1993
were $59.8 million, $59.1 million and $55.7 million, respectively.
F. Earnings per Share
Earnings per share has been determined by dividing the appropriate
earnings by the weighted average number of common shares
outstanding during the year. Common share equivalents were not
material.
G. Foreign Currency Translation
For most foreign operations, local currencies are considered the
functional currency. Assets and liabilities are translated using the
exchange rates in effect at the balance sheet date. Results of
operations are translated using the average exchange rates prevailing
throughout the period. Translation effects are accumulated in the
foreign currency adjustment in stockholders' equity.
H. Statements of Cash Flows
For purposes of the statement of cash flows, we consider all
investments purchased with a maturity of three months or less to
be cash equivalents.
I. Segment Information
As of May 28, 1995 with the spin-off of the restaurant segment, we
operate exclusively in the consumer foods industry. See note two.
J. Advertising Costs
Advertising expense (including production and communication costs)
for fiscal 1995, 1994 and 1993 was $323.7, $292.1 and $282.6
million, respectively. Prepaid advertising costs (including
syndication properties) of $33.1 and $43.4 million were reported as
assets at May 28, 1995 and May 29, 1994, respectively, We expense
the production costs of advertising the first time the advertising
takes place.
Note Two: Discontinued Operations
On May 28, 1995, General Mills separated into two independent public
corporations, General Mills, Inc. and Darden Restaurants, Inc.
(Darden), through a distribution of the shares of Darden (a wholly-
owned subsidiary) to General Mills' shareholders ("spin-off"). General
Mills' shareholders received one share of Darden for each share of
General Mills common stock owned as of the close of business on May 15,
1995. 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 to Unilever United States, Inc.,
New York City. Gorton's, headquartered in Gloucester, Mass., is a
leading marketer of frozen and canned seafood products to the grocery
and foodservice markets in the United States and Canada. Gorton's is
also now included in Discontinued Operations for all periods presented.
Discontinued Operations are summarized as follows:
Fiscal Year
In Millions 1995 1994 1993
Total net sales $3,366.9 $3,189.7 $2,996.2
Pretax earnings $ 80.0 $ 205.2 $ 167.5
Income taxes 17.9 75.5 72.4
Net earnings - operations 62.1 129.7 95.1
Accounting changes - 3.7 -
Spin-off costs and other (7.7) - -
Gorton's sale and Red Lobster Japan
joint venture termination 53.3 - -
Discontinued Operations, net $ 107.7 $ 133.4 $ 95.1
The "Net earnings-operations" amounts include restructuring
charges of $59.3 million and $26.9 million in 1995 and 1993,
respectively, related primarily to the cost of restaurant closings
in the U.S. and Canada. The accounting changes are the net
cumulative effect to May 31, 1993 of the discontinued operations'
adoption of Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes", and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." "Spin-off costs and other"
includes expenses associated with the creation of Darden and the
separation. "Gorton's sale and Red Lobster Japan joint venture
termination" includes the gain on the disposition of Gorton's as
well as costs associated with the termination of our restaurant
joint-venture arrangement in Japan and conversion to a royalty
agreement.
Note Three: Unusual Items
In 1995, we recorded restructuring charges of $183.2 million pretax,
$111.6 million after tax ($.71 per share) primarily related to
shutting down and scaling back production systems at four food
manufacturing locations and realignment of the sales organization.
The charges include approximately $139 million in non-cash charges
primarily related to asset write-offs and approximately $44 million
of charges to be settled in cash, primarily related to disposal of
assets and severance costs. The restructuring activities will be
completed in fiscal 1996.
In 1994, we recorded an after-tax charge of $87.1 million ($.55 per
share) to cover estimated costs associated with the actions of an
independent licensed contractor who made an improper substitution of
a pesticide in treating some of our oat supplies, a portion of which
was used in production. While the substitution presented no consumer
health or safety issues, the pesticide had not been registered for
use on oats and thus its application represented a FDA regulatory
violation. The charge included estimated costs associated with the
disposition of finished oat products and oats inventory and other
related expenses, as well as the anticipated settlement of several
consumer class action lawsuits. Most of these costs were incurred in
fiscal 1995 and the original charge has not required adjustment.
We recorded restructuring charges in 1993 related primarily to
costs for increasing consumer foods manufacturing productivity and
efficiency, and our share of streamlining and tax reorganization
costs associated with the formation of Snack Ventures Europe. These
charges reduced net earnings by $30.4 million ($.19 per share).
These actions were substantially completed in 1994.
Note Four: Acquisition and Investments
In 1995, we formed a joint venture, International Dessert Partners
(IDP), with CPC International Inc. to market dessert and baking mixes in
Latin America. We own 50 percent of IDP.
In 1994, we purchased the Colombo yogurt business for approximately
$75.0 million from a U.S. subsidiary of Bongrain S.A. The transaction
did not have any material effect on our 1994 earnings.
In 1993, we entered into a joint venture, Snack Ventures Europe (SVE),
with PepsiCo Foods International to merge six existing Continental
European snack operations (three from each company) into one company to
develop, manufacture and market snack foods. We own 40.5 percent of
SVE. The merger was effective July 1992. We reclassified the net
individual assets and liabilities of our operations to investment in
affiliates and excluded the noncash transaction from our statement of
cash flows.
During 1995 and 1994, we made capital contributions and advances of
$49.3 million and $48.3 million, respectively, to Cereal Partners
Worldwide (CPW), our joint venture with Nestle, S.A. Capital advanced
to our other two joint ventures was not material.
Note Five: Balance Sheet Information
The components of certain balance sheet accounts are as follows:
May 28, May 29,
In Millions 1995 1994
Land, Buildings and Equipment:
Land $ 18.5 $ 18.4
Buildings 524.9 507.8
Equipment 1,877.5 1,762.0
Construction in progress 191.0 224.3
Total land, buildings and equipment 2,611.9 2,512.5
Less accumulated depreciation (1,155.3) (1,009.3)
Net land, buildings and equipment $ 1,456.6 $ 1,503.2
Other Assets:
Prepaid pension $ 320.7 $ 262.1
Marketable securities, at market in
1995; at cost in 1994 214.7 196.1
Investments in and advances to affiliates 214.7 172.0
Intangible assets 119.9 124.1
Miscellaneous 134.7 126.8
Total other assets $ 1,004.7 $ 881.1
We adopted SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," as of May 30, 1994. Adoption of this
standard had no impact on our Consolidated Statement of Earnings,
and the Consolidated Balance Sheet was not materially affected.
Beginning in fiscal 1995, available-for-sale securities, including
their associated derivatives, are reflected at fair market value in
the Consolidated Balance Sheet. The aggregate unrealized gains and
losses on available-for-sale securities, net of tax effects, are
accumulated in the "Unearned compensation and other" account within
Stockholders' Equity.
