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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 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended May 30, 1999
/ / 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) 764-2311
(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. [ X ]
Aggregate market value of Common Stock held by non-affiliates of the
Registrant, based on the closing price of $84.125 per share as reported on the
New York Stock Exchange on July 29, 1999: $12,827.8 million.
Number of shares of Common Stock outstanding as of July 29, 1999:
152,485,214 (including 25,848 shares set aside for the exchange of shares of
Ralcorp Holdings, Inc. and excluding 51,668,118 shares held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 14, 1999 are
incorporated by reference into Part III, and portions of Registrant's
1999 Annual Report to Stockholders are incorporated by
reference into Parts I, II and IV.
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<PAGE>
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.
The Company is a leading producer of packaged consumer foods and markets its
products primarily through its own sales organizations, supported by advertising
and other promotional activities. Such products are primarily distributed
directly to retail food chains, cooperatives, membership stores and wholesalers.
Certain food products, such as yogurt and some foodservice and refrigerated
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 food
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 sold at lower prices.
CEREALS. General Mills produces and sells a number of ready-to-eat cereals,
including such brands as: CHEERIOS, HONEY NUT CHEERIOS, FROSTED CHEERIOS, APPLE
CINNAMON CHEERIOS, MULTI-GRAIN CHEERIOS, TEAM CHEERIOS, WHEATIES, HONEY FROSTED
WHEATIES, CRISPY WHEATIES 'N RAISINS, LUCKY CHARMS, TOTAL CORN FLAKES, WHOLE
GRAIN TOTAL, TOTAL RAISIN BRAN, TRIX, GOLDEN GRAHAMS, WHEAT CHEX, CORN CHEX,
RICE CHEX, MULTI-BRAN CHEX, KIX, BERRY BERRY KIX, FIBER ONE, REESE'S PEANUT
BUTTER PUFFS, COCOA PUFFS, COOKIE CRISP, CINNAMON TOAST CRUNCH, FRENCH TOAST
CRUNCH, CLUSTERS, RAISIN NUT BRAN, OATMEAL CRISP, TRIPLES and BASIC 4. In fiscal
1999 the Company introduced an organic cereal called Sunrise, Honey Nut Chex and
NesQuik, a chocolate-flavored cereal.
DESSERTS, FLOUR AND BAKING MIXES. General Mills makes and sells a line of
dessert mixes under the BETTY CROCKER trademark, including SUPERMOIST layer
cakes, RICH & CREAMY and SOFT WHIPPED ready-to-spread frostings, SUPREME brownie
and dessert bar mixes, muffin mixes, STIR 'N BAKE mixes and SWEET REWARDS
fat-free and reduced-fat mixes. The company markets a variety of baking mixes
under the BISQUICK trademark, sells pouch mixes under the BETTY CROCKER 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 flour for internal ingredient
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
CHICKEN HELPER trademarks and a line of refrigerated barbeque products under the
LLOYD'S BARBEQUE name. Also under the BETTY CROCKER trademark, the Company sells
dry packaged specialty potatoes, POTATO BUDS instant mashed potatoes, seasoned
rice and pasta side dishes, SUDDENLY SALAD and BAC*O'S salad topping. The
Company also manufactures and markets seasoned rice and pasta side dish mixes
under the FARMHOUSE name.
SNACK PRODUCTS AND BEVERAGES. General Mills markets POP*SECRET microwave
popcorn; a line of grain snacks including NATURE VALLEY granola bars, DUNKAROOS
and GOLDEN GRAHAMS TREATS; a line of fruit snacks including FRUIT ROLL-UPS,
FRUIT BY THE FOOT, GUSHERS, FRUIT STRING THING, LUCKY CHARMS and TRIX shapes, a
line of salty snack products called CHEX Mix and savory snacks 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. General Mills manufactures and sells yogurt products,
including YOPLAIT ORIGINAL, YOPLAIT LIGHT, CUSTARD STYLE and TRIX, a layered
yogurt for children. GO-GURT, yogurt packaged in a portable tube, was introduced
in fiscal 1999 and is expanding nationally. The Company also manufactures and
sells a variety of refrigerated cup yogurt products under the COLOMBO brand
name.
FOODSERVICE. General Mills markets branded baking mixes, cereals, snacks,
dinner and side dish products, refrigerated and soft-serve frozen yogurt and
custom products to the commercial and non-commercial foodservice sectors,
including schools, colleges, hotels, restaurants, healthcare facilities,
convenience stores and vending.
INTERNATIONAL FOODS OPERATIONS. The International Foods organization of the
Company exports packaged food products and snack pellets throughout the world
and licenses food products for manufacture in Europe and the Asia/Pacific
region. General Mills Canada, Inc. sells BIG G ready-to-eat cereals, BETTY
CROCKER side dishes, baking and packaged dinner mixes and fruit, grain and salty
snacks in Canada.
During fiscal 1999 the Company engaged in four international joint ventures.
See Note Four to Consolidated Financial Statements appearing on page 28 of the
Company's 1999 Annual Report to Stockholders, incorporated herein by reference.
Cereal Partners Worldwide (CPW), the Company's joint venture with Nestle, S.A.,
competes in more than 70 countries and republics. The following cereal products
were marketed under the umbrella Nestle trademark in fiscal 1999: TRIO,
CLUSTERS, NESQUIK, MULTI-CHEERIOS, HONEY NUT CHEERIOS, GOLDEN GRAHAMS, CINI
MINIS, CHOCAPIC, TRIX, ESTRELITAS, GOLD, KIX, MILO, FIBRE 1, KANGUS, SPORTIES,
FITNESS, SHREDDED WHEAT, SHREDDIES, COUNTRY CORN FLAKES, HONEY STARS, KOKO
KRUNCH, SNOW FLAKES, ZUCOSOS, FRUTINA and APPLE MINIS. CPW also manufactures
private label cereals for customers in the United Kingdom. The Company has a 50%
equity interest in CPW.
Snack Ventures Europe (SVE), the Company's joint venture with PepsiCo, Inc.,
manufactures and sells snack foods in Holland, France, Belgium, Spain, Portugal,
Greece, Estonia, Hungary, Russia and Slovakia. The Company has a 40.5% equity
interest in SVE.
In fiscal 1999, decisions were made to end the Company's International
Dessert Partners joint venture with Bestfoods for baking mixes and desserts in
Latin America, and the Tong Want snack joint venture with Want Want Holdings
Ltd., which had not yet begun operating. These decisions will not have a
material impact on our financial position, results of operations, or cash flows.
General Information
TRADEMARKS AND PATENTS. The Company's products are marketed 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 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 majority of such raw materials are purchased on
the open market. Prices of most raw materials will probably increase over the
long term. Nonetheless, General Mills believes that it will be able to obtain an
adequate supply of needed ingredients and packaging materials. Occasionally and
where possible, General Mills makes advance purchases of items significant to
its business in order to ensure continuity of operations. The Company's
objective is to procure materials meeting both the company's quality standards
and its production needs at the lowest total cost to the Company. The Company's
strategy is to buy these materials at price levels that allow a targeted profit
margin. Since commodities 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 using exchange-traded futures
and options, forward cash contracts and over-the-counter hedging mechanisms.
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. 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 pages 29
through 31 of the Company's 1999 Annual Report to Stockholders, incorporated
herein by reference and the "Market Risk Management" section of the Report's
"Management's Discussion and Analysis" appearing on page 19 of the Company's
1999 Annual Report to Stockholders, incorporated herein by reference.
CAPITAL EXPENDITURES. During the three fiscal years ended May 30, 1999,
General Mills expended $627 million for capital expenditures, not including the
cost of acquired companies. The Company expects to spend approximately $250
million for such purposes in fiscal 2000.
RESEARCH AND DEVELOPMENT. The Company's main research and development
facilities are located at the James Ford Bell Technical Center in Minneapolis,
Minnesota. With a staff of approximately 880, 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 $70.0 million in
fiscal 1999, $66.3 million in fiscal 1998 and $61.4 million in fiscal 1997.
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 30, 1999, General Mills had approximately 10,660
employees.
ENVIRONMENTAL MATTERS. As of June 30, 1999, the Company has received notices
advising that there have been releases or threatened releases of hazardous
substances or wastes at 11 sites, and alleging that the Company and other named
parties are 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 adverse effect upon the
capital expenditures, earnings or competitive position of the Company.
SEGMENT INFORMATION. See Note Eighteen to Consolidated Financial Statements
appearing on page 38 of the Company's 1999 Annual Report to Stockholders,
incorporated herein by reference, for Business Segment and Geographic
Information.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, together with their ages and
business experience, are set forth below.
Y. Marc Belton, age 40, is Senior Vice President; President, Big G. Mr.
Belton joined the Company in 1983 and served in various food marketing
management positions. He was appointed a Vice President of the Company in 1991,
named President, Snacks in 1994, elected Senior Vice President, President, New
Ventures in 1997 and named to his present position in July 1999.
Peter J. Capell, age 42, is Vice President; President, Snacks. Mr. Capell
joined the Company in 1985 and served in various marketing and general
management positions. He was appointed a Vice President of the Company in 1996,
named Marketing Director, Cheerios business unit in 1996 and named to his
present position in 1997.
Randy G. Darcy, age 48, is Senior Vice President, Operations. Mr. Darcy
joined the Company in 1987, was named Vice President, Director of Manufacturing,
Technology and Operations in 1989 and was named to his present position in 1994.
Stephen R. Demeritt, age 55, will become Vice Chairman of the Company on
October 1, 1999, with responsibility for worldwide cereal businesses, General
Mills Canada, Consumer Insights and Advertising. Mr. Demeritt joined General
Mills in 1969 and has served in a variety of consumer food marketing positions.
He was president of International Foods from 1991 to 1993 and for the past five
years has been Chief Executive Officer of Cereal Partners Worldwide, the
Company's global cereal joint venture with Nestle.
Jon L. Finley, age 45, is Senior Vice President, Global Convenience Foods,
which includes Yoplait-Colombo yogurt and domestic and international snack
foods. Mr. Finley joined the Company in 1983 and was named President, Yoplait
USA in 1991, appointed a Vice President of the Company in 1991, elected Senior
Vice President in 1994, named Senior Vice President, New Business in 1995 and
named Senior Vice President, Gold Medal in 1996. He was named to his present
position in 1998.
Ian R. Friendly, age 38, is Vice President; President, Yoplait-Colombo. Mr.
Friendly joined the Company in 1983 and served in various food marketing
management positions. He was appointed a Vice President of the Company in 1990
with responsibility for the New Enterprise Business Unit of Big G and was
subsequently appointed to lead the Child Cereals Business Unit of Big G in 1993
and the Asia/Pacific, Middle East and Latin America Business Development of CPW,
S.A. in 1994. He was named to his present position in 1998.
Charles W. Gaillard, age 58, has been President of General Mills since
1995, and will retire from the Company on October 1, 1999. Mr. Gaillard joined
General Mills in 1966 and advanced through various food marketing management
positions, becoming Executive Vice President in 1989 and Vice Chairman in 1993.
From 1989 to 1993 he was Chief Executive Officer of Cereal Partners Worldwide.
Eric J. Larson, age 43, is Senior Vice President, Investor Relations. Mr.
