UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1997
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-1185 41-0274440
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
Number One General Mills Boulevard
(Mail: P.O. Box 1113)
Minneapolis, Minnesota 55440
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 540-2311
<PAGE>
Item 5. Other Events.
General Mills hereby updates the pro forma financial information
contained in the proxy statement/prospectus included on pages 11, 12 and 30
through 34 of the Company's Registration Statement on Form S-4 (File
No. 333-18849) effective December 27, 1996:
Summary Selected Unaudited Pro Forma
Financial Information
In the table below, we attempt to illustrate the financial results that
might have occurred if the spinoff and the merger had been completed previously.
We present combined balance sheet information of General Mills and Ralcorp as of
November 24, 1996, as if the spinoff and the merger had been completed on
November 24, 1996. We present combined earnings statement information for
General Mills and Ralcorp for the fiscal year ended May 26, 1996 and the 26
weeks ended November 24, 1996, as if the spinoff and the merger had been
completed on May 29, 1995.
It is important to remember that this information is hypothetical, and does
not necessarily reflect the financial performance that would have actually
resulted if the spinoff and the merger had been completed on those dates. It is
also important to remember that this information does not necessarily reflect
future financial performance if the spinoff and the merger actually occur.
Please see "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION"
for a more detailed explanation of this analysis.
26 Weeks Ended Year Ended
November 24, May 26,
1996 1996
-------------------- ----------
(In millions, except
per share data)
Earnings Statement Information:
Sales $3,098.5 $5,809.6
Earnings from continuing operations 268.5 486.8
Earnings from continuing operations
per common share 1.65 2.97
Dividends declared per common share 1.00 1.91
November 24,
1996
(In millions,
except per
share data)
Balance Sheet Information:
Total assets $4,058.4
Long-term debt, excluding current portion 1,332.8
Shareholders' equity 570.6
Book value per common share 3.54
Comparative Per Share Data
In the table below, we provided you with certain historical and pro forma
per share financial information as of and for the 26 weeks ended November 24,
1996, and for the year ended May 26, 1996. Ralcorp historical data and New
Ralcorp data are as of and for the six months ended December 31, 1996, and for
the 12-month period ended June 30, 1996. We prepared the General Mills pro forma
combined amounts based on the purchase method of accounting and a preliminary
allocation of the purchase price.
It is important that when you read this information, you read along with it
the consolidated financial statements and accompanying Notes of General Mills
and Ralcorp included in the documents described on page 74 of the Proxy
Statement-Prospectus dated December 27, 1996 under "WHERE YOU CAN FIND MORE
INFORMATION." It is also important that you read the pro forma condensed
combined financial information and accompanying discussion and Notes that we
have included under "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION."
Ralcorp Pro Forma Per Common Share Data
The table below compares historical amounts per share of Ralcorp with pro
forma amounts for the fraction of a share of General Mills and the full share of
New Ralcorp that will be issued for each old Ralcorp share. The "Total Pro
Forma" column in the table adds the amounts for the fraction of a General Mills
share and the full New Ralcorp share to show the total pro forma amount for the
shares that you will hold after completion of the spinoff and the merger for
each Ralcorp share that you held before the spinoff and the merger. We have
assumed for this purpose that General Mills issues .154 of a General Mills share
for each Ralcorp share. The actual fraction of a General Mills share will be
determined using a formula and may be higher or lower than .154 of a share. We
have also assumed in the amounts under the "New Ralcorp" column that the sale of
New Ralcorp's Resort Operations is completed.