As of May 28, 1995, a comparison of cost and market values of our
marketable securities is as follows:
Market Net Gain Gross Gross
In Millions Cost Value or (Loss) Gain Loss
Asset-backed bonds $ 28.6 $ 28.6 $ - $ - $ -
Corporate bonds 27.4 27.4 - - -
Foreign government securities 34.9 34.6 (.3) .4 (.7)
Municipal bonds 12.3 12.1 (.2) - (.2)
US Treasury and agencies 66.0 112.0 46.0 46.0 -
Totals $169.2 $214.7 $45.5 $46.4 $(.9)
Marketable securities with a carrying value of $1.2 million were
sold during fiscal 1995 with a gain of $.7 million. Proceeds on
scheduled maturities were approximately $47.2 million.
Scheduled maturities of our marketable securities are as follows:
In Millions Cost Market Value
Under one year $ 12.3 $ 12.1
From 1 to 3 years 64.4 64.0
From 4 to 7 years 28.5 28.8
Over 7 years 64.0 109.8
Totals $169.2 $214.7
Note Six: Inventories
The components of inventories are as follows:
May 28, May 29,
In Millions 1995 1994
Raw materials, work in process and supplies $ 77.1 $ 97.9
Finished goods 282.2 237.2
Grain 65.7 47.0
Reserve for LIFO valuation method (53.0) (42.8)
Total inventories $372.0 $339.3
At May 28, 1995 and May 29, 1994, respectively, inventories of
$237.3 million and $234.4 million were valued at LIFO.
Note Seven: Financial Instruments and Risk Management
Most of our financial instruments are recorded on the balance sheet.
A few (known as "derivatives") are off-balance-sheet items.
Derivatives are financial instruments whose value is derived from one
or more underlying financial instruments. Examples of such
underlying instruments are currencies, equities, commodities and
interest rates. The carrying amount and fair value of our financial
instruments at the balance-sheet dates are as follows:
May 28, 1995 May 29, 1994
Carrying Fair Carrying Fair
In Millions Amount Value Amount Value
Assets and Liabilities
Assets:
Cash and cash equivalents $ 13.0 $ 13.0 $ 27.8 $ 27.8
Receivables 277.3 277.3 266.0 266.0
Marketable securities 216.3 216.3 196.1 231.4
Liabilities:
Accounts payable 494.0 494.0 513.9 513.9
Debt 1,607.5 1,689.6 1,961.7 2,020.9
Derivatives relating to:
Marketable securities (1.6) (1.6) - (.1)
Debt - 1.3 - (.7)
The fair values were estimated using current market quotes and
interest rates. Gains or losses from derivatives offset and
neutralize the corresponding losses or gains from the asset or
liability being hedged. We ensure that these derivative instruments
correlate with the asset or liability being hedged, and we do not
issue or hold derivatives for trading or speculative purposes.
We use derivative instruments to reduce financial risk in three
areas: interest rates, foreign currency, and commodities. The
notional amounts of derivatives do not represent actual amounts
exchanged by the parties and, thus, are not a measure of the exposure
of the Company through its use of derivatives. Interest rate swap
and foreign exchange agreements are made with a diversified group of
highly rated financial institutions, whereas commodities agreements
are entered into through various regulated exchanges. We have credit
exposure associated with these agreements to the extent that the
instruments have a positive fair value, but we do not anticipate any
losses. The Company does not have a significant concentration of
risk with any single party or group of parties in any of its
financial instruments.
(1) Interest Rate Risk Management - We use interest rate swaps to
hedge and/or lower financing costs, to adjust our floating- and fixed-
rate debt positions, and to lock in a positive interest rate spread
between certain assets and liabilities. An interest rate swap used
in conjunction with a debt financing may allow the Company to create
fixed or floating-rate financing at a lower cost than with a stand-
alone financing. Generally, under interest rate swaps, the Company
agrees with a counterparty to exchange the difference between fixed-
rate and floating-rate interest amounts calculated by reference to an
agreed notional principal amount. A basis swap involves the exchange
of two floating-rate interest amounts, each calculated by reference
to a different interest rate index or formula.
The following table indicates the types of swaps used to hedge
various assets and liabilities and their weighted average interest
rates. Average variable rates are based on rates as of the end of
the reporting period. The swap contracts mature from fiscal 1996 to
fiscal 2007.
May 28, 1995 May 29, 1994
$ in Millions Asset Liability Asset Liability
Receive fixed swaps - notional amount $ - $90.0 $ - $137.9
Average receive rate - 6.8% - 5.4%
Average pay rate - 5.8% - 4.2%
Pay fixed swaps - notional amount $74.8 $21.3 $81.9 $ 25.0
Average receive rate 6.4% 6.1% 4.8% 4.4%
Average pay rate 8.3% 6.2% 6.9% 8.8%
Basis swaps - notional amount $ - $ - $ - $145.0
Average receive rate - - - 3.0%
Average pay rate - - - 4.2%
The interest rate differential on interest rate swaps used to hedge
existing assets and liabilities is recognized as an adjustment of
interest expense or income over the term of the agreement.
The Company uses interest rate options and cap agreements primarily
to reduce the impact of interest rate changes on its floating-rate
debt, as well as to hedge the value of call options contained in long-
term debt issued by the Company in earlier periods. In return for an
upfront payment, an interest rate swap option grants the purchaser
the right to receive(pay), the fixed rate interest amount in an
interest rate swap. In return for an upfront payment, a cap
agreement entitles the purchaser to receive the amount, if any, by
which an agreed upon floating rate index exceeds the cap interest
rate. The following table summarizes our option and cap agreements,
which mature in fiscal 1997.
May 28, 1995 May 29, 1994
Notional Average Notional Average
$ in Millions Amount Rate Amount Rate
Swap options sold - pay fixed $ - -% $ 21.3 6.8%
Caps purchased - receive floating 200.0 7.0 221.7 4.9
Caps sold - pay floating - - 200.0 6.5
The premiums paid/received for interest rate options and cap
agreements are included in other assets/liabilities and are amortized
to interest expense over the terms of the agreements. Amounts
receivable or payable under the cap agreements are recognized as
yield adjustments over the life of the related debt.
(2) Foreign-Currency Exposure - We selectively hedge the potential
effect of foreign currency fluctuations related to operating activities
and net investments in foreign operations by entering into foreign
exchange contracts with major financial institutions. Realized and
unrealized gains and losses on hedges of firm commitments are included
in the cost basis of the asset being hedged and are recognized as the
asset is expensed through cost of goods sold or depreciation. Realized
and unrealized gains and losses on contracts that hedge other operating
activities are recognized currently in net earnings. Realized and
unrealized gains and losses on contracts that hedge net investments
are recognized in the foreign currency adjustment in stockholders'
equity.