Larson joined the Company in this position in June 1996 from Morgan Stanley &
Co., where he had been a partner and senior analyst covering packaged food,
agri-business, foodservice, tobacco and selected beverage companies since 1992.
He previously worked as an analyst covering consumer products companies at First
Boston Corporation and PaineWebber.
James A. Lawrence, age 46, is Executive Vice President, Chief Financial
Officer. Mr. Lawrence joined the Company in this position in 1998 from Northwest
Airlines where he was Executive Vice President, Chief Financial Officer. Prior
to joining Northwest Airlines in 1996, he was at Pepsi-Cola International,
serving initially as Executive Vice President and subsequently as President and
Chief Executive Officer for their operations in Asia, the Middle East and
Africa.
John T. Machuzick, age 42, is Senior Vice President, Sales-Strategic
Channels. Mr. Machuzick joined the Company in 1978 and served in a variety of
sales management positions. He was appointed Vice President, Trade Marketing and
Promotions in 1997, named Vice President of Sales for the Western Zone in 1998
and named to his present position in July 1999.
Siri S. Marshall, age 51, is Senior Vice President, Corporate Affairs and
General Counsel. Ms. Marshall joined the Company in 1994 from Avon Products,
Inc. where she spent 15 years, last serving as Senior Vice President, General
Counsel and Secretary.
Christopher D. O'Leary, age 40, is Senior Vice President; President, Betty
Crocker. Mr. O'Leary joined the Company in 1997 in the position of Vice
President, Corporate Growth. Prior to joining General Mills he spent 17 years at
PepsiCo, Inc., last serving as President and Chief Executive Officer of the
Hostess Frito-Lay business in Canada. He was named to his present position in
July 1999.
Michael A. Peel, age 49, is Senior Vice President, Human Resources. Mr.
Peel joined the Company in this position in 1991 from PepsiCo, Inc. where he
spent 14 years, last serving as Senior Vice President, Personnel, responsible
for PepsiCo Worldwide Foods.
Kendall J. Powell, age 45, is Senior Vice President of General Mills and
has been elected Chief Executive Officer of Cereal Partners Worldwide, effective
September 14, 1999. Mr. Powell joined the Company in 1979 and was appointed a
Vice President of General Mills and named Marketing Director of Cereal Partners
U.K. in 1990. He was named President, Yoplait USA in 1995, and was elected
Senior Vice President, President, Big G in 1998.
Jeffrey J. Rotsch, age 49, is Senior Vice President, with overall
responsibility for Sales, Foodservice and Channel Development. Mr. Rotsch joined
the Company in 1974 and served as the president of several divisions, including
Betty Crocker and Big G. He was elected Senior Vice President in 1993 and named
to his present position in July 1999.
Stephen W. Sanger, age 53, has been Chairman and Chief Executive Officer of
General Mills, Inc. since 1995. Mr. Sanger joined the Company in 1974 and served
as the president of several business units, including Yoplait USA and Big G. He
was elected a Senior Vice President in 1989, an Executive Vice President in
1991, Vice Chairman in 1992 and President in 1993.
Christina L. Shea, age 46, is Senior Vice President; President, New
Ventures. Ms. Shea joined the Company in 1976 and was appointed a Vice President
in 1987. She was appointed Vice President, New Business Development for Yoplait
USA in 1991, and Vice President, General Manager, Betty Crocker Main Meals and
Side Dishes in 1992, and served as President of Betty Crocker from 1994 to July
1999. She was elected a Senior Vice President in 1998.
Robert L. Stretmater, age 55, is Vice President; President, Foodservice.
Mr. Stretmater joined the Company in 1967 and was appointed a Vice President in
1987. He was appointed Vice President, Director of Marketing for the Gold Medal
Division in 1989, Vice President, Director of Marketing for Foodservice in 1996
and named to his present position in 1997.
Danny L. Strickland, age 50, is Senior Vice President, Innovation,
Technology and Quality. Mr. Strickland joined the Company in this position in
1997 from Johnson & Johnson where he held the position of Executive Vice
President, Worldwide Absorbent Products and Material Research from 1993 to 1997.
Prior to joining Johnson & Johnson he spent five years at Kraft General Foods as
Vice President of Technology.
Austin P. Sullivan, Jr., age 59, 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 51, 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.
Raymond G. Viault, age 55, is Vice Chairman of the Company, with overall
responsibility for Global Convenience Foods, Betty Crocker, New Ventures and
Snack Ventures Europe. Mr. Viault joined the Company in January 1996 from Philip
Morris, where he had been based in Zurich, Switzerland, serving since 1990 as
President of Kraft Jacobs Suchard. Mr. Viault had been with Kraft General Foods
a total of 20 years, serving in a variety of major marketing and general
management positions.
AVAILABLE INFORMATION
General Mills is a reporting company under the Securities Exchange Act of
1934, as amended, and files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The public may read
and copy any Company filings at the Commission's Public Reference Room at 450
Fifth Street N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. Because the Company makes filings to the Commission
electronically, you may access this information at the Commission's Internet
site (http://www.sec.gov). This site contains reports, proxies and information
statements and other information regarding issuers that file electronically with
the Commission. You can also learn more about General Mills at our web site
(http://www.generalmills.com).
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company and its representatives may from time to time make written or
oral forward-looking statements with respect to annual or long-term goals of the
Company, including statements contained in the Company's filings with the
Securities and Exchange Commission and in its reports to stockholders.
The words or phrases "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project" or similar expressions
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. The
Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is identifying important factors that
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
Our future results could be affected by a variety of factors such as
competitive dynamics in the U.S. ready-to-eat cereal market, including pricing
and promotional spending levels by premium branded manufacturers and by
lower-priced bagged cereal and private label competitors. Results could also be
affected by other external factors such as: economic conditions; the impact of
competitive products and pricing; product development; actions of competitors
other than as described above; changes in laws and regulations, including
changes in accounting standards; customer demand; effectiveness of advertising
and marketing spending or programs; consumer perception of health-related
issues; fluctuations in the cost and availability of supply-chain resources; and
foreign economic conditions, including currency rate fluctuations.
The Company's debt securities are rated by rating organizations. Investors
should note that a security rating is not a recommendation to buy, sell or hold
securities, that it is subject to revision or withdrawal at any time by the
assigning rating agency, and that each rating should be evaluated independently
of any other rating.
The Company specifically declines to undertake any obligation to publicly
revise any forward-looking statements that have been made to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
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 operated in Canada.
General Mills operates nine 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 (2); Cincinnati, Ohio; Covington,
Georgia; Lodi, California; and Toledo, Ohio. 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 29 locations, primarily in Idaho and Montana.
General Mills also has nine other food and beverage production facilities
with total floor space of approximately 575,000 square feet, including 64,000
square feet of leased space. General Mills also owns or leases warehouse space
aggregating approximately 8,200,000 square feet, of which approximately
5,800,000 square feet are leased. A number of sales and administrative offices
are maintained in the United States and Canada, totaling 1,900,000 square feet.
ITEM 3. LEGAL PROCEEDINGS.
In management's opinion, there were no claims or litigation pending at May
30, 1999, the outcome of which could have a material adverse effect on the
consolidated financial position or results of operations of the Company. 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.
<PAGE>
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 and in the Eleven-Year Financial Summary appearing on pages 38 and 39
of Registrant's 1999 Annual Report to Stockholders is incorporated herein by
reference. As of July 29, 1999, the number of record holders of common stock was
40,551. 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 1995 through 1999 contained in the
Eleven-Year Financial Summary on page 39 of Registrant's 1999 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
and Analysis" on pages 16 through 20 of Registrant's 1999 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information set forth in the "Market Risk Management" subsection of the
section entitled "Management's Discussion and Analysis" on page 19 of
Registrant's 1999 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information on pages 21 through 38 of Registrant's 1999 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 About
Nominees For the Board of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" contained in Registrant's definitive proxy materials dated
August 14, 1999 is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained on pages 18 through 21 of Registrant's definitive
proxy materials dated August 14, 1999 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 "Stock Ownership of
General Mills Directors and Officers" contained in Registrant's definitive proxy
materials dated August 14, 1999 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. -- Not applicable.
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The Company's Annual Report on Form 10-K for the fiscal year ended May 30, 1999,
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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and the Board of Directors
General Mills, Inc.:
Under date of June 28, 1999, we reported on the consolidated balance sheets
of General Mills, Inc. and subsidiaries as of May 30, 1999 and May 31, 1998 and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended May 30, 1999,
as contained in the 1999 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 30, 1999. 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 in fiscal 1997 for impairment of long-lived
assets and for long-lived assets to be disposed of.
/s/ KPMG LLP
Minneapolis, Minnesota
June 28, 1999
CONSENT OF KPMG LLP
The Board of Directors
General Mills, Inc.:
We consent to incorporation by reference in the Registration Statements
(Nos. 2-49637 and 333-76741) on Form S-3 and Registration Statements (Nos.
2-13460, 2-53523, 2-95574, 33-24504, 33-27628, 33-32059, 33-36892, 33-36893,
33-50337, 33-62729, 333-13089 and 333-32509, 333-65311 and 333-65313) on Form
S-8 of General Mills, Inc. of our reports dated June 28, 1999, relating to the
consolidated balance sheets of General Mills, Inc. and subsidiaries as of May
30, 1999 and May 31, 1998 and the related consolidated statements of earnings,
stockholders' equity, cash flows and related financial statement schedule for
each of the fiscal years in the three-year period ended May 30, 1999, which
reports are included or incorporated by reference in the May 30, 1999 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 in fiscal 1997 for impairment of long-lived
assets and for long-lived assets to be disposed of.
/s/ KPMG LLP
Minneapolis, Minnesota
August 23, 1999
<PAGE>
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 30,
1999, May 31, 1998 and May 25, 1997 (incorporated herein by reference to
page 22 of the Registrant's 1999 Annual Report to Stockholders).
Consolidated Balance Sheets at May 30, 1999 and May 31, 1998
(incorporated herein by reference to page 23 of the Registrant's 1999
Annual Report to Stockholders).
Consolidated Statements of Cash Flows for the Fiscal Years Ended May 30,
1999, May 31, 1998 and May 25, 1997 (incorporated herein by reference to
page 24 of the Registrant's 1999 Annual Report to Stockholders).
Consolidated Statements of Stockholders' Equity for the Fiscal Years
Ended May 30 1999, May 31, 1998 and May 25, 1997 (incorporated herein by
reference to page 25 of the Registrant's 1999 Annual Report to
Stockholders).
Notes to Consolidated Financial Statements (incorporated herein by
reference to pages 26 through 38 of the Registrant's 1999 Annual Report
to Stockholders).
2. Financial Statement Schedules:
For the Fiscal Years Ended May 30, 1999, May 31, 1998 and May 25, 1997:
II- Valuation and Qualifying Accounts
3. Exhibits:
Exhibit No. Description
3.1 Registrant's Restated Certificate of Incorporation, as amended
to date (incorporated herein by reference to Exhibit 3(i) to
Registrant's Quarterly Report on Form 10-Q for the period ended
August 24, 1997).