<TABLE>
<CAPTION>
General Mills
Ralcorp Pro Forma Total
Historical (per .154 share) New Ralcorp Pro Forma
<S> <C> <C> <C> <C>
Year ended May 26, 1996
Earnings from continuing operations per
common share $ .27 $.46 $(.97) $(.51)
Dividends per common share - .29 - .29
26 Weeks ended November 24, 1996
Earnings from continuing operations per
common share (1.62) .25 (2.23) (1.98)
Dividends per common share - .15 - .15
As of November 24, 1996
Book value per common share 3.69 .55 8.39 8.94
</TABLE>
General Mills Pro Forma Per Common Share Data
General Mills General Mills
Historical Pro Forma
Year ended May 26, 1996
Earnings from continuing operations
per common share $3.00 $2.97
Dividends per common share 1.91 1.91
26 weeks ended November 24, 1996
Earnings from continuing operations
per common share 1.62 1.65
Dividends per common share 1.00 1.00
As of November 24, 1996
Book value per common share 1.54 3.54
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma information set forth below gives effect to the
Branded Contribution, the Internal Merger, the Internal Spinoff, the
Distribution and the Merger (as each such term is defined under the "THE
PROPOSED TRANSACTONS - General" in the Proxy Statement-Prospectus dated December
27, 1996) as if they had been consummated on November 24, 1996 for balance sheet
presentation purposes and May 29, 1995 for income statement purposes, subject to
the assumptions and adjustments in the accompanying Notes to the pro forma
financial information.
The pro forma adjustments reflecting the consummation of the Merger are
based upon the purchase method of accounting and upon the assumptions set forth
in the Notes hereto, including the exchange of all outstanding shares of Ralcorp
Common Stock for an aggregate of approximately 5.1 million shares of General
Mills Common Stock. This pro forma financial information should be read in
conjunction with the financial data appearing under "SUMMARY" Selected
Historical Financial Information" in the Proxy Statement-Prospectus dated
December 27, 1996 and the historical financial statements of General Mills and
Ralcorp which have been incorporated in the Proxy Statement-Prospectus dated
December 27, 1996 by reference. See "WHERE YOU CAN FIND MORE INFORMATION" in the
Proxy Statement-Prospectus dated December 27, 1996. This pro forma financial
information should also be read in conjunction with the combined financial
statements of the Branded Business and the Notes thereto contained in the Proxy
Statement-Prospectus dated December 27, 1996.
The pro forma adjustments do not reflect any operating efficiencies and
cost savings which may be achievable with respect to the combined companies. The
pro forma adjustments do not include any adjustments to historical sales for any
future price changes nor any adjustments to selling and marketing expenses for
any future operating changes.
The following information is not necessarily indicative of the financial
position or operating results that would have occurred had the Merger been
consummated on the dates, or at the beginning of the periods, for which the
consummation of the Merger is being given effect. For purposes of preparing the
General Mills' consolidated financial statements, General Mills will establish a
new basis for Ralcorp's assets and liabilities (as adjusted to reflect only the
assets and liabilities of the Branded Business) based upon the fair values
thereof and the General Mills purchase price, including the costs of Merger. A
final determination of required purchase accounting adjustments, including the
allocation of the purchase price to the assets acquired and liabilities assumed
based on their respective fair values, has not yet been made. Accordingly, the
purchase accounting adjustments made in connection with the development of the
pro forma combined financial information are preliminary and have been made
solely for purposes of developing such pro forma combined financial information.
General Mills will undertake a study to determine the fair value of certain of
Ralcorp's assets and liabilities (as so adjusted) and will make appropriate
purchase accounting adjustments upon completion of that study. Assuming
completion of the Merger, the actual financial position and results of
operations will differ, perhaps significantly, from the pro forma amounts
reflected herein because of a variety of factors, including access to additional
information, changes in value, and changes in operating results between the
dates of the pro forma financial data and the date on which the Merger takes
place.
<TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of November 24, 1996
(in millions) (unaudited)
Branded Business Pro Forma (A)
General Mills Historical Merger
Historical as adjusted (A) Adjustments Combined
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 28.3 28.3
Receivables, net 428.4 0.0 (B) 428.4
Inventories 396.3 14.9 0.0 (C) 411.2
Prepaids and other 154.3 154.3
Deferred income taxes 101.2 1.7 (D) 102.9
------------- ------ ------- --------
Total Current Assets 1,108.5 14.9 1.7 1,125.1
------------- ---- ------- -------
Fixed assets at cost, net 1,256.4 36.0 0.0 (E) 1,292.4
Other assets (including goodwill) 1,066.8 24.4 549.7 (F) 1,640.9
------------- ---- ----- -------
Total Assets $ 3,431.7 75.3 551.4 4,058.4
============= ==== ===== =======
Accounts payable $ 643.1 3.8 10.0 (G) 656.9
Current portion of long-term debt 107.5 0.0 (H) 107.5
Notes payable 421.6 421.6
Accrued taxes 141.7 141.7
Accrued payroll 101.4 101.4
Other current liabilities 131.0 25.4 0.0 (I) 156.4
------------- ---- ------- --------
Total Current Liabilities 1,546.3 29.2 10.0 1,585.5
------------- ---- ------- -------
Long-term debt 1,078.8 254.0 (J) 1,332.8
Deferred income taxes 243.1 243.1
Deferred income taxes-tax leases 154.5 154.5
Other liabilities 168.4 4.2 (0.7) (K) 171.9
------------- ----- ------- --------
Total Liabilities 3,191.1 33.4 263.3 3,487.8
------------- ---- ----- -------
Common stock 389.6 41.9 288.1 (L) 719.6
Retained earnings 1,506.7 1,506.7
Treasury stock (1,553.6) (1,553.6)
Unearned compensation and other (52.8) (52.8)
Foreign currency translation (49.3) (49.3)
------------- ------ ------- --------
Total Stockholder's Equity 240.6 41.9 288.1 570.6
------------- ---- ----- --------
Total Liabilities and Equity $ 3,431.7 75.3 551.4 4,058.4
============= ==== ===== =======
<FN>
(A) The accompanying pro forma condensed combined balance sheet combines the
General Mills balance sheet as of November 24, 1996 with the Ralcorp
balance sheet (after giving effect to the Branded Contribution, the
Internal Merger, the Internal Spinoff, and the Distribution) as of December
31, 1996 as if the Branded Contribution, the Internal Merger, the Internal
Spinoff, the Distribution and the Merger had all been consummated at
November 24, 1996. The Branded Business Historical balance sheet includes
those assets and liabilities from the Ralcorp balance sheet that are
associated with the Branded Business. The associated assets and liabilities
are either directly attributable to the Branded Business or have been
allocated to the Branded Business based upon methods considered reasonable
by Ralcorp's management.
While General Mills will acquire all the operations of the Branded Business
in the Merger, certain assets and liabilities reflected in the Branded
Business Historical balance sheet will not be transferred to General Mills
and, therefore, are not reflected under the column "Branded Business
Historical as adjusted."
(B) New Ralcorp will retain and collect all trade accounts receivable of the
Branded Business as of the Effective Time. Accordingly, the merged business
will commence with Branded Business trade accounts receivable of zero.
(C) It is assumed that the historical valuation of the Branded Business
inventories approximates the new book basis for the merged business, using
the purchase method of accounting.
(D) The estimated adjustment for deferred taxes is the tax effect on the
difference between the new book basis and the tax basis of the merged
assets of the Branded Business.
(E) It is assumed that the new book basis of the merged fixed assets from the
Branded Business using the purchase method of accounting is substantially
the same as the historical net book value to the Branded Business.
(F) The Goodwill amount of $549.7 million represents the excess of the purchase
price paid by General Mills over the sum of the amounts assigned to
identifiable assets acquired, less liabilities assumed in the Merger.
(G) The accounts-payable adjustment of $10.0 million represents the accrued
estimated transaction costs to be incurred as the Merger is completed. The
costs are primarily General Mills' financial advisory, legal, accounting,
printing and similar expenses.
(H) The long-term debt will not have a current portion, as of the Effective
Time. See Note (J) below.