The components of our net foreign investment exposure by geographic
region are as follows:
May 28, May 29,
In Millions 1995 1994
Europe $171.1 $118.3
North/South America 26.5 (34.5)
Asia 1.9 1.3
Total exposure 199.5 85.1
After-tax hedges (7.0) 47.9
Net exposure $192.5 $133.0
At May 28, 1995, we had forward contracts maturing in fiscal 1996 to
sell $62.1 million of foreign currencies. The fair value of these
contracts is based on third-party quotes and was immaterial at May 28,
1995.
(3) Commodities - The Company uses an integrated set of financial
instruments in its purchasing cycle, including purchase orders,
noncancellable contracts, futures contracts, and futures options.
Except as described below, these instruments are all used to purchase
ingredients for the Company's internal needs, and to manage purchase
prices and inventory values as practical. All futures contracts and
futures options are exchange-based instruments with ready liquidity
and determinable market values. Unrealized gains and losses are
recorded monthly and deferred until the physical ingredients flow
through cost of goods sold. The net gain and losses deferred and
expensed are immaterial. At May 28, 1995 and May 29, 1994, the
aggregate fair value of our ingredient derivatives position was $53.8
million and $41.4 million, respectively.
The Company also has a grain-merchandising operation, which uses
cash contracts, futures contracts, and futures options. All futures
contracts and futures options are exchange-based instruments with
ready liquidity and market values. Neither results of operations nor
the year-end positions from grain-merchandising operations was
material to the Company's overall results.
Note Eight: Notes Payable
The components of notes payable and their respective weighted average
interest rates at the end of the period are as follows:
May 28, 1995 May 29, 1994
Weighted Weighted
Average Average
Notes Interest Notes Interest
$ in Millions Payable Rate Payable Rate
U.S. commercial paper $ 78.3 6.1% $339.2 4.1%
Canadian commercial paper 22.8 7.7 83.3 5.7
Financial institutions 261.8 6.4 260.8 4.5
Amounts reclassified to
long-term debt (250.0) 6.0 (250.0) 4.1
Total notes payable $112.9 $433.3
To ensure availability of funds, we maintain bank credit lines
sufficient to cover our outstanding short-term borrowings. As of
May 28, 1995, we had $650.0 million fee-paid lines (decreased to
$500.0 million in June 1995) and $179.6 million uncommitted, no-fee
lines available in the U.S. and Canada. In addition, other foreign
subsidiaries had unused credit lines of $105.1 million.
We have a revolving credit agreement expiring in 1999 that provides
for the fee-paid credit lines. This agreement provides us with the
ability to refinance short-term borrowings on a long-term basis, and
therefore we have reclassified a portion of our notes payable to
long-term debt.
Note Nine: Long-term Debt
May 28, May 29,
In Millions 1995 1994
4.3% to 9.1% medium-term notes,
due 1995 to 2033 $1,094.4 $1,080.3
Zero coupon notes, yield 11.1%, $306.0
due August 15, 2013 43.1 41.4
ESOP loan guaranty (related to restaurant
operations - see note two) - 50.0
8.3% ESOP loan guaranty,
due through June 30, 2007 74.5 78.3
Zero coupon notes, yield 11.7%, $64.4
due August 15, 2004 22.6 20.2
Notes payable, reclassified 250.0 250.0
Other 10.0 8.2
1,494.6 1,528.4
Less amounts due within one year (93.7) (115.1)
Total long-term debt $1,400.9 $1,413.3
Our shelf registration statement permits the issuance of up to $97.1
million net proceeds in unsecured debt securities to reduce short-
term debt and for other general corporate purposes. This
registration includes a medium-term note program that allows us to
issue debt quickly for various amounts and at various rates and
maturities.
In 1995, we issued $125.0 million of debt under our medium-term
note program with maturities from two to 12 years and interest rates
from 6.4% to 8.0%. In 1994, $217.9 million of debt was issued under
this program with maturities from one to 40 years and interest rates
from 4.3% to 7.3%.
The Company has guaranteed the debt of the Employee Stock Ownership
Plan; therefore, the loan is reflected on our consolidated balance
sheets as long-term debt with a related offset in stockholders'
equity, "Unearned compensation and other."
The sinking fund and principal payments due on long-term debt are
(in millions) $93.7, $123.6, $151.6, $99.7 and $90.1 in years ending
1996, 1997, 1998, 1999 and 2000, respectively. The notes payable
that are reclassified under our revolving credit agreement are not
included in these principal payments.
Our marketable securities include zero coupon U.S. Treasury
securities. These investments are intended to provide the funds for
the payment of principal and interest for the zero coupon notes due
August 15, 2004 and 2013.
Note Ten: Stock Options
The following table contains information on stock options:
Average Option
Shares Price per Share
Granted
1995 4,063,100 $55.11
1994 4,868,098 63.22
1993 3,384,144 66.64
Exercised
1995 725,437 $32.31
1994 562,714 31.08
1993 1,962,063 22.90
Expired
1995 574,714 $59.33
1994 459,800 62.56
1993 288,907 61.63
Outstanding at year end
1995 21,974,796 $41.60
1994 18,009,478 49.52
1993 14,163,894 44.50
Exercisable at year end
1995 14,406,840 $33.71
1994 10,278,466 38.73
1993 9,488,948 36.23
A total of 10,990,501 shares (including 1,514,336 shares for salary
replacement options and 293,901 shares for restricted stock) are
available for grants of options or restricted stock to employees under
our 1990 and 1993 stock plans through October 1, 1998. An additional
2,082,400 shares are available for grants under the 1993 plan on a one-
for-one basis as common stock is repurchased by the Company. Options
may be granted at a price not less than 100 percent of fair market
value on the date the option is granted. Options now outstanding
include some granted under the 1984 and 1988 option plans, under which
no further rights may be granted. All options expire within 10 years
plus one month after the date of grant. The plans provide for full
vesting of options in the event there is a change of control.
The 1993 plan permits awards of restricted stock to key employees
subject to a restricted period and a purchase price, if any, to be paid
by the employee as determined by the Compensation Committee of the
Board of Directors. The 1988 plan also permitted such awards. Most of
the restricted stock awards require the employee to deposit personally
owned shares (on a one-for-one basis) with the Company during the
restricted period. In 1995, grants from the 1993 plan of 67,303 shares
of restricted stock were made and on May 29, 1995, there were 178,246
of such shares outstanding after adjustments related to the spin-off.
The 1988 plan permitted the granting of performance units
corresponding to stock options granted. The value of performance units
will be determined by return on equity and growth in earnings per share
measured against preset goals over three-year performance periods. For
seven years after a performance period, holders may elect to receive
the value of performance units (with interest) as an alternative to
exercising corresponding stock options. On May 28, 1995, there were
2,638,656 outstanding options with corresponding performance units or
performance unit accounts.