3.2 Registrant's By-Laws, as amended to date.
4.1 Indenture between Registrant and U.S. Bank Trust National
Association (f.k.a.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 4.1 to Registrant's Annual Report on Form 10-K for the
fiscal year ended May 25, 1997).
4.2 Rights Agreement dated as of December 11, 1995 between
Registrant and Norwest Bank Minnesota, N.A. (incorporated herein
by reference to Exhibit 1 to Registrant's Report on Form 8-K
dated December 11, 1995).
4.3 Indenture between Registrant and U.S. Bank Trust National
Association (f.k.a. First Trust of Illinois, National
Association) dated February 1, 1996 (incorporated herein by
reference to Exhibit 4.1 to Registrant's Registration Statement
on Form S-3 effective February 23, 1996).
4.4 Indenture between Ralcorp Holdings, Inc. and The First National
Bank of Chicago, as supplemented to date by the First
Supplemental Indenture among Ralcorp Holdings, Inc., Registrant
and The First National Bank of Chicago (incorporated herein by
reference to Exhibit 4.1 to Registrant's Report on Form 8-K
dated January 31, 1997).
<PAGE>
Exhibit No. Description
*10.1 Stock Option and Long-Term Incentive Plan of 1988, as amended to
date.
10.2 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).
*10.3 1998 Employee Stock Plan, as amended to date (incorporated
herein by reference to Exhibit 4 to Registrant's Registration
Statement No. 333-65311 on Form S-8 effective October 5, 1998).
*10.4 Executive Incentive Plan, as amended to date (incorporated
herein by reference to Exhibit 10.4 to Registrant's Annual
Report on Form 10-K for the fiscal year ended May 25, 1997).
*10.5 Management Continuity Agreement (incorporated herein by
reference to Exhibit 4 to Registrant's Report on Form 8-K dated
December 11, 1995).
*10.6 Supplemental Retirement Plan, as amended to date.
*10.7 Executive Survivor Income Plan, as amended to date.
*10.8 Executive Health 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, 1996).
*10.9 Supplemental Savings Plan, as amended to date.
*10.10 1996 Compensation Plan for Non-Employee Directors, as amended to
date.
*10.11 General Mills, Inc. 1995 Salary Replacement Stock Option Plan,
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 31, 1998).
*10.12 General Mills, Inc. Deferred Compensation Plan, as amended to
date (incorporated herein by reference to Exhibit 10.12 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998).
*10.13 Supplemental Benefits Trust Agreement dated February 9, 1987, as
amended and restated as of September 26, 1988.
*10.14 Supplemental Benefits Trust Agreement dated September 26, 1988.
10.15 Agreements dated November 29, 1989 by and between General Mills,
Inc.and Nestle, S.A.(incorporated herein by reference to Exhibit
10.15 to Registrant's Annual Report on Form 10-K for the fiscal
year ended May 28, 1995).
10.16 Protocol and Addendum No. 1 to Protocol of Cereal Partners
Worldwide (incorporated herein by reference to Exhibit 10.16 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 26, 1996).
*10.17 1990 Salary Replacement Stock Option Plan, as amended to date.
10.18 Addendum No. 2 dated March 16, 1993 to Protocol of Cereal
Partners Worldwide (incorporated herein by reference to
Exhibit 10.18 to Registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1998).
10.19 Agreement dated July 31, 1992 by and between General Mills, Inc.
and PepsiCo, Inc. (incorporated herein by reference to Exhibit
10.19 to Registrant's Annual Report on Form 10-K for the fiscal
year ended May 31, 1998).
*10.20 Stock Option and Long-Term Incentive Plan of 1993, as amended to
date (incorporated herein by reference to Exhibit 10.20 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 25, 1997).
10.21 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).
*10.22 1998 Senior Management Stock Plan, as amended to date
(incorporated herein by reference to Exhibit 4 to Registrant's
Registration Statement No. 333-65313 on Form S-8 effective
October 5, 1998).
* 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.
<PAGE>
Exhibit No. Description
12 Statement of Ratio of Earnings to Fixed Charges (contained on
page 15 of this Report).
13 1999 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 LLP (contained on page 8 of this Report).
(B) REPORTS ON FORM 8-K. -- Not applicable.
<PAGE>
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 23, 1999
By: /s/ S. S. MARSHALL
S. S. Marshall
SENIOR VICE PRESIDENT, CORPORATE AFFAIRS
AND GENERAL COUNSEL
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 7/27/99
(Richard M. Bressler)
/s/ L. DE SIMONE Director 7/25/99
(Livio D. DeSimone)
/s/ W.T. ESREY Director 7/28/99
(William T. Esrey)
/s/ C.W. GAILLARD Director, 7/28/99
(Charles W. Gaillard) President
/s/ R.V. GILMARTIN Director 7/29/99
(Raymond V. Gilmartin)
/s/ JUDITH RICHARDS HOPE Director 7/30/99
(Judith R. Hope)
/s/ ROBERT L. JOHNSON Director 7/28/99
(Robert L. Johnson)
/s/ KENNETH MACKE Director 7/29/99
(Kenneth A. Macke)
/s/ M.D. ROSE Director 7/28/99
(Michael D. Rose)
<PAGE>
Signature Title Date
/s/ S.W. SANGER Chairman of the Board and 8/04/99
(Stephen W. Sanger) Chief Executive Officer
/s/ A. MICHAEL SPENCE Director 7/30/99
(A. Michael Spence)
/s/ DOROTHY A. TERRELL Director 7/29/99
(Dorothy A. Terrell)
/s/ R.G. VIAULT Director 8/06/99
(Raymond G. Viault) Vice Chairman
/s/ C. ANGUS WURTELE Director 7/28/99
(C. Angus Wurtele)
/s/ KENNETH L. THOME Senior Vice President, 8/03/99
(Kenneth L. Thome) Financial Operations
(Principal Accounting Officer)
<PAGE>
GENERAL MILLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
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:
Year ended May 30, 1999 $4.2 $ .6 $.6 (a) $4.7
(.5)(b)
---- ---- ---- ----
Total............. $4.2 $ .6 $ .1 $4.7
==== ==== ==== ====
Year ended May 31, 1998 $4.1 $ .7 $1.6 (a) $4.2
(1.0)(b)
---- ---- ---- ----
Total............. $4.1 $ .7 $ .6 $4.2
==== ==== ==== ====
Year ended May 25, 1997 $4.1 $ .6 $1.1 (a) $4.1
(.5)(b)
---- ---- ---- ----
Total............. $4.1 $ .6 $ .6 $4.1
==== ==== ==== ====
VALUATION ALLOWANCE FOR
DEFERRED TAX ASSETS:
Year ended May 30, 1999 10.3 - 5.3 5.0
Year ended May 31, 1998 11.2 - .9 10.3
Year ended May 25, 1997 11.2 - - 11.2
RESTRUCTURING CHARGES:
Year ended May 30, 1999 30.5 51.6 37.5(c) 44.6
Year ended May 31, 1998 9.1 166.4 145.0(c) 30.5
Year ended May 25, 1997 27.3 - 18.2(c) 9.1
- -------------------------
Notes:
(a) Bad debt write-offs.
(b) Other adjustments and reclassifications.
(c) Net Amounts utilized for restructuring activities.
<PAGE>
EXHIBIT 12
GENERAL MILLS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended
-----------------------------------------------
May 30, May 31, May 25, May 26, May 28,
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
Ratio of Earnings to
Fixed Charges........... 6.67 5.63 6.54 6.94 4.10
For purposes of computing the ratio of earnings to fixed charges, earnings
represent pretax income from continuing operations, plus pretax earnings or
losses of joint ventures, 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
3.2 Registrant's By-Laws, as amended to date.
10.1 Stock Option and Long-Term Incentive Plan of 1988, as amended to
date.
10.6 Supplemental Retirement Plan, as amended to date.
10.7 Executive Survivor Income Plan, as amended to date.
10.9 Supplemental Savings Plan, as amended to date.
10.10 1996 Compensation Plan for Non-Employee Directors, as amended to
date.
10.13 Supplemental Benefits Trust Agreement dated February 9, 1987, as
amended and restated as of September 26, 1988.
10.14 Supplemental Benefits Trust Agreement dated September 26, 1988.
10.17 1990 Salary Replacement Stock Option Plan, as amended to date.
12 Statement of Ratio of Earnings to Fixed Charges.
13 1999 Annual Report to Stockholders (only portions).
21 List of Subsidiaries of General Mills, Inc.
23 Consent of KPMG LLP.
27 Financial Data Schedule.
EXHIBIT 3.2
BY-LAWS
of
GENERAL MILLS, INC.
as amended
through
June 28, 1999
<PAGE>
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.............................1
Section 5. Special Meetings: How Called.............................2
Section 6. Voting at Stockholders' Meetings.........................2
Section 7. Notice of Stockholders' Meetings.........................2
Section 8. Notice of Stockholder Business and Nominations...........3
ARTICLE II. DIRECTORS................................................5
Section 1. Organization.............................................5
Section 2. Election of Officers.....................................5
Section 3. Regular Meetings.........................................5
Section 4. Special Meetings: How Called: Notice....................5
Section 5. Number: Qualifications: Quorum: Term....................6
Section 6. Place of Meetings........................................6
Section 7. Powers of Directors......................................6
Section 8. Vacancies................................................6
Section 9. Resignation of Directors.................................6
Section 10. Compensation of Directors................................6
Section 11. Executive Committee......................................7
Section 12. Executive Committee: Powers..............................7
Section 13. Executive Committee: Organization: Meetings, Etc.........7
Section 14. Resignation and Removal of Member of Executive
Committee.............................................8
Section 15. Vacancies in the Executive Committee.....................8
Section 16. Other Committees.........................................8
ARTICLE III. OFFICERS.................................................9
Section 1. Titles...................................................9
Section 2. Chairman.................................................9
Section 3. Vice Chairman............................................9
Section 4. President................................................9
Section 5. Vice President(s)........................................9
Section 6. Secretary................................................9
Section 7. Assistant Secretary.....................................10
Section 8. Treasurer...............................................10
Section 9. Assistant Treasurer.....................................10
Section 10. Senior Vice President, Financial Operations.............11
Section 11. Resignation and Removal of Officers.....................11
Section 12. Salaries................................................11
<PAGE>
Page
ARTICLE IV. CAPITAL STOCK...........................................11
Section 1. Issue of Certificates of Stock..........................11
Section 2. Transfer of Shares......................................12
Section 3. Dividends...............................................12
Section 4. Lost Certificates.......................................12
Section 5. Rules as to Issue of Certificates.......................12
Section 6. Holder of Record Deemed Holder in Fact..................12
Section 7. Closing of Transfer Books or Fixing Record Date.........12
ARTICLE V. CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC...................................13
Section 1. Contracts, Etc.: How Executed...........................13
Section 2. Loans...................................................13
Section 3. Deposits................................................13
Section 4. Checks, Drafts, Etc.....................................14
Section 5. Transaction of Business.................................14
ARTICLE VI. MISCELLANEOUS PROVISIONS................................14
Section 1(a) Fiscal Year.............................................14
Section 1(b) Staff and Divisional Titles.............................14
Section 2. Notice and Waiver of Notice.............................14
Section 3. Inspection of Books.....................................15
Section 4. Construction............................................15
Section 5. Adjournment of Meetings.................................15
Section 6. Indemnification.........................................15
Section 7. Resolution of Board of Directors Providing for
Issuance of Cumulative Preference Stock...............17
ARTICLE VII. AMENDMENTS..............................................18
Section 1. Amendment of By-Laws....................................18
<PAGE>
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.