(I) Other current liabilities are valued on the same basis for the merged
business as for the historical balance sheet of the Branded Business.
(J) The merged business will assume $150.0 million of Ralcorp 8 3/4 % Notes due
September 15, 2004 plus an estimated $90.0 million of other Ralcorp debt
(which amount is subject to increase or decrease at Closing) at an
effective rate of 5.6% (after giving effect to the related interest-rate
swap agreements). The face value of the $150.0 million debt is recorded at
the current market value of $164.0 million by the merged business in
accordance with purchase accounting procedures as reqired by generally
accepted accounting principles. The $14 million increase in value is due to
the lower marginal borrowing rate (approximately 7%) experienced by General
Mills. The remaining debt of $90.0 million approximates market valuation
and has been recorded at the same $90.0 million figure.
(K) The $0.7 million adjustment to other liabilities is the net of two accounts
(one deferred income, and one deferred expense) recorded by the historical
Branded Business, that will have zero basis to the merged business.
(L) The common stock adjustment of $288.1 million, plus the $41.9 million net
assets of the Branded Business, totals $330.0 million which represents the
market valuation of General Mills stock to be issued in the merger. This
$330.0 plus the face value of $240.0 of long-term debt described in note
(J) above, equal the aggregate Merger Consideration of $570.0 million.
</FN>
</TABLE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
26 Weeks Ended November 24, 1996
(in millions, except per share amount) (unaudited)
<CAPTION>
General Branded Pro Forma (A)
Mills Business Merger
Historical Historical (A) Adjustments Combined
<S> <C> <C> <C> <C>
Sales $ 2,875.7 222.8 0.0 (B) 3,098.5
Cost of sales (1,195.2) (54.4) 0.0 (C) (1,249.6)
Selling, general and administrative (1,098.2) (120.9) 0.0 (D) (1,219.1)
Depreciation and amortization (85.9) (4.6) (6.9) (E) (97.4)
Interest, net (47.3) (3.2) (5.0) (F) (55.5)
Unusual items (48.4) 0.0 (48.4)
------------- -------- ----- ----------
Earnings before taxes and earnings
(losses) of joint ventures 400.7 39.7 (11.9) 428.5
Income taxes (147.0) (15.2) 1.5 (G) (160.7)
Earnings (Losses) from joint ventures .7 .7
------------- -------- ----- ----------
Net earnings $ 254.4 24.5 (10.4) 268.5
============= ======= ===== ==========
Net earnings per share $ 1.62 N/A N/A 1.65
============ ======== ===== ==========
Average number of common shares 157.2 N/A 5.1 (H) 162.3
============= ======== ===== ==========
</TABLE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
Year Ended May 26, 1996
(in millions, except per share amount) (unaudited)
<CAPTION>
General Branded Pro Forma (A)
Mills Business Merger
Historical Historical (A) Adjustments Combined
<S> <C> <C> <C> <C>
Sales $ 5,416.0 393.6 0.0 (B) 5,809.6
Cost of sales (2,241.0) (107.7) 0.0 (C) (2,348.7)
Selling, general and administrative (2,128.3) (218.6) 0.0 (D) (2,346.9)
Depreciation and amortization (186.7) (8.4) (13.7)(E) (208.8)
Interest, net (101.4) (3.9) (12.6)(F) (117.9)
Unusual items (2.5) (2.5)
----------- -------- ------ -----------
Earnings before taxes and earnings
(losses) of joint ventures 758.6 52.5 (26.3) 784.8
Income taxes (279.4) (20.0) 4.2 (G) (295.2)
Losses from joint ventures (2.8) (2.8)
------------- -------- ------ -----------
Net earnings $ 476.4 32.5 (22.1) 486.8
============= ======== ===== ===========
Net earnings per share $ 3.00 N/A N/A $ 2.97
============ ========= ====== ===========
Average number of common shares 158.9 N/A 5.1 164.0
============= ========= ====== ===========
<FN>
(A) The accompanying pro forma condensed combined statement of earnings for the
26 weeks ended November 24, 1996 combines the General Mills statement of
earnings for the 26 weeks ended November 24, 1996 with the Ralcorp
statement of earnings (after giving effect to the Branded Contribution, the
Internal Merger, the Internal Spinoff, and the Distribution) for the six
months ended December 31, 1996, as if the Branded Contribution, the
Internal Merger, the Internal Spinoff, the Distribution and the Merger had
been consummated at May 29, 1995.