A total of 45,800 shares are available for grants of options and
restricted stock to non-employee directors until September 30, 1998
under a separate 1990 stock plan. As of May 29, 1995, there were
20,898 shares of such stock outstanding after adjustments related to
the spin-off. Each newly elected non-employee director is granted an
option to purchase 2,500 shares at fair market value on the date of
grant. Options expire 10 years after the date of grant. Each year
400 shares of restricted stock will be awarded to each non-employee
director, restricted until the later of the expiration of one year or
completion of service on the Board of Directors.
The number and exercise price of options outstanding when the
Restaurant operations were spun off were adjusted to compensate for
the market value of the Darden shares distributed to our
stockholders. This adjustment increased the number of General Mills
options outstanding by 1,202,369 shares and decreased the price of
the option shares outstanding by approximately 17.7 percent.
Note Eleven: Stockholders' Equity
<TABLE>
<CAPTION>
$.10 Par Value Common Stock Cumulative
(One Billion Shares Authorized) Unearned Foreign
In Millions, Except Issued Treasury Retained Compensation Currency
per Share Data Shares Amount Shares Amount Earnings and Other Adjustment Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992 204.2 $343.6 (38.7) $ (802.9) $ 2,049.0 $(172.3) $(46.5) $1,370.9
Net Earnings 506.1 506.1
Cash dividends declared ($1.68
per share), net of income
taxes of $4.2 (270.6) (270.6)
Stock option, profit sharing and
ESOP plans 15.1 1.3 19.7 34.8
Shares purchased on open market (6.3) (413.2) (413.2)
Unearned compensation related to
restricted stock awards (3.2) (3.2)
Earned compensation 9.6 9.6
Minimum pension liability adjustment (1.6) (1.6)
Translation adjustments, net of
income tax benefit of $2.0 (14.3) (14.3)
Balance at May 30, 1993 204.2 358.7 (43.7) (1,196.4) 2,284.5 (167.5) (60.8) 1,218.5
Net earnings 469.9 469.9
Cash dividends declared ($1.88
per share), net of income
taxes of $2.9 (296.5) (296.5)
Stock option, profit sharing and
ESOP plans 8.0 .4 7.5 15.5
Shares purchased on open market (2.4) (145.7) (145.7)
Put option premium 6.3 .2 6.5
Transfer of put options (122.0) (122.0)
Unearned compensation related to
restricted stock awards (3.9) (3.9)
Earned compensation 9.6 9.6
Minimum pension liability adjustment 1.6 1.6
Translation adjustments, net of
income taxes of $4.2 (2.3) (2.3)
Balance at May 29, 1994 204.2 251.0 (45.7) (1,334.4) 2,457.9 (160.2) (63.1) 1,151.2
Unrealized gain, net of income taxes
of $14.0, on available-for-sale
securities at May 30, 1994 22.0 22.0
Net earnings 367.4 367.4
Cash dividends declared ($1.88
per share), net of income
taxes of $3.1 (294.1) (294.1)
Stock option, profit sharing and
ESOP plans 10.0 .4 17.2 27.2
Shares purchased via puts, or on open
market (1.0) (57.7) (57.7)
Put option premium/settlements, net (3.5) 2.8 (.7)
Transfer of put options 122.0 122.0
Unearned compensation related
to restricted stock awards (5.6) (5.6)
Earned compensation 11.0 11.0
Change in unrealized gain, net of
of income taxes of $3.7, on
available-for-sale securities 5.8 5.8
Amount charged to gain on sale of
foreign operations 3.6 3.6
Translation adjustments, net of
income tax benefit of $.2 7.6 7.6
Transfer of equity components to
Darden prior to spin-off 69.1 10.1 79.2
Distribution of equity to
stockholders from spin-off of
Restaurant operations (1,297.9) (1,297.9)
Balance at May 28, 1995 204.2 $379.5 (46.3) $(1,372.1) $ 1,233.3 $ (57.9) $(41.8) $ 141.0
</TABLE>
Cumulative preference stock of 5.0 million shares, without par value, is
authorized but unissued.
We have a shareholder rights plan that entitles each outstanding
share of common stock to one-fourth of a right. Each right entitles
the holder to purchase one one-hundredth of a share of cumulative
preference stock (or, in certain circumstances, common stock or other
securities), exercisable upon the occurrence of certain events. The
rights are not transferable apart from the common stock until a person
or group has acquired 20 percent or more, or makes a tender offer for
20 percent or more, of the common stock. If the Company is then
acquired in a merger or other business combination transaction, each
right will entitle the holder (other than the acquiring company) to
receive, upon exercise, common stock of either the Company or the
acquiring company having a value equal to two times the exercise price
of the right. The rights are redeemable by the Board in certain
circumstances and expire on March 7, 1996. At May 28, 1995, there
were 39.5 million rights issued and outstanding.
The Board of Directors has authorized the repurchase, from time to
time, of common stock for our treasury, provided that the number of
shares held in treasury shall not exceed 60.0 million.
Through private transactions in fiscal 1994, we issued put options
that entitled the holder to sell shares of our common stock to us, at
a specified price, if the holder exercised the option. The amount
related to our potential obligation at May 29, 1994 was transferred
from stockholders' equity to "Common Stock Subject to Put Options."
There are no put options outstanding at May 28, 1995.
Note Twelve: Interest Expense
The components of net interest expense are as follows:
Fiscal Year
In Millions 1995 1994 1993
Interest expense $150.0 $121.7 $99.8
Capitalized interest (5.2) (6.1) (11.5)
Interest income (19.4) (16.4) (14.7)
Total interest expense, net 125.4 99.2 73.6
Net interest allocated to discontinued
operations (24.2) (20.4) (17.6)
Interest expense, net $101.2 $ 78.8 $56.0
During 1995, 1994 and 1993, we paid interest (net of amount
capitalized) of $135.2 million, $99.0 million and $77.0 million,
respectively. The interest allocated to discontinued operations is
net of capitalized interest credits of $4.3 million, $4.1 million and
$3.0 million in 1995, 1994 and 1993, respectively.
Note Thirteen: Retirement Plans
We have defined-benefit plans covering most employees. Benefits for
salaried employees are based on length of service and final average
compensation. The hourly plans include various monthly amounts for each
year of credited service. Our funding policy is consistent with the
funding requirements of federal law and regulations. Our principal plan
covering salaried employees has a provision that any excess pension
assets would be vested in plan participants if the plan is terminated
within five years of a change in control. Plan assets consist
principally of listed equity securities and corporate obligations, and
U.S. government securities.