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 the chairman of the meeting or 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 the chairman of the
meeting or by a majority vote of the stockholders. 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 such date and at such time as may be fixed by resolution of the
board of directors.
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 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. 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. In determining the number of votes cast for or
against a proposal, shares abstaining from voting on a matter (including
elections) will not be treated as a vote for or against the proposal. A non-vote
by a broker will be treated as if the broker never voted.
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.
SECTION 8. Notice of Stockholder Business and Nominations:
(a) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the board of directors of the corporation and the
proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (A) pursuant to the corporation's
notice of meeting, (B) by or at the direction of the board of directors
or (C) by any stockholder of the corporation who was a stockholder of
record at the time of giving of notice provided for in this section 8,
who is entitled to vote at the meeting and who complies with the notice
procedures set forth in this section 8.
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (C)
of paragraph (a)(1) of this section 8, the stockholder must have given
timely notice thereof in writing to the secretary of the corporation and
such other business must otherwise be a proper matter for stockholder
action. To be timely, a stockholder's notice shall be delivered to the
secretary at the principal executive offices of the corporation not
later than the close of business on the 90th day nor earlier than the
close of business on the 120th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days before or more
than 60 days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the close of business on
the 120th day prior to such annual meeting and not later than the close
of business on the later of the 90th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date
of such meeting is first made by the corporation. In no event shall the
public announcement of an adjournment of an annual meeting commence a
new time period for the giving of a stockholder's notice as described
above. Such stockholder's notice shall set forth (A) as to each person
whom the stockholder proposes to nominate for election or reelection as
a director all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (B) as to any other
business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C)
as to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the corporation's books,
and of such beneficial owner and (ii) the class and number of shares of
the corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (a)(2) of this section 8 to the contrary, in the event that
the number of directors to be elected to the board of directors of the
corporation is increased and there is no public announcement by the
corporation naming all of the nominees for director or specifying the
size of the increased board of directors at least 100 days prior to the
first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this section 8 shall also be considered
timely, but only with respect to nominees for any new positions created
by such increase, if it shall be delivered to the secretary at the
principal executive offices of the corporation not later than the close
of business on the 10th day following the day on which such public
announcement is first made by the corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the corporation's notice of
meeting. Nominations of persons for election to the board of directors
may be made at a special meeting of stockholders at which directors are
to be elected pursuant to the corporation's notice of meeting (A) by or
at the direction of the board of directors or (B) provided that the
board of directors has determined that directors shall be elected at
such meeting, by any stockholder of the corporation who is a stockholder
of record at the time of giving of notice provided for in this section
8, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this section 8. In the event the
corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors, any such
stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (a)(2) of
this section 8 shall be delivered to the secretary at the principal
executive offices of the corporation not earlier than the close of
business on the 120th day prior to such special meeting and not later
than the close of business on the later of the 90th day prior to such
special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at such
meeting. In no event shall the public announcement of an adjournment of
a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(c) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this section 8 shall be
eligible to serve as directors and only such business shall be conducted
at a meeting of stockholders as shall have been brought before the
meeting in accordance with the procedures set forth in this section 8.
Except as otherwise provided by law, the chairman of the meeting shall
have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this
section 8 and, if any proposed nomination or business is not in
compliance with this section 8, to declare that such defective proposal
or nomination shall be disregarded.
(2) For purposes of this section 8, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(3) Notwithstanding the foregoing provisions of this
section 8, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this section 8.
Nothing in this section 8 shall be deemed to affect any rights (i) of
stockholders to request inclusion of proposals in the corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act or any
successor rule regarding shareholder proposals or (ii) of the holders of
any series of cumulative preference stock to elect directors under
specified circumstances pursuant to the terms of such preference stock.
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 senior vice president,
financial operations, one or more assistant secretaries, and one or more
assistant treasurers who need not be members of the Board of 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. Notwithstanding 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 determine the number of directors on
the board, which shall be at least twelve (12).
(b) No person shall be eligible to become or to remain a director of
the corporation unless the person is 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.
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 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.
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 expenses incurred in
attending meetings of the board of directors or of any committee of which he or
she 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 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 services as director, who shall serve for only a portion of a
year, shall be entitled to receive only that portion of the annual stated
compensation on which the period of 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 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 on such dates and at such times and places as the chairman or a
majority of the members of the executive committee shall determine, unless the
board of directors shall otherwise provide. 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.
SECTION 16. Other Committees: The board of directors may by resolution
designate one or more other committees, in addition to the executive committee,
each of which shall consist of two or more directors of the corporation. The
board of directors may designate one or more directors as alternate members of
any such other committee, who may replace any absent or disqualified member at
any meeting of such committee. Any such other committee may, to the extent
permitted by law, exercise such powers and shall have such responsibilities as
shall be specified in the designating resolution. In the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not constituting a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such absent or
disqualified member. Each such committee shall keep written minutes of its
proceedings and shall report such proceedings to the board of directors when
required. The chairman or a majority of the members of any such other committee
may fix the time and place of its meetings, unless the board of directors shall
otherwise provide. Notice of such meetings shall be given to each member of the
committee in the manner provided for in sections 3 and 4 of this article II with
respect to meetings of the board of directors. The board of directors shall have
power at any time to fill vacancies in, to change the membership of, or to
dissolve any such committee. Nothing herein shall be deemed to prevent the board
of directors from appointing one or more committees consisting in whole or in
part of persons who are not directors of the corporation; provided, however,
that no such committee shall have or may exercise any authority limited by law
to the board of directors or a committee thereof.
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 treasurer,
a senior vice president, financial operations, one or more assistant
secretaries, and one or more assistant treasurers 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 or she 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 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 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 or her absence or disability, an assistant secretary may
perform all the duties of the secretary, and, when so acting, 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 by the board of directors.
SECTION 8. Treasurer: The treasurer, if required so to do by the board of
directors, shall give a bond for the faithful discharge of his or her duties in
such sum, and with such sureties, as the board of directors shall require. The
treasurer shall:
(a) have charge and custody of, and be responsible for, all funds and
securities of the corporation (until deposited 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 the 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
treasurer and such other duties as from time to time may be assigned by the
board of directors.
The Chief Executive Officer may designate another title for a corporate
officer fulfilling the duties described herein.
SECTION 9. Assistant Treasurer: The board of directors may elect an
assistant treasurer or more than one assistant treasurer. At the request of the
treasurer, or in his or her absence or disability, an assistant treasurer may
perform all the duties of the treasurer and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the treasurer. Each
assistant treasurer shall have such other powers and shall perform such other
duties as may be assigned 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 or she shall be
responsible directly to the board of directors through its chairman.
The Chief Executive Officer may designate another title for a corporate
officer fulfilling the duties described herein.
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, the president, 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 or she 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 shares of stock under the seal of the corporation, signed by the chairman,
the president, a vice chairman or a vice president and also by the secretary or
an assistant secretary or by the treasurer or an assistant treasurer; 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, the president, a vice chairman or a vice president and
the treasurer or an assistant treasurer 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, the president, a vice chairman,
or any vice president, or the treasurer or any assistant treasurer, 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 or her 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 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 the post office
address as shown on the stock books of the corporation, in case of a
stockholder, and at the 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 or she 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 the person in connection
with such action, suit or proceeding if the person acted in good faith and
in a manner the person 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 such 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 the person 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 such 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 the person 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 the person in connection with the defense or settlement of such
action or suit if the person acted in good faith and in a manner the person
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, the person shall be
indemnified or reimbursed against expenses (including attorneys' fees)
actually and reasonably incurred by such person 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
the person 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 a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) by a committee
of such directors designated by a majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or, if
such directors so direct, by independent legal counsel in a written
opinion, or (4) by the stockholders, or (5) in the case of a determination
with respect to employees or agents (who are not then directors or officers
of the corporation), by the Chief Executive Officer, the President, a Vice
Chairman or the General Counsel.
(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 corporation 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 any such person and incurred by any such
person in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify such
person 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 the
person 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 an 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 or she 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; 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 10.1
GENERAL MILLS, INC.
STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1988
As Amended Through June 27, 1994
<PAGE>
GENERAL MILLS, INC.
STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1988
1. PURPOSE OF THE PLAN
The purpose of the General Mills, Inc. Stock Option and Long-Term
Incentive Plan of 1988 (the "Plan") is to attract and retain strong
management employees by rewarding certain officers and key employees
of General Mills, Inc. (the "Corporation") and its subsidiaries who
are primarily responsible for the management, growth and sound
development of the business of the Corporation.
2. EFFECTIVE DATE OF PLAN
This Plan shall become effective as of September 26, 1988, subject to
the approval of the stockholders of the Corporation at the Annual
Meeting on September 26, 1988.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee (the
"Committee"). The Committee shall be made up of non-management
members of the Board of Directors (the "Board") appointed in
accordance with the Corporation's Certificate of Incorporation. The
Committee shall have authority to adopt rules and regulations for
carrying out the purpose of the Plan, select the employees to whom
grants will be made, the number of shares to be optioned or awarded
and interpret, construe and implement the provisions of the Plan;
provided that if at any time Rule 16b-3 or any successor rule ("Rule
16b-3") under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), so permits without adversely affecting the ability of
the Plan to comply with the conditions for exemption from Section 16
of the 1934 Act (or any successor provisions) provided by Rule 16b-3,
the Committee may delegate the administration of the Plan in whole or
in part, on such terms and conditions, and to such person or persons
as it may determine in its discretion, as it relates to persons not
subject to Section 16 of the 1934 Act, or any successor provision.
Decisions of the Committee (or its delegate as permitted herein)
shall be final, conclusive and binding upon all parties, including
the Corporation, stockholders and optionees.
4. COMMON STOCK SUBJECT TO THE PLAN
The shares of Common Stock of the Corporation ($.10 par value) to be
issued upon exercise of a Stock Option, as Restricted Stock, or upon
expiration of the restricted period for Restricted Stock Units, may
be made available from the authorized but unissued Common Stock,
shares of Common Stock held in the treasury, or Common Stock
purchased on the open market or otherwise.
Approval of the Plan by the stockholders of the Corporation shall
constitute authorization to use such shares for the Plan, subject to
the discretion of the Board or as such discretion may be delegated to
the Committee.
The Committee, in its discretion, may require as a condition to the
grant of Stock Options, Restricted Stock or Restricted Stock Units,
the deposit of Common Stock ("Deposit Shares") by the person
receiving such grant, and the forfeiture of such Stock Options,
Restricted Stock or Restricted Stock Units, if such deposit is not
made or maintained during the option period or the applicable
restricted period. Such shares of deposited Common Stock may not be
otherwise sold, exchanged, transferred, pledged or disposed of during
the applicable option period or restricted period. The Committee may
also determine whether any shares issued in respect of a Stock Option
shall be restricted in any manner.