The accompanying pro forma condensed combined statement of earnings for the
year ended May 26, 1996 combines the General Mills statement of earnings
for the 52 weeks ended May 26, 1996 with the Ralcorp statement of earnings
(after giving effect to the Branded Contribution, the Internal Merger, the
Internal Spinoff, and the Distribution) for the 12 months ended June 30,
1996 as if the Branded Contribution, the Internal Merger, the Internal
Spinoff, the Distribution and the Merger had been consummated at May 29,
1995.
The Branded Business Historical statement of earnings includes those
revenues and expenses from the Ralcorp statement of earnings that are
associated with the Branded Business. The associated revenues and expenses
are either directly attributable to the Branded Business based upon methods
considered reasonable by Ralcorp's management. As the transaction
contemplates the merger of the complete operations of the Branded Business,
no adjustments are necessary to the Branded business Historical statement
of earnings.
(B) Sales (and the implicit selling prices) are all as-reported historically,
and have not been adjusted for any proposed future price changes.
(C) The pro-forma adjustments do not reflect any operating efficiencies and
cost savings. A final determination of the required purchase accounting
adjustments has not been made, and the earnings results will vary from
those pro-forma earnings shown.
(D) No changes have been made to historical estimated sales expense and
marketing expense. While it is possible that General Mills may incur
significant additional promotional expenditures in the first year for
introductory purposes, such expenditure are deemed exceptional, and not
continuing.
(E) The $6.9 million and $13.7 million of amortization expense for the 26 weeks
ended November 24, 1996 and the year ended May 26, 1996, respectively
represent the estimated amount of goodwill amortization expense to be
recorded, assuming straight line amortization of the $549.7 million of
goodwill, over a life of 40 years.
(F) The interest adjustment of $5.0 million for the 26 weeks ended November 24,
1996, when added to the $3.2 million historical interest expense allocated
to the Branded business, reflects 26 weeks estimated interest ($8.2
million) for the debt assumed in the merger - see Note J to the Pro Form
Condensed Combined Balance Sheet.
The adjustment of $12.6 million for the year ended May 26, 1996, to the
added to the $3.9 million historical interest expense allocated to the
Branded Business, reflects one year's estimated total interest expense
($16.5 million) for the debt assumed in the Merger - see Note J to the Pro
Form Condensed Combined Balance Sheet.
(G) The adjustment to tax expense results from providing for income tax expense
at a 39.6% rate (net combined federal and state) against the pretax pro
forma adjustments and the Branded Business pretax income, after taking the
Branded Business income tax expense into consideration. The amortization of
goodwill is not deductible and therefore received no tax benefit.
(H) The number of shares of General Mills Common Stock to be issued were
determined on the assumption that General Mills will issue shares with a
total market valuation of $330.0 million (see Note L to the Pro Forma
Condensed Combined Balance Sheet) at an estimated value of $65.00 per
share. This results in an estimated 5,076,923 shares to be issued. For
purposes of the pro forma information, such shares were deemed to be
outstanding for the entire pro forma period. The actual number of shares of
General Mills Common Stock to be issued in the Merger will be determined
using a formula and may be more or less than this amount.
</FN>
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MILLS, INC.
Dated: January 28, 1997 By: /s/Siri S. Marshall
--------------------
Siri S. Marshall
Senior Vice President
and General Counsel