Components of net pension income are as follows:
Fiscal Year
Expense (Income) in Millions 1995 1994 1993
Service cost--benefits earned $ 13.5 $ 14.6 $ 11.3
Interest cost on projected benefit obligation 55.1 52.9 48.5
Actual return on plan assets (106.9) (47.8) (128.2)
Net amortization and deferral 8.3 (43.9) 36.2
Net pension expense (income) $(30.0) $(24.2) $(32.2)
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the benefit obligations were 8.0% and 4.5% in 1995, and 8.8% and 4.5% in
1994, respectively. The expected long-term rate of return on assets was
10.4%.
The funded status of the plans and the amount recognized on the
consolidated balance sheets (as determined as of May 31, 1995 and 1994)
are as follows:
<TABLE>
<CAPTION>
May 28, 1995 May 29, 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
In Millions Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $ 623.7 $ 16.5 $537.1 $ 12.3
Nonvested benefits 41.4 1.3 51.1 1.8
Accumulated benefit obligations 665.1 17.8 588.2 14.1
Projected benefit obligation 709.2 19.0 635.2 16.6
Plan assets at fair value 942.8 1.1 862.4 .1
Plan assets in excess of
(less than) the projected
benefit obligation 233.6 (17.9) 227.2 (16.5)
Unrecognized prior service cost 30.0 2.9 33.0 2.4
Unrecognized net loss (gain) 166.2 (13.3) 129.6 2.2
Recognition of minimum liability - 7.1 - (8.5)
Unrecognized transition (asset)
liability (109.4) 5.3 (124.7) 6.6
Prepaid (accrued) pension cost $ 320.4 $(15.9) $265.1 $(13.8)
</TABLE>
We have defined-contribution plans covering salaried and non-union
employees with net assets of $614.6 million at May 28, 1995 and $543.5
million at May 29, 1994. Our main defined contribution plan is a 401(k)
savings plan which is open to substantially all employees. The plan
includes investment funds and an Employee Stock Ownership Plan (ESOP).
The ESOP's only assets are Company shares and temporary cash balances.
Expense recognized for all defined-contribution plans in fiscal 1995,
1994 and 1993 was $5.4 million, $4.7 million and $7.7 million,
respectively. The ESOP's share of this expense was $5.0 million, $4.3
million and $5.2 million, respectively. The ESOP's expense is calculated
by the "shares allocated" method.
The ESOP uses Company shares to convey benefits to employees and through
increased share ownership to align employee interests with that of
shareholders. The Company matches a percentage of employee contributions
with a base match plus a variable year-end match that depends on annual
results. Employees receive the Company match in the form of ESOP shares.
The ESOP originally purchased Company shares with borrowed funds from
third parties (guaranteed by the Company), plus $10.0 million borrowed
from the Company at a variable interest rate. The ESOP shares are
included in net shares outstanding for the purposes of calculating
earnings per share. The ESOP's third-party debt is described in the long-
term debt footnote. At May 28, 1995, the ESOP's debt to the Company had
a balance of $7.0 million with an interest rate of 6.3% and sinking fund
payments due to June 2015.
The Company treats dividends paid to the ESOP the same as other
dividends. Dividends received on leveraged shares (i.e., all shares
originally purchased with the debt proceeds) are used for debt service,
while dividends received on unleveraged shares are passed through to
participants.
The Company's cash contribution to the ESOP is calculated so as to pay
off enough debt to release sufficient shares to make the Company
match. The ESOP uses the Company's cash contributions to the plan,
plus the dividends received on the ESOP's leveraged shares, to make
principal and interest payments on the ESOP's debt. As loan payments
are made, shares become unemcumbered by debt and become committed to
be allocated. The ESOP allocates shares to individual employee
accounts on the basis of the match of employee payroll savings
(contributions), plus reinvested dividends received on previously
allocated shares. In 1995, 1994 and 1993, the ESOP incurred interest
expense of $6.6 million, $6.8 million and $7.2 million, respectively.
The ESOP received dividends of $6.2 million, $6.0 million and $5.4
million; plus Company contributions of $4.8 million, $4.7 million and
$5.7 million in the respective years. These funds were used to make
interest and principal payments.
The number of Company shares within the ESOP are summarized as follows:
May 28, May 29,
Number of shares 1995 1994
Unreleased shares 2,690,000 2,393,000
Committed to be allocated 66,000 64,000
Allocated to participants 1,966,000 1,529,000
Total shares 4,722,000 3,986,000
On May 28, 1995, the ESOP received Darden shares from the spin-off
distribution described in note two. The Darden shares were
immediately exchanged for Company shares, based on their relative
market values immediately preceding the distribution date.
Note Fourteen: Other Postretirement and Postemployment Benefits
We sponsor several plans that provide health care benefits to the
majority of our retirees. The salaried plan is contributory with
retiree contributions based on years of service.
We fund plans for certain employees and retirees on an annual basis.
In 1995, 1994 and 1993 we contributed $13.7 million, $38.3 million
and $30.6 million, respectively. Plan assets consist principally of
listed equity securities and U.S. government securities.
Components of the postretirement health care expense are as follows:
Fiscal Year
Expense (Income) in Millions 1995 1994 1993
Service cost--benefits earned $ 4.5 $ 5.0 $ 3.2
Interest cost on accumulated benefit
obligation 14.3 13.4 10.6
Actual return on plan assets (15.1) (1.5) (3.9)
Net amortization and deferral 5.0 (4.6) (1.1)
Net postretirement expense $ 8.7 $ 12.3 $ 8.8
The funded status of the plans and the amount recognized on our
consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
May 28, 1995 May 29, 1994
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
In Millions Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Accumulated benefit obligations:
Retirees $ 36.2 $ 47.2 $ 36.3 $ 44.7
Fully eligible active employees 14.6 8.5 12.7 7.1
Other active employees 35.8 50.6 27.0 36.8
Accumulated benefit obligations 86.6 106.3 76.0 88.6
Plan assets at fair value 104.6 7.5 89.3 7.1
Accumulated benefit obligations in
excess of (less than) plan assets (18.0) 98.8 (13.3) 81.5
Unrecognized prior service cost .1 17.3 .1 19.2
Unrecognized net loss (27.1) (33.8) (28.1) (23.2)
Accrued (prepaid) postretirement
benefits $(45.0) $ 82.3 $(41.3) $ 77.5
</TABLE>
The discount rates used in determining the actuarial present value
of the benefit obligations were 8.0% and 8.8% in 1995 and 1994,
respectively. The expected long-term rate of return on assets was
10%.