Subject to the provisions of the next succeeding paragraph, the
maximum aggregate number of shares originally authorized under the
Plan for which Stock Options, Restricted Stock and Restricted Stock
Units could be granted under the Plan was 6,000,000 shares. As of
September 20, 1993, and subject to the provisions of the next
succeeding paragraph, there remain 798,050 shares authorized to be
issued under the Plan (as adjusted for stock splits). If a Stock
Option granted under the Plan is terminated without having been
exercised in full, the unpurchased shares shall become available for
grant to other employees, except when a Non-Qualified Stock Option is
terminated as a result of a withdrawal from an optionee's Performance
Unit Account.
The number of shares subject to the Plan, the outstanding options,
the outstanding Restricted Stock, the outstanding Restricted Stock
Units and the exercise price per share of outstanding options may be
appropriately adjusted by the Committee in the event that:
(i) the number of outstanding shares of Common Stock of the
Corporation 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 Corporation; or
(iii) the Common Stock of the Corporation 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. ELIGIBLE PERSONS
Only persons who are officers or key employees of the Corporation or
a subsidiary shall be eligible to receive grants under the Plan. No
grant shall be made to any member of the Committee or any other
non-employee Director.
6. PURCHASE PRICE OF STOCK OPTIONS
The purchase price for each share of Common Stock issuable under a
Stock Option shall not be less than 100% of the Fair Market Value of
the shares of Common Stock of the Corporation subject to such option
on the date of grant. "Fair Market Value" as used in the Plan shall
equal the mean of the high and low price of shares of the Common
Stock on the New York Stock Exchange on the applicable date.
7. STOCK OPTION TERM
The term of any Stock Option grant as determined by the Committee
shall not exceed 10 years and 1 month from the date of that grant and
shall expire as of the last day of the designated term, unless
terminated earlier under the provisions of the Plan.
8. STOCK OPTION TYPE
The Committee shall determine whether stock option grants will be
Non-Qualified Stock Options governed by section 83 of the Internal
Revenue Code of 1986, as amended (the "Code") or Incentive Stock
Options governed by section 422A of the Code or stock options
governed by any other newly enacted provision of the Code.
9. INCENTIVE STOCK OPTIONS
No optionee may be granted an Incentive Stock Option, under this or
any other stock option plan of the Corporation, with respect to which
the Fair Market Value of shares subject to such Incentive Stock
Option and which first become exercisable in a specified calendar
year exceed $100,000. For purposes of this Section, the Fair Market
Value of such shares shall be determined on the date of the grant.
10. PERFORMANCE UNITS
At the time of the granting of Non-Qualified Stock Options, the
Corporation may grant corresponding Performance Units to the
optionee, less than or equal in number to the shares covered by the
option grant.
In each fiscal year of the Corporation in which Performance Units may
be granted, the Committee shall establish goals for
(i) the compound growth in earnings per share ("EPS") for
the Corporation over 3 fiscal years (the "Performance
Period"); and
(ii) the after-tax return on average stockholder equity
("ROE") for the Corporation for the final fiscal year of
the Performance Period.
The Committee shall specify the Performance Unit values to be earned
at various actual rates of EPS growth and ROE. "EPS" means the
Corporation's earnings from continuing operations per common share
and common share equivalent (before extraordinary items) as reported
in the Corporation's financial statements included in the
Corporation's annual report for the final fiscal year of the
Performance Period. The compound growth rate in EPS shall be
calculated by comparing the EPS for the final fiscal year of the
Performance Period and the EPS for the fiscal year immediately
preceding the Performance Period. "ROE" means the Corporation's
after-tax earnings, divided by its average equity, which is the sum
of beginning and ending total stockholders' equity for such fiscal
year divided by 2. EPS and ROE shall be subject to such adjustments
as may be determined by the Committee. An optionee shall have no
vested right to the value of a Performance Unit until the end of the
Performance Period, except as set forth below.
A Performance Unit Account shall be established for each optionee for
each fiscal year in which Performance Unit grants are made under the
Plan. The value of the Performance Units when determined shall be
credited to the optionee's Performance Unit Account, and such amount
shall thereafter earn interest at an annual rate determined by the
Committee; provided, that no such interest rate shall exceed
two-thirds of the Corporation's "return on average capital
structure," defined as earnings after-tax plus after-tax interest
expense, divided by average capital structure. "Average capital
structure" is the sum of beginning and ending stockholders' equity
and interest bearing obligations, both current and long-term, divided
by 2. The optionee's Performance Unit Account shall be credited with
such interest on such Performance Units at the end of each fiscal
quarter of the Corporation until:
(i) such Performance Units are withdrawn from the Account by
the optionee; or
(ii) the corresponding Non-Qualified Stock Options have been
exercised, provided that no interest shall be paid
beyond the term of the corresponding Non-Qualified Stock
Option.
In the event of a Change of Control as described in Section 15,
Performance Units which have not been valued shall be immediately
valued at the maximum amount specified by the Committee for the
pro-rata portion of the Performance Period completed to the date of
the Change of Control, and credited to each optionee's Performance
Unit Account.
Performance Units may be granted commencing in fiscal year 1989, and
each fiscal year thereafter until the termination of the Plan.
Accruals of the Performance Units (but not the accumulating interest)
shall be charged annually against the Corporation's profit sharing
fund established in accordance with the resolution approved by the
stockholders in 1933, as amended in 1953 and 1968.
11. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
A. Grant of Awards
With respect to awards of Restricted Stock and Restricted Stock
Units, the Committee shall:
(i) select those employees to whom awards will be made ("the
Participants"), provided that Restricted Stock Units may
only be awarded to those officers or key employees of
the Corporation or a subsidiary who are employed in a
country other than the United States;
(ii) determine the number of shares of Restricted Stock or
the number of Restricted Stock Units to be awarded;
(iii) determine the length of the restricted period;
(iv) determine the purchase price, if any, to be paid by the
Participant for (a) shares of Restricted Stock at the
time of the award, or (b) Restricted Stock Units at the
expiration of the applicable restricted period; and
(v) determine any restrictions other than those set forth in
this Section 11.
Each Participant who receives shares of Restricted Stock shall
deliver to the Corporation a stock power endorsed in blank
relating to the Restricted Stock prior to issuance of Restricted
Stock. A certificate for the shares of Restricted Stock shall be
issued and registered in the name of the Participant and shall
bear an appropriate restrictive legend. Such certificates shall
be held in the custody of the Corporation until the restricted
period expires or until all restrictions thereon otherwise
lapse.
Subject to the restrictions set forth in this Section 11, each
Participant who receives Restricted Stock shall have all rights
as a shareholder with respect to such shares, including the
right to vote the shares and receive dividends and other
distributions.
Each Participant who receives Restricted Stock Units shall be
eligible to receive, at the expiration of the applicable
restricted period, one share of Common Stock for each Restricted
Stock Unit awarded pursuant thereto, and the Corporation shall
issue to and register in the name of each such Participant a
certificate for that number of shares of Common Stock.
Participants who receive Restricted Stock Units shall have no
rights as shareholders with respect to such Restricted Stock
Units until such time as share certificates for Common Stock are
issued to the Participants; provided, however, that quarterly
during the applicable restricted period for all Restricted Stock
Units awarded hereunder, the Corporation shall pay to each such
Participant an amount equal to the sum of all dividends and
other distributions paid by the Corporation on that number of
shares of Common Stock during the prior quarter.
B. Termination of Employment
Except when specified otherwise in this Section 11, if a
Participant's employment by the Corporation or a subsidiary
terminates before the expiration of the applicable restricted
period for Restricted Stock or Restricted Stock Units for any
reason other than disability, retirement, death, "Change of
Control" (as defined in Section 15), or termination for the
convenience of the Corporation, all shares of Restricted Stock
and all Restricted Stock Units which are subject to restriction
as of said termination date shall be forfeited by the
Participant to the Corporation.
For those shares of Restricted Stock or Restricted Stock Units
which have a deposit requirement, subject to the provisions of
this Section 11, a Participant will be eligible to vest only in
those shares of Restricted Stock or Restricted Stock Units for
which Deposit Shares are on deposit with the Corporation as of
the date the Participant's employment with the Corporation
terminates.
(i) Early Retirement
A Participant who takes early retirement (after age 55,
but prior to age 65) during any applicable restricted
period may elect either of the following alternatives
with respect to Restricted Stock or Restricted Stock
Units (unless any award provides otherwise):
(a) Leave Deposit Shares on deposit with the
Corporation and vest in all shares of Restricted
Stock or Restricted Stock Units, effective as of
the earlier of the date the participant attains
age 65 or the termination date of the applicable
restricted period;
(b) Withdraw Deposit Shares and vest in a
proportionate number of shares of Restricted Stock
or Restricted Stock Units, effective as of the
date the Deposit Shares are withdrawn. Such
proportionate vesting shall be pro-rata, based on
the number of full months of employment completed
during the restricted period prior to the date of
early retirement, as a percentage of the
applicable restricted period.
(ii) Retirement
A Participant who retires on or after the date he or she
attains age 65 shall fully vest in all shares of
Restricted Stock or Restricted Stock Units, effective as
of the date of retirement (unless any such award
specifically provides otherwise).
(iii) Disability
A Participant who becomes permanently disabled and
unable to work (as determined by the Corporation's
Director of Health and Human Services) during any
applicable restricted period shall vest in a
proportionate number of shares of Restricted Stock or
Restricted Stock Units, effective as of the date of
disability. Such proportionate vesting shall be
pro-rata, based on the number of full months of
employment completed during the restricted period prior
to the date of disability, as a percentage of the
applicable restricted period.
(iv) Death
A Participant who dies during any applicable restricted
period shall vest in a proportionate number of shares of
Restricted Stock or Restricted Stock Units, effective as
of the date of death. Such proportionate vesting shall
be pro-rata, based on the number of full months of
employment completed during the restricted period prior
to the date of death, as a percentage of the applicable
restricted period.
(v) Change of Control
In the event of a Change of Control, a Participant shall
vest in all shares of Restricted Stock and Restricted
Stock Units, effective as of the date of such Change of
Control.
(vi) Termination for Convenience of the Corporation In the
event a Participant's employment with the Corporation is
terminated for the convenience of the Corporation during
any applicable restricted period, the Committee, in its
sole discretion, may vest such Participant in all or any
portion of shares of Restricted Stock or Restricted
Stock Units, effective as of the date of such
termination.
C. Non-Transferability
Except as otherwise provided in Section 11, no shares of
Restricted Stock and no Restricted Stock Units shall be sold,
exchanged, transferred, pledged, or otherwise disposed of during
the restricted period.
D. Withholding Taxes
Upon the vesting of Restricted Stock or Restricted Stock Units,
the Participant shall deliver to the Corporation (or foreign
subsidiary) cash in an amount equal to all federal, state, and
local or foreign withholding taxes required to be collected by
the Corporation (or foreign subsidiary), and the Corporation (or
foreign subsidiary) may, in its discretion, retain all or a
portion of the shares to be delivered until such payment is
made.