The assumed health care cost trend-rate increase in the per capita
charges for benefits ranged from 6.2% to 9.8% for 1996 depending on
the medical service category. The rates gradually decrease to 4.4%
to 5.7% for 2007 and remain at that level thereafter. If the health
care cost trend rate increased by one percentage point in each future
year, the aggregate of the service and interest cost components of
postretirement expense would increase for 1995 by $3.1 million and
the accumulated benefit obligation as of May 28, 1995 would increase
by $30.5 million.
In 1994, we adopted Statement of Financial Accounting Standards
(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 $14.7 million ($.09 per share).
Note Fifteen: Profit-sharing Plans
We have profit-sharing plans to provide incentives to key individuals who
have the greatest potential to contribute to current earnings and
successful future operations. These plans were approved by the Board of
Directors upon recommendation of the Compensation Committee. The awards
under these plans depend on profit performance in relation to pre-
established goals. The plans are administered by the Compensation
Committee, which consists solely of outside directors. Profit-sharing
expense, including performance unit accruals, was $.9 million, $1.5
million and $6.7 million in 1995, 1994 and 1993, respectively.
Note Sixteen: Income Taxes
We adopted SFAS No. 109, "Accounting for Income Taxes" as of May
31, 1993. The adoption of SFAS 109 changed our method of
accounting for income taxes from the deferred method to the asset
and liability method. Deferred income taxes reflect the
differences between assets and liabilities recognized for
financial reporting purposes and amounts recognized for tax
purposes measured using the current enacted tax rates. The
cumulative effect of adoption was an increase in net earnings of
$11.2 million ($.07 per share).
The components of earnings from continuing operations before
income taxes and the income taxes thereon are as follows:
Fiscal Year
In Millions 1995 1994 1993
Earnings (loss) before income taxes:
U.S. $ 391.7 $533.3 $688.7
Foreign 12.9 14.8 (12.3)
Total earnings before income taxes $ 404.6 $548.1 $676.4
Income taxes:
Current:
Federal $ 86.0 $187.1 $185.4
State and local .1 45.9 46.6
Foreign (.2) 9.1 (1.3)
Total current 85.9 242.1 230.7
Deferred:
Federal 50.6 (17.5) 31.1
State and local 11.1 (4.3) 4.5
Foreign (2.7) (12.2) (.9)
Total deferred 59.0 (34.0) 34.7
Total income taxes $144.9 $208.1 $265.4
During 1995 and 1994, net income tax (expense)/benefits of $(8.0)
million and $3.5 million, respectively, were allocated to
stockholders' equity. These expenses/ benefits were attributable
to the exercise of employee stock options, dividends paid on
unallocated ESOP shares, translation adjustments and unrealized
gain on marketable securities.
During 1995, 1994 and 1993, we paid income taxes of $104.1
million, $202.2 million and $196.4 million, respectively.
In prior years we purchased certain income-tax items from other
companies through tax lease transactions. Total current income
taxes charged to earnings reflect the amounts attributable to
operations and have not been materially affected by these tax
leases. Actual current taxes payable on 1995, 1994 and 1993
operations were increased by approximately $12 million, $10
million and $10 million, respectively, due to the current effect
of tax leases. These tax payments do not affect taxes for
statement of earnings purposes since they repay tax benefits
realized in prior years. The repayment liability is classified as
"Deferred Income Taxes - Tax Leases."
The following table reconciles the U.S. statutory income tax rate
with the effective income tax rate:
Fiscal Year
1995 1994 1993
U.S. statutory rate 35.0% 35.0% 34.0%
State and local income taxes, net of
federal tax benefits 3.5 5.1 5.1
Other, net (2.7) (2.1) .1
Effective income tax rate 35.8% 38.0% 39.2%
The tax effects of temporary differences that give rise to
deferred tax assets and liabilities are as follows:
May 28, May 29,
In Millions 1995 1994
Accrued liabilities $ 80.6 $111.5
Unusual charge for oats 9.5 59.8
Unusual charge for restructuring 42.5 -
Compensation and employee benefits 55.2 57.7
Disposition liabilities 29.1 31.6
Foreign tax loss carryforward 19.4 16.2
Other 11.2 10.9
Gross deferred tax assets 247.5 287.7
Depreciation 139.4 137.8
Prepaid pension asset 125.1 104.9
Intangible assets 12.8 12.7
Other 53.8 32.6
Gross deferred tax liabilities 331.1 288.0
Valuation allowance 11.2 11.1
Net deferred tax liability $ 94.8 $ 11.4
As of May 28, 1995, we have foreign operating loss carryovers for
tax purposes of $47.1 million, which will expire as follows if not
offset against future taxable income: $11.0 million in 1998, $9.4
million in 1999, $11.2 million in 2000, $15.2 million in 2001, and
$.3 million in 2002.
We have not recognized a deferred tax liability for unremitted
earnings of $78.7 million for our foreign operations because we do
not expect those earnings to become taxable to us in the
foreseeable future. A determination of the potential liability is
not practicable. If a portion were to be remitted, we believe
income tax credits would substantially offset any resulting tax
liability.
Note Seventeen: Leases and Other Commitments
An analysis of rent expense by property leased follows:
Fiscal Year
In Millions 1995 1994 1993
Warehouse space $14.0 $13.3 $12.5
Equipment 8.7 8.1 8.8
Other 3.7 3.6 5.1
Total rent expense $26.4 $25.0 $26.4
Some leases require payment of property taxes, insurance and
maintenance costs in addition to the rent payments. Contingent and
escalation rent in excess of minimum rent payments and sublease
income netted in rent expense were insignificant.
Noncancelable future lease commitments are (in millions) $17.5 in
1996, $12.8 in 1997, $4.1 in 1998, $3.2 in 1999, $1.9 in 2000 and
$3.7 after 2000, with a cumulative total of $43.2.
We are contingently liable under guarantees and comfort letters
for $96.4 million. The guarantees and comfort letters are
principally issued to support borrowing arrangements, primarily
for our joint ventures. The Company remains the primary
guarantor on a number of Darden leases and other obligations;
however Darden has indemnified the Company against any loss.
Note Eighteen: Geographic Information
Unallocated
Corporate Consolidated
In Millions U.S.A. Foreign Items (a) Total
Sales
1995 $4,840.7 $186.0 $ - $5,026.7
1994 5,156.8 170.4 - 5,327.2
1993 4,932.7 205.7 - 5,138.4
Operating Profits
1995 503.5(b) .4 (b) (99.3) 404.6
1994 642.7(c) 2.8 (97.4) 548.1
1993 780.6(d) (12.0)(d) (92.2) 676.4
Identifiable Assets
1995 2,531.9 300.6 525.7 3,358.2
1994 2,502.3 245.7 2,056.0(e) 4,804.0
1993 2,273.3 215.6 1,821.5(e) 4,310.4
(a) Corporate expenses reported here include net interest expense and
general corporate expenses.
(b) U.S.A. and Foreign operating profits are net of charges of $179.1
million and $4.1 million, respectively, for the unusual items
described in note three.
(c) U.S.A. operating profits include a charge of $146.9 million for
unusual items described in note three.
(d) U.S.A. and Foreign operating profits include a charge of $25.8
million and $7.6 million, respectively, for unusual items.
(e) For 1994 and 1993, Unallocated Corporate Items include the net assets
of discontinued operations. See note two.
The foreign sales above were primarily by our Canadian subsidiary.
The foreign operating profits above also include our share of the
results from our joint ventures, Cereal Partners Worldwide (CPW)
and Snack Ventures Europe (SVE).
Note Nineteen: Quarterly Data (unaudited)
<TABLE>
Summarized quarterly data for 1995 and 1994 follows:
<CAPTION>
In Millions, Except per Share First Quarter Second Quarter Third Quarter
and Market Price Amounts 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Sales $1,156.7 $1,306.3 $1,417.3 $1,448.6 $1,224.2 $1,277.6
Gross profit (a) 720.8 834.1 848.8 899.4 727.1 796.9
Earnings (loss) from
continuing operations 118.0 129.0 134.8 126.0 20.2(b) 110.8
Earnings (loss) per share from
continuing operations .75 .81 .85 .79 .13 .70
Discontinued operations 32.8 40.3 14.4 14.7 (14.8) 34.2
Cumulative effect of accounting changes - (3.5) - - - -
Net earnings 150.8 165.8 149.2 140.7 5.4 145.0
Net earnings per share .95 1.04 .95 .88 .03 .91
Dividends per share .47 .47 .47 .47 .47 .47
Market price of common stock:
High 56 1/4 68 3/4 58 3/8 67 3/4 61 5/8 63
Low 49 3/8 56 7/8 52 7/8 59 5/8 53 1/4 55 1/2
</TABLE>
<TABLE>
<CAPTION>
In Millions, Except per Share Fourth Quarter Total Year
and Market Price Amounts 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales $1,228.5 $1,294.7 $5,026.7 $5,327.2
Gross profit (a) 707.0 784.3 3,003.7 3,314.7
Earnings (loss) from continuing
operations (13.3)(b) (25.8)(c) 259.7 340.0
Earnings (loss) per share from
continuing operations (.09) (.16) 1.64 2.14
Discontinued operations 75.3 44.2 107.7 133.4
Cumulative effect of accounting changes - - - (3.5)
Net earnings 62.0 18.4 367.4 469.9
Net earnings per share .40 .12 2.33 2.95
Dividends per share .47 .47 1.88 1.88
Market price of common stock:
High 63 3/4 57 63 3/4 68 3/4
Low 58 49 7/8 49 3/8 49 7/8
<FN>
(a) Before charges for depreciation.
(b) Includes an after-tax loss of $82.8 million ($.52 per share) in the third quarter
and $28.8 million ($.19 per share) in the fourth quarter related to restructuring.
(c) Includes an after-tax loss of $87.1 million ($.55 per share) related to the improper
treatment of oat supplies by an independent contractor.
</FN>
</TABLE>
<TABLE>
ELEVEN YEAR FINANCIAL SUMMARY
<CAPTION>
May 28, May 29, May 30, May 31, May 26,
In Millions, Except per Share Data 1995 1994 1993 1992 1991
Financial Results
<S> <C> <C> <C> <C> <C>
Net earnings (loss) per share $ 2.33 $ 2.95 $ 3.10 $ 2.99 $ 2.87
Continuing operations earnings per share 1.64 2.14 2.52 2.39 2.26
Return on average equity 52.0% 37.7% 39.1% 39.9% 49.2%
Dividends per share 1.88 1.88 1.68 1.48 1.28
Sales 5,027 5,327 5,138 4,964 4,657
Costs and expenses:
Cost of sales 2,023 2,012 2,003 1,967 1,819
Selling, general and administrative 2,123 2,367 2,214 2,152 2,090
Depreciation and amortization 192 174 153 143 134
Interest, net 101 79 56 45 51
Unusual expenses (income) 183 147 36 (12) (48)
Earnings before income taxes 405 548 676 669 611
Earnings from continuing operations 260 340 411 396 372
Discontinued operations after taxes 107 134 95 100 101
Net earnings (loss) 367 470 506 496 473
Earnings from continuing operations as a
percent of sales 5.2% 6.4% 8.0% 8.0% 8.0%
Weighted average number of common shares 158 159 163 166 165
Taxes (income, payroll, property, etc.)
per share 1.30 1.68 1.98 2.08 1.86
Financial Position
Total assets 3,358 4,804 4,310 3,997 3,561
Land, buildings and equipment, net 1,457 1,503 1,463 1,398 1,168
Working capital at year end (324) (630) (386) (238) (142)
Long-term debt, excluding current portion 1,401 1,413 1,264 916 875
Stockholders' equity 141 1,151 1,219 1,371 1,114
Stockholders' equity per share .89 7.26 7.59 8.28 6.74
Other Statistics
Total dividends 297 299 275 245 211
Gross capital expenditures 157 213 317 396 279
Research and development 60 59 56 55 52
Advertising media expenditures 324 292 283 309 314
Wages, salaries and employee benefits 538 558 556 598 633
Number of employees (actual) 9,882 10,616 10,577 12,195 12,521
Accumulated LIFO reserve 53 43 47 50 54
Common stock price range (a):
High 63 3/4 68 3/4 74 1/8 75 7/8 60 7/8
Low 49 3/8 49 7/8 62 54 1/4 37 7/8
Close 60 5/8 54 1/2 65 1/4 63 1/2 58
<FN>
(a) Prices shown are before the spin-off described in note two. The closing prices on May 30, 1995 of the two
common stocks were $50 for General Mills and $11 1/8 for Darden Restaurants.
Note: All amounts presented in this summary have been restated to a continuing basis only.