Notwithstanding the foregoing, in the event the number of shares
to be issued equals or exceeds 500 and to the extent permitted
by law and pursuant to such rules as the Committee may adopt, a
Participant may authorize the Corporation to satisfy any such
withholding requirement by directing the Corporation to withhold
from any shares to be issued, such number of shares as shall be
sufficient to satisfy the withholding obligation.
12. NON-TRANSFERABILITY OF STOCK OPTIONS AND PERFORMANCE UNITS
No Stock Option or Performance Unit granted under this Plan shall be
transferable by the optionee otherwise than by the optionee's Last
Will and Testament or by the laws of descent and distribution, and
such Stock Option shall be exercised and Performance Units withdrawn
during the optionee's lifetime only by the optionee or his or her
guardian or legal representative.
13. EXERCISE OF STOCK OPTIONS
Except as provided in Sections 15, 18 and 19 (Change of Control,
termination or death), each Stock Option may be exercised only:
(i) after 1 year of continued employment with the
Corporation or a subsidiary (as defined in section
425(f) of the Code) immediately following the date the
Stock Option is granted;
(ii) during the optionee's employment with the Corporation or
such subsidiary; and
(iii) in such cumulative annual installments as determined by
the Committee at the time of grant.
Subject to the provisions of this Section 13, each Non-Qualified
Stock Option may be exercised in whole or, from time to time, in part
with respect to the number of then exercisable shares in any sequence
desired by the optionee without regard to the date of grant of other
Stock Options.
An optionee exercising a Stock Option shall give notice to the
Corporation of such exercise and of the number of shares elected to
be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which
must be a business day at the executive offices of the Corporation.
At the time of purchase, the optionee shall tender the full purchase
price of the shares purchased. Until such payment has been made and a
certificate or certificates for the shares purchased has been issued
in the optionee's name, the optionee shall possess no stockholder
rights with respect to such shares. Payment of such purchase price
shall be made to the Corporation, subject to any applicable rule or
regulation adopted by the Committee:
(i) in cash (including check, draft, money order or wire
transfer made payable to the order of the Corporation);
(ii) through the delivery of shares of Common Stock owned by
the optionee; or
(iii) by a combination of (i) and (ii) above.
For determining the payment, Common Stock delivered pursuant to (ii)
or (iii) shall have a value equal to the Fair Market Value of the
Common Stock on the date of exercise.
14. WITHHOLDING TAXES ON STOCK OPTION EXERCISE
Each optionee shall deliver to the Corporation cash in an amount
equal to all federal, state and local withholding taxes required to
be collected by the Corporation in respect of the exercise of a Stock
Option, and until such payment is made, the Corporation may, in its
discretion, retain all or a portion of the shares to be issued.
Notwithstanding the foregoing, to the extent permitted by law and
pursuant to such rules as the Committee may adopt, an optionee may
authorize the Corporation to satisfy any such withholding requirement
by directing the Corporation to withhold from any shares to be
issued, such number of shares as shall be sufficient to satisfy the
withholding obligation.
15. EXERCISE OF STOCK OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL
Each outstanding Stock Option shall become immediately and fully
exercisable for a period of 6 months following the date of the
following occurrences, each constituting a "Change of Control":
(i) if any person (including a group as defined in Section
13(d)(3) of the Securities Exchange Act of 1934)
becomes, directly or indirectly, the beneficial owner of
20% or more of the shares of the Corporation entitled to
vote for the election of directors;
(ii) 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 Corporation just prior to such event
cease to constitute a majority of the Corporation's
Board of Directors; or
(iii) the stockholders of the Corporation approve an agreement
providing for a transaction in which the Corporation
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 Corporation
occurs.
After such 6 month period the normal option exercise provisions of
the Plan shall govern. In the event an optionee is terminated as an
employee of the Corporation or a subsidiary within 2 years of any of
the events specified in (i), (ii) or (iii), all outstanding Stock
Options at that date of termination shall become immediately
exercisable for a period of 3 months.
With respect to Stock Option grants outstanding as of the date of any
such Change of Control which require the deposit of optionee-owned
Common Stock as a condition to obtaining rights: (a) said deposit
requirement shall be terminated as of the date of the Change of
Control and any such deposited stock shall be promptly returned to
the optionee; and (b) any restrictions on the sale of shares issued
in respect of any such Stock Option shall lapse.
16. WITHDRAWAL OF PERFORMANCE UNITS
Performance Units (plus accrued interest) may be withdrawn only after
the completion of the Performance Period, except as described in
Section 10, and provided the optionee has remained in the employment
of the Corporation during said Performance Period, except as provided
in Sections 18 and 19 (termination or death). An optionee may
subsequently withdraw Performance Units, without regard to the date
of the grant of the Performance Units. Withdrawals must be made in
whole units, including accrued interest.
To withdraw Performance Units, the optionee shall give notice to the
Corporation. Upon receipt of such notice, the Committee shall
determine whether the withdrawal is to be paid in cash or by the
delivery of Common Stock with a Fair Market Value on the date of
withdrawal equal to the amount being withdrawn.
17. RELATIONSHIP OF PERFORMANCE UNITS AND NON-QUALIFIED STOCK OPTIONS
Upon a withdrawal of Performance Units (including accrued interest),
the corresponding Non-Qualified Stock Options shall terminate on a
"one-for-one" basis. Upon the exercise of Non-Qualified Stock
Options, the optionee's corresponding Performance Unit Account shall
be decreased on a "one-for-one" basis by the value of the Performance
Units, including accrued interest, on the date of such exercise. In
the event Non-Qualified Stock Options are exercised prior to the
completion of the Performance Period, the corresponding Performance
Units shall not be valued and shall lapse on a "one-for-one" basis as
of the date of such exercise.
18. TERMINATION OF EMPLOYMENT OR LEAVE OF ABSENCE OF AN OPTIONEE
A. Normal Termination
If the optionee's employment by the Corporation or a
subsidiary terminates for any reason other than as specified
in subsections B, C, D or E, the optionee's Stock Options
and right to withdraw Performance Units shall terminate 3
months after such termination, and all Performance Units
granted but not valued at the termination of employment
shall expire on that date. If the employment by the
Corporation or a subsidiary of an optionee, other than an
optionee subject to Section 16 of the 1934 Act, is
terminated for the convenience of the Corporation, as
determined by the Committee, and, at the time of termination
the sum of the optionee's age and service with the
Corporation equals or exceeds 70, the Committee, in its sole
discretion, may permit any stock option previously granted
to the optionee under the Plan to be exercised to the full
extent that such stock option could have been exercised by
such optionee immediately prior to the optionee's
termination and may permit such Stock Option to remain
exercisable until the earlier of (i) 5 years after the date
of termination, or (ii) the expiration of the Stock Option
in accordance with its original term.
B. Death
If the termination of employment is due to the optionee's
death, the Stock Options may be exercised or Performance
Units withdrawn as provided in Section 19.
C. Retirement
If the termination of employment is due to the optionee's
retirement, the optionee may exercise a Stock Option,
subject to the original term of the Stock Option, within 5
years after the date of retirement, including any Stock
Option granted under the Plan within the 12 months preceding
such retirement and, provided further, with respect to Stock
Option grants which require the deposit by the optionee of
optionee-owned Common Stock as a condition to obtaining
rights, any restrictions on the sale of shares issued in
respect of any such Stock Option shall lapse. Performance
Units granted but not valued at the date of retirement shall
be valued at the end of the Performance Period as provided
in Section 10 with such value being reduced by the
percentage of the Performance Period not completed at the
date of such retirement. In the event of such retirement,
the optionee may withdraw Performance Units within such time
period as the corresponding Non-Qualified Stock Option could
have been exercised after the optionee's retirement.
D. Spin-offs
If the termination of employment is due to the cessation,
transfer, or spin-off of a complete line of business of the
Corporation, the Committee, in its sole discretion, may
determine that all outstanding Stock Options granted more
than 1 year prior to the date of such termination shall
immediately become exercisable for a period of 2 years after
the date of such termination, subject to the provisions of
Section 7.
E. Leave of Absence
Unless the Committee shall otherwise determine, if an
optionee is placed on an unpaid leave of absence, such
optionee's Stock Options and right to withdraw Performance
Units shall terminate at the expiration of 3 months from the
inception of said leave of absence and all Performance Units
granted, but not valued, at the inception of said leave of
absence shall expire on such date.
If an optionee is placed on an unpaid leave of absence,
retires during such leave, and the Committee had decided not
to terminate the optionee's right to exercise a Stock
Option, right to withdraw Performance Units or the right to
Performance Units granted, but not valued, at the date of
the inception of said leave of absence, then such optionee
may exercise a Stock Option or withdraw Performance Units in
accordance with subsection C. Performance Units granted but
not valued at the date of such retirement shall be valued at
the end of the Performance Period as provided in Section 10
with such value being reduced by the percentage of the
Performance Period not completed at the date the optionee
was placed on the unpaid leave of absence.
19. DEATH OF OPTIONEE
If an optionee should die while employed by the Corporation or a
subsidiary, any Stock Option previously granted to the optionee under
this Plan may be exercised or Performance Units withdrawn by the
person designated in such optionee's Last Will and Testament or, in
the absence of such designation, by the optionee's estate, to the
full extent that such Stock Option could have been exercised or
Performance Units withdrawn by such optionee immediately prior to the
optionee's death, provided that the Stock Option is exercised or
corresponding Performance Units which have been valued are withdrawn
within 2 years of the optionee's death.
Performance Units granted but not valued at the date of the
optionee's death shall be valued at the end of the applicable
Performance Period with such value being reduced by the percentage of
the Performance Period not completed at the date of death. Such
amounts must be withdrawn within the later of (i) 2 years of the
optionee's death or (ii) 3 months of such valuation.
With respect to Stock Option grants which require the deposit by the
optionee of optionee-owned Common Stock as a condition to obtaining
rights, in the event an optionee should die while in the employment
of the Corporation or a subsidiary, said Stock Options may be
exercised as provided in the first paragraph of this Section, subject
to the following special conditions:
(i) any restrictions on the sale of shares issued in respect
of any such Stock Option shall cease;
(ii) any optionee-owned Common Stock deposited by the
optionee pursuant to said grant shall be promptly
returned to the person designated in such optionee's
Last Will and Testament or, in the absence of such
designation, to the optionee's estate, and all
requirements regarding deposit by the optionee shall be
terminated; and
(iii) the amount of the Stock Options deemed to be exercisable
immediately prior to the optionee's death shall be as
follows: (a) None, if the date of death is less than 1
year after the date of the grant; (b) 1/3, if the date
of death is 1 year after the date of the grant; (c) 2/3,
if the date of death is 2 years after the date of the
grant; and (d) total amount, if the date of death is 3
years after the date of the grant.
20. AMENDMENTS OF THE PLAN
The Plan may be terminated, modified, or amended by the Board of
Directors of the Corporation.
The Committee may from time to time prescribe, amend and rescind
rules and regulations relating to the Plan. Subject to the approval
of the Board of Directors, the Committee may at any time terminate,
modify, or suspend the operation of the Plan, provided that no action
shall be taken by the Board of Directors or Committee without the
approval of the stockholders of the Corporation which would:
(i) materially increase the number of shares which may be
issued under the Plan;
(ii) materially increase the benefits accruing to optionees
and Participants under the Plan; or
(iii) materially modify the requirements as to eligibility for
participating in the Plan.