</FN>
</TABLE>
EXHIBIT 21
GENERAL MILLS, INC. SUBSIDIARIES
Percentage
Country or of Voting
State in Which Securities
Each Subsidiary Owned
Was Organized (Note 1)
ALTCARE CORPORATION Minnesota 50
COLOMBO DAIRY FOODS LTD. Ontario 100
COLOMBO, INC. Delaware 100
COLOMBO YOGURT SHOP, QUINCY MARKET, INC. Delaware 100
C.P.A. CEREAL PARTNERS HANDELSGESELLSCHAFT
m.b.H. (Note 10) Austria 50
C.P.D. CEREAL PARTNERS DEUTSCHLAND
VERWALTUNGSGESSELSCHAFT m.b.H (Note 2) Germany 50
CPW MEXICO S.A. de C.V. Mexico 50
CPW S.A. (Note 13) Switzerland 50
CPW-CI LIMITED Cayman Islands 50
FYL CORP. California 100
GENERAL MILLS CONTINENTAL, INC. (Note 11) Delaware 100
GENERAL MILLS EUROPE LIMITED England 100
C.P. HELLAS EEIG Greece 50
GENERAL MILLS FINANCE, INC. Delaware 100
GENERAL MILLS FRANCE S.A. France 100
GMSNACKS, SCA (Note 3) France 43.29
Snack Ventures Europe, SCA (Note 4) Belgium 40.49
Biscuiterie Nantaise-BN, S.A. France 100
Matutano, S.A. Portugal 100
Smiths Food Group B.V. The Netherlands 100
SVE Italia Italy 100
Tasty Foods S.A. Greece 100
GENERAL MILLS HOLDING B.V. (Note 5) The Netherlands 100
CEREAL PARTNERS FRANCE B.V. (Note 6) The Netherlands 100
GENERAL MILLS ESPANA B.V. (Note 7) The Netherlands 100
GENERAL MILLS HOLLAND B.V. The Netherlands 100
GMR Japan, Inc. Japan 100
GENERAL MILLS MAARSSEN B.V. The Netherlands 100
GENERAL MILLS PRODUCTS CORP. Delaware 100
GENERAL MILLS INTERNATIONAL LIMITED (Note 11) Delaware 100
INMOBILIARIA SELENE, S.A. DE C.V. Mexico 100
SMITHS FOOD GROUP DEUTSCHLAND B.V. The Netherlands 100
TORONTO MACARONI & IMPORTED FOODS LIMITED Ontario 100
General Mills Canada, Inc. (Note 8) Canada 100
GOLD MEDAL INSURANCE CO. (Note 9) Minnesota 100
GRANDES MOLINOS DE VENEZUELA, S.A Venezuela 12.61
INTERNATIONAL DESSERT PARTNERS L.L.C. Delaware 50
MILLS SYNDICATED PROPERTIES, INC. Minnesota 100
NESTLE ASEAN PHILIPPINES, INC. (Note 12) The Philippines 30
POPCORN DISTRIBUTORS, INC. Delaware 100
TORUN-PACIFIC SP. Z O.O. Poland 50
YOPLAIT USA, INC. Delaware 100
Notes to list of subsidiaries:
1. Except where noted, the percentage of ownership refers to the
total ownership by the indicated parent corporation.
2. General Mills, Inc. also owns a 50% ownership interest in a
partnership organized under the laws of Germany.
3. General Mills Holland B.V. owns a 29.34% interest in GMSNACKS,
SCA, General Mills Holding B.V. owns a 26.25% interest in
GMSNACKS, SCA, and General Mills Products Corp. owns a 1.12%
interest in GMSNACKS, SCA.
4. General Mills Holding B.V. owns a .01% interest in Snack Ventures
Europe, SCA.
5. General Mills Holding B.V. and General Mills, Inc. together own a
100% interest in a Belgian partnership, General Mills Belgium,
SNC, which also has a 50% interest in a partnership organized
under the laws of Portugal.
6. Cereal Partners France B.V., General Mills, Inc. and General Mills
France S.A. own a 100% interest in a French partnership, GMEAF
SNC, which owns a 50% interest in a partnership organized under
the laws of France.
7. General Mills Espana B.V. owns a 50% interest in a partnership
organized under the laws of Spain.
8. General Mills Canada, Inc. and General Mills Products Corp.
together own a 100% interest in a Canadian partnership, General
Mills North America Affiliates, which owns a 50% interest in a
partnership organized under the laws of the United Kingdom.
9. Eighty-one percent of the voting securities are owned by General
Mills, Inc. and 19% of the voting securities are owned by General
Mills Canada, Inc.
10.General Mills, Inc. also owns a 50% ownership interest in a
partnership organized under the laws of Austria.
11.General Mills Continental, Inc. and General Mills International
Limited together own a 100% interest in a Chilean partnership,
General Mills Continental, Inc. y Compania, which owns a 50%
interest in Cereales C.P.W. Chile Limitada, a corporation
organized under the laws of Chile.
12.The 30% ownership interest of General Mills, inc. is held in trust
by Nestle, S.A.
13.General Mills, Inc. also owns a 50% ownership interest in a
partnership organized under the laws of Switzerland.
EXHIBIT 23
AUDITORS' CONSENT
The Board of Directors
General Mills, Inc.:
We consent to incorporation by reference in the
Registration Statements (Nos. 2-49637, and 33-56032) on Form
S-3 and Registration Statements (Nos. 2-13460, 2-53523, 2-
66320, 2-91987, 2-95574, 33-24504, 33-27628, 33-32059, 33-
36892, 33-36893, and 33-50337) on Form S-8 of General Mills,
Inc. of our reports dated June 27, 1995, relating to the
consolidated balance sheets of General Mills, Inc. and
subsidiaries as of May 28, 1995 and May 29, 1994 and the
related consolidated statements of earnings, cash flows and
related financial statement schedule for each of the fiscal
years in the three-year period ended May 28, 1995, which
reports are included or incorporated by reference in the May
28, 1995 annual report on Form 10-K of General Mills, Inc.
Our report covering the basic consolidated financial
statements refers to changes in the method of accounting for
investments in debt and equity securities in fiscal 1995 and
postemployment benefits and income taxes in fiscal 1994.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 16, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from our
Form 10-K for the fiscal year ended May 28, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-28-1995
<PERIOD-END> MAY-28-1995
<CASH> 13,000,000
<SECURITIES> 0
<RECEIVABLES> 281,400,000
<ALLOWANCES> (4,100,000)
<INVENTORY> 372,000,000
<CURRENT-ASSETS> 896,900,000
<PP&E> 2,611,900,000
<DEPRECIATION> (1,155,300,000)
<TOTAL-ASSETS> 3,358,200,000
<CURRENT-LIABILITIES> 1,220,900,000
<BONDS> 1,400,900,000
<COMMON> 379,500,000
0
0
<OTHER-SE> (238,500,000)
<TOTAL-LIABILITY-AND-EQUITY> 3,358,200,000
<SALES> 5,026,700,000
<TOTAL-REVENUES> 5,026,700,000
<CGS> 2,023,000,000
<TOTAL-COSTS> 2,023,000,000
<OTHER-EXPENSES> 191,400,000
<LOSS-PROVISION> 1,000,000
<INTEREST-EXPENSE> 101,200,000
<INCOME-PRETAX> 404,600,000
<INCOME-TAX> 144,900,000
<INCOME-CONTINUING> 259,700,000
<DISCONTINUED> 107,700,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 367,400,000
<EPS-PRIMARY> 2.33
<EPS-DILUTED> 2.33
</TABLE>