The Board of Directors shall have authority to cause the Corporation
to take any action related to the Plan which may be required to
comply with the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the rules and
regulations prescribed by the Securities and Exchange Commission. Any
such action shall be at the expense of the Corporation.
No termination, modification, suspension, or amendment of the Plan
shall alter or impair the rights of any optionee or Participant
pursuant to a prior grant, without the consent of the optionee or
Participant.
21. FOREIGN JURISDICTIONS
The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or
desirable to make available tax or other benefits of laws of any
foreign jurisdiction, to key employees of the Corporation who are
subject to such laws and who receive grants under the Plan.
22. DURATION OF THE PLAN
Grants may be made under the Plan until July 1, 1994.
23. NOTICE
All notices to the Corporation shall be in writing, effective as of
actual receipt by the Corporation, and shall be sent to:
General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, Minnesota 55426
Attention: Corporate Compensation
If by Telex: 170360 Gen Mills
If by Facsimile: (612) 540-4925
24. SECTION 16 OFFICERS
With respect to persons subject to Section 16 of the 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.
Adopted by the Board of Directors on July 25, 1988 Adopted by the Shareholders
on September 26, 1988 Effective as of September 26, 1988 As amended effective
March 1, 1989 As amended effective April 23, 1990 As amended effective April 22,
1991 As amended effective June 1, 1992 As amended effective September 20, 1993
As amended effective June 27, 1994
PLANS.STKOP'88
6-'94
EXHIBIT 10.6
SUPPLEMENTAL RETIREMENT PLAN
OF GENERAL MILLS, INC.
As Amended Effective January, 1991,
November, 1991, December, 1992
and May, 1994
<PAGE>
SUPPLEMENTAL RETIREMENT PLAN
OF GENERAL MILLS, INC.
Effective as of January 1, 1991, General Mills, Inc. hereby amends and restates
the Supplemental Retirement Plan of General Mills, Inc. for the exclusive
benefit of its employees, pursuant to authorization of the Board of Directors of
General Mills, Inc. Additional amendments have been made since the date of the
last restatement.
ARTICLE I
INTRODUCTION
Section 1.1 NAME OF PLAN. The name of the Plan is the "Supplemental
Retirement Plan of General Mills, Inc." It is also referred to as the
"Supplemental Plan" or the "Plan."
Section 1.2 EFFECTIVE DATE. The effective date of the Plan is January 1,
1976. This Plan, except as may otherwise be specifically provided herein, shall
not apply to Participants who separated from active service prior to January 1,
1991.
<PAGE>
ARTICLE II
DEFINITIONS
Section 2.1 BASE PLAN shall mean a defined benefit pension plan sponsored
by the Company, which is qualified under the provisions of Code Section 401.
With respect to any Participant in this Plan where, as of June 1, 1991, the sum
of such individual's age and length of Company service equals or exceeds 65,
Base Plan shall mean the provisions of such plan as were in effect on December
31, 1988, and benefits under this Plan shall be determined as if such provisions
had continued in effect until the date of the Participant's termination or
retirement from the Company. With respect to any Participant in this Plan where,
as of June 1, 1991, the sum of such individual's age and Company service is less
than 65, Base Plan shall mean the provisions of such Plan as are in effect on
the date of such Participant's termination or retirement from the Company.
Section 2.2 BOARD shall mean the Board of Directors of General Mills, Inc.
Section 2.3 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) 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.
Section 2.4 CODE shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
Section 2.5 COMPANY shall mean General Mills, Inc. and any of its
subsidiaries or affiliated business entities as shall be authorized to
participate in the Plan by the Board, or its delegate.
Section 2.6 COMPENSATION COMMITTEE shall mean the Compensation Committee of
the Board.
Section 2.7 DEFERRED CASH AWARD shall mean the cash amount deferred by an
individual under any formal plan of deferred compensation sponsored by the
Company. A Deferred Cash Award shall not include:
(a) any base salary which was deferred during calendar year 1986;
(b) any interest or investment increment applied to the amount of the cash
award which is deferred; or
(c) any cash amount deferred by any person under any individual contract
or arrangement with the Company or any of its subsidiaries or
affiliated business entities.
Section 2.8 ERISA shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
Section 2.9 MINOR AMENDMENT COMMITTEE shall mean the Minor Amendment
Committee appointed by the Compensation Committee.
Section 2.10 "MAXIMUM BENEFIT" shall mean the maximum annual benefit
payable in dollars permitted to be either accrued or paid to a participant of
any Base Plan, as determined under all applicable provisions of the Code and
ERISA, specifically taking into account the limitations of Code Sections
401(a)17 and 415, and any applicable regulations thereunder. It is specifically
intended that the Maximum Benefit, as defined herein, shall take into account
changes in the dollar limits under Code Sections 401(a)17 and 415, and benefits
payable from this Plan and the Base Plan shall be adjusted accordingly. In
addition, if a Base Plan limits the accrued benefits of any Participant by
restricting the application of future changes in such dollar limits with respect
to such Participant, benefits payable under this Plan shall nevertheless be
determined on the full amount that would have been permissible absent such
restrictions under the Base Plan.
Section 2.11 PARTICIPANT shall mean an individual who is a participant in
the Company's Executive Incentive Plan or who is eligible to defer compensation
under a formal deferred compensation program maintained by the Company, and who
is:
(a) an active participant in one or more Base Plans on and after January
1, 1976 and whose accrued benefits, determined on the basis of the
provisions of such Base Plans without regard to the Maximum Benefit,
would exceed the Maximum Benefit;
(b) An individual with a Deferred Cash Award, which, if included as
compensation under any Base Plans in which such individual is a
participant, would result in a greater accrued benefit under the
provisions of such Base Plans;
(c) An active participant of the General Mills, Inc. Executive Incentive
Plan who is entitled to a vested Pension under a Base Plan and who is
involuntarily terminated prior to attainment of age 55, if the sum of
such individual's age and length of company service at the date of
termination equals or exceeds 75; or
(d) An individual who participates in the Retirement Income Plan of
General Mills, Inc., where the sum of such individual's age and length
of Company service as of June 1, 1991 equals or exceeds 65, and who
would have been entitled to a greater benefit under the provisions of
the RIP at the time of his or her retirement from the Company had he
or she not been considered a "highly compensated employee" for any
period on or after January 1, 1989.
An eligible individual shall remain a Participant under this Supplemental
Plan until all amounts payable on his or her behalf from this Plan have been
paid.
Section 2.12 DEFINED TERMS. Capitalized terms which are not defined herein
shall have the meaning ascribed to them in the relevant Base Plan.
<PAGE>
ARTICLE III
BENEFITS
Section 3.1 EFFECT OF RETIREMENT. Upon the Normal, Early, Late or
Disability Retirement of a Participant, as provided under a Base Plan, such
Participant shall be entitled to a benefit equal to the amount determined in
accordance with the provisions of the Base Plan without regard to the
limitations of the Maximum Benefit, including as compensation for purposes of
such calculation any Deferred Cash Award (as if actually paid at the time of the
award), reduced by the lesser of the Participant's actual accrued benefit under
such Base Plan or the Maximum Benefit.
In the event a Participant has accrued benefits under more than one Base
Plan, the provisions of the Base Plan from which the Participant retires as an
Active Participant shall be used to determine the total benefits payable without
regard to the Maximum Benefit.
If the Participant received a partial prepayment as described in Section
3.10, benefits payable under this Section shall be adjusted as provided in
Section 3.11.
Section 3.2 SPOUSE'S PENSION. Upon the death of a Participant whose
surviving spouse is eligible for a Spouse's Pension under a Base Plan, such
surviving spouse shall be entitled to a benefit under this Supplemental Plan,
determined in accordance with the provisions of the Base Plan without regard to
the limitations of the Maximum Benefit, and including as compensation for
purposes of such calculation any Deferred Cash Award (as if actually paid at the
time of the award), reduced by the lesser of the actual Spouse's Pension payable
under such Base Plan or the Maximum Benefit.
In the event a Participant had accrued benefits under more than one Base
Plan, the provisions of the Base Plan under which the Participant was accruing
benefits as an Active Participant shall be used to determine the total benefits
payable without regard to the Maximum Benefit.
If the Participant received a partial prepayment as described in Section
3.10, benefits payable under this Section shall be adjusted as provided in
Section 3.11.
Section 3.3 EFFECT OF TERMINATION PRIOR TO RETIREMENT ELIGIBILITY. If a
Participant terminates employment with the Company and is entitled to a Vested
Deferred Pension under a Base Plan, such Participant shall be entitled to a
benefit equal to the amount determined in accordance with the provisions of the
Base Plan without regard to the limitations of the Maximum Benefit, including as
compensation for purposes of such calculation any Deferred Cash Award (as if
actually paid at the time of the award), reduced by the lesser of the
Participant's actual accrued benefit under such Base Plan or the Maximum
Benefit.
In the event a Participant has participated in more than one Base Plan, the
provisions of the Base Plan under which the Participant was accruing benefits as
an Active Participant at the time of such separation from service shall be used
to determined the total amount of benefit payable without regard to the Maximum
Benefit.
If the Participant received a partial prepayment as described in Section
3.10, benefits payable under this Section shall be adjusted as provided in
Section 3.11.
Section 3.4 BENEFITS PRIOR TO SEPARATION FROM SERVICE. Prior to a
Participant's separation from service due to Retirement, termination or death,
benefits shall accrue under this Supplemental Plan, based on the Participant's
actual accrued benefit under a Base Plan or Plans, the Maximum Benefit and
Deferred Cash Awards, if any. A Participant's benefit under this Supplemental
Plan may increase or decrease, before or after Retirement or termination, as a
result of changes in the formula under any Base Plan, the Maximum Benefit, or
changes in the earnings used to calculate benefits under a Base Plan formula.
Any benefit accrued under this Supplemental Plan as a result of a
Participant's Deferred Cash Award shall be payable only if, and to the extent
that on the date of his or her termination of employment, both of the following
conditions are satisfied:
(a) The Participant has a vested accrued benefit under the applicable Base
Plan; and
(b) A Deferred Cash Award was made during a year which is used in the
calculation of Final Average Earnings under this Supplemental Plan on
the date of termination.
If the Participant received a partial prepayment as described in Section
3.10, benefits payable under this Section shall be adjusted as provided in
Section 3.11.
Section 3.5 EFFECT OF INVOLUNTARY TERMINATION OF EIP PARTICIPANTS PRIOR TO
RETIREMENT ELIGIBILITY. In the event of the involuntary termination of an active
Participant of the General Mills, Inc. Executive Incentive Plan, where the sum
of such Participant's age and years of service with the Company equals or
exceeds 75 at the date of termination, and who is entitled to a Vested Deferred
Pension under a Base Plan, the provisions of this Section shall apply. Subject
to the aggregate limits of Section 4.4, such Participant shall be entitled to
receive benefits determined under this Section, in addition to any benefit
provided under Section 3.3. Such additional benefits shall be in the form of a
retirement supplement, calculated as the difference between an Early Retirement
Pension under the provisions of such Base Plan and a Vested Deferred Pension
under such Base Plan.
If the Participant received a partial prepayment as described in Section
3.10, benefits payable under this Section shall be adjusted as provided in
Section 3.11.
Section 3.6 EFFECT OF TERMINATION OF THE RETIREMENT INCOME PLAN OF GENERAL
MILLS, INC. In the event of the termination of the Retirement Income Plan of
General Mills, Inc. (RIP) within five years after a Change in Control each
Participant of the RIP whose benefits would then exceed the Maximum Benefit as a
result of the changes required under Section 12.4 of the RIP shall be entitled
to receive such excess benefits under the Supplemental Plan.
Section 3.7 FORM OF PAYMENT. Any benefit amount payable under the
Supplemental Plan to a married Participant shall be adjusted and paid in the
form of a joint and 100% to survivor annuity. Any benefit amount payable under
the Supplemental Plan to an unmarried Participant shall be paid in the form of a
single life annuity. Notwithstanding the above, a married Participant may
request, subject to the approval of the Minor Amendment Committee, to have such
benefit amounts adjusted and paid as a joint and 50% to survivor annuity or as a
single life annuity. Further, any Participant may request, subject to the
approval of the Minor Amendment Committee, that any benefit amount be paid in a
single sum payment in cash, effective as of the first day monthly benefits would
otherwise begin. Any request for an alternate form of benefit that is granted
may be made at any time before benefits would otherwise begin. The Minor
Amendment Committee may approve or reject any such request in its sole
discretion. Any joint and survivor annuity shall be the actuarial equivalent of
a single life annuity based on the following factors, determined using the ages
of the Participant and spouse on the effective date of the payment:
(a) For benefits commencing after January 1, 1989. The formula for the
joint and 100% to survivor factor is:
.868 + .005 (65 - X) + .005 (Y - X), where X is equal to the
Participant's age and Y is equal to the age of the spouse.
The formula for the joint and 50% to survivor factor is:
.928 + .003 (65 - X) + .003 (Y - X), where X is equal to the
Participant's age and Y is equal to the age of the spouse.
(b) For benefits commencing on or before January 1, 1989. The formula for
the joint and 100% to survivor factor is:
.815 + .007 (63 - X) + .007 (Y - X), where X is equal to the
Participant's age and Y is equal to the age of the spouse.
The formula for the joint and 50% to survivor factor is:
.898 + .004 (63 - X) + .004 (Y - X), where X is equal to the
Participant's age and Y is equal to the age of the spouse.
For the purpose of calculating any lump sum payment, the interest rate used
shall be the immediate annuity interest rate determined by the Pension Benefit
Guaranty Corporation as in effect on the first day of the year in which a
distribution is to be made.
Section 3.8 TIME OF PAYMENT. The payment of benefits determined under the
provisions of the Supplemental Plan shall commence on the first day of the month
coincident with or next following the date upon which a Participant (or
surviving spouse) first becomes eligible to commence receiving benefits under
the Base Plan or Plans, regardless of the time benefits actually commence under
the Base Plan. Notwithstanding any other provisions of the Supplemental 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), it believes that a Participant or Beneficiary has
recognized or will recognize income for federal income tax purposes with respect
to amounts that are or will be payable under the Supplemental Plan before they
are to be paid. In making this determination, the Minor Amendment Committee
shall take into account the hardship that would be imposed on the Participant or
Beneficiary by the payment of federal income taxes under such circumstances.
Section 3.9 EFFECT OF CHANGES IN THE MAXIMUM BENEFIT. In the event the
dollar amount of the Maximum Benefit increases as a result of federal
legislation, the benefits of any Participant payable under the Supplemental
Plan, whether or not in pay status, shall be recalculated to take into account
the higher Maximum Benefit payable from the applicable Base Plan. If payments
have already commenced under the provisions of the applicable Base Plan and the
Supplemental Plan, benefit amounts under both Plans shall be adjusted to reflect
the higher Maximum Benefit, by increasing the amount paid under the Base Plan
and decreasing the amount paid under the Supplemental Plan, as soon as
administratively possible after such a change. Notwithstanding the above, if a
Base Plan is terminated, no adjustments shall be made to benefits payable under
the Supplemental Plan with respect to changes in the Maximum Benefit after the
date of termination of the Base Plan.
Section 3.10 PARTIAL PREPAYMENT. Notwithstanding any other provisions of
this Supplemental Plan, partial prepayment of benefits due under this
Supplemental Plan may be made from time to time, pursuant to amendments to this
Section. Prepayments so authorized are described as follows:
(a) (1) The first prepayment was authorized to be made in January, 1988 to
those active Participants who, on December 31, 1987, had earned vested
accrued benefits under one or more Base Plans equal to the Maximum
Benefit then in effect, payable at December 31, 1987, or age 55, if
later.
(2) The second prepayment was authorized to be made on or after October,
1988 and before December 31, 1988, to those active Participants who
had earned vested accrued benefits under one or more Base Plans, when
projected to December 31, 1988, equal to the Maximum Benefit then if
effect, payable at December 31, 1988, or age 55, if later.
(3) The third prepayment was authorized to be made in December, 1989, to
those active Participants who, if the Base Plans had continued in
effect through December 31, 1989 as in effect on December 31, 1988,
would have earned vested accrued benefits under such Base Plans equal
to the Maximum Benefit then in effect, payable at January 1, 1990, or
at age 55 if later.
(4) The fourth prepayment was authorized to be made in October, 1990, to
those active Participants who, if the Base Plans had continued in
effect through December 31, 1990, as in effect on December 31, 1988,
would have earned vested accrued benefits under such Base Plans equal
to the Maximum Benefit then if effect, payable at January 1, 1991, or
at age 55 if later.
(5) The fifth prepayment was authorized to be made in December, 1991, to
those active Participants who had earned vested accrued benefits under
one or more Base Plans, when projected to December 31, 1991, equal to
the Maximum Benefit then in effect, payable at December 31, 1991, or
age 55, if later, but only to the extent that, when estimated benefits
payable at each Participant's normal retirement age were projected,
the Participant's additional benefits payable from this Plan at such
normal retirement date were equal to or greater than zero.
(6) The sixth prepayment was authorized to be made in December, 1992, to
those active Participants who had earned vested accrued benefits under
one or more Base Plans, when projected to December 31, 1992, equal to
the Maximum Benefit then in effect, payable at December 31, 1992, but
only to the extent that, when estimated benefits payable at each
Participant's normal retirement age (or announced early retirement
age, if earlier) were projected, the Participant's additional benefits
payable from this Plan at such retirement date were equal to or
greater than zero.
(b) For such Participants identified in (a) above, who were eligible for a
Normal or Early Retirement under the applicable Base Plans as of the stated
dates, a monthly benefit payable under this Supplemental Plan is calculated
as if (i) retirement actually occurred on the stated date, and (ii) the
benefits payable under the applicable Base Plans were paid under the normal
form of payment provided in such Base Plans. The resulting benefit payable
under the provisions of this Supplemental Plan shall be calculated as if
payable in the form of an annuity for the life of such Participant.
(c) For such Participants who are participating in the Company's Executive
Incentive Plan but are not eligible for a Normal or Early Retirement under
the applicable Base Plans as of the stated date, a monthly benefit payable
under this Supplemental Plan is calculated under the provisions of Section
3.5 as if (i) such a Participant's involuntary termination occurred as of
the stated date, and (ii) the benefit payable under the applicable Base
Plans is paid under the normal form of payment provided in such Base Plans.
The resulting benefit payable under the provisions of this Supplemental
Plan shall be calculated as if payable in the form of an annuity payable
for the life of such Participant.
(d) The present value of the monthly benefits payable under this Supplemental
Plan as calculated above shall be based on the immediate annuity interest
rates determined by the Pension Benefit Guaranty Corporation as in effect
on the January 1 of the year of any such authorized prepayment.
(e) In the event the Compensation Committee, or its delegate, believes that
payment of the entire present value of any amounts calculated pursuant to
this Section may result in an overpayment of amounts that would have been
payable under this Supplemental Plan upon the actual retirement or
separation from service of any of such Participants, without regard to the
provisions of this Section, the Compensation Committee, or its delegate,
shall reduce the amount of the single sum payment as the Compensation
Committee, or its delegate, in its sole discretion, deems appropriate.
Section 3.11 ADJUSTMENT FOR PREPAYMENT. With respect to any Participant who
received a prepayment of benefits under Section 3.10 above, the benefits due
upon Retirement, separation or death under Sections 3.1, 3.2, 3.3, 3.4 or 3.5,
or a subsequent prepayment of benefits due under Section 3.10, shall be adjusted
to reflect the prepayment of benefits in the following manner:
(a) The monthly benefit payable under the applicable section shall be
calculated first without regard to prepayment, under a life only form
of payment.
(b) The offset for each prepayment shall be calculated based on a lump sum
future value of the amount of the prepayment. Such amount will be
calculated using the time period from the stated date as of which the
prepayment was calculated to the date of the Participant's retirement,
separation, subsequent payment date, or death, and an annual interest
rate equal to 66.2% of the immediate annuity interest rate used to
calculate the lump sum value of such prepayment, on the after-tax
value of the prepayment. The after-tax value of the prepayment shall
be based on an effective annual tax rate of 33.8%. This same rate
shall be used to compute a before-tax value for offset purposes. The
resulting lump sum future value is to be converted to a life annuity
figure using the 1983 Group Annuity Mortality table for males.
(c) The result in (b) above shall be subtracted from (a) above after both
figures have been adjusted for the appropriate form of benefit
selected by the Participant (or spouse, in the event of the
Participant's death). The result shall be the additional benefit
remaining, if any, to be paid from this Supplemental Plan. In the
event of multiple prepayments for such a Participant, the offset for
each prepayment shall be calculated separately and applied to the
benefit in (a) above in the order in which paid. In the event the
amount (or amounts in the event of multiple payments) determined in
(b) above is equal to the amount determined in (a) above, no
additional benefits shall be payable under this Supplemental Plan. If
the amount (or amounts in the event of multiple payments) determined
in (b) above is greater than the amount determined in (a) above, the
Company shall be entitled to recover the amount of any excess
prepayments from the Participant and may withhold and retain sums
which would otherwise be payable to the Participant under any other
nonqualified plan of the Company in satisfaction of the excess
prepayment.
Section 3.12 PARTICIPANTS FORMERLY ON LEAVE TO GENERAL MILLS RESTAURANTS,
INC. Participants in this Plan (i) who were active participants in the
Retirement Income Plan of General Mills, Inc. ("RIP") on "leave of absence
status" to General Mills Restaurants, Inc. and (ii) whose leaves were canceled
effective as of May 31, 1991, may be entitled to additional benefits under this
Plan as described below. In addition to any benefits that such a Participant may
be entitled to under the provisions of this Article III, this Plan shall also
pay the difference, if any, between the total benefits the Participant is
entitled to from the Base Plan in which he or she is participating at the time
of termination and this Plan, and the total benefits the Participant would have
been entitled to from the RIP and this Plan, had the Participant continued to
participate in the RIP until the date of the Participant's termination of
employment or Retirement.
Section 3.13 PRESIDENTS OF GENERAL MILLS RESTAURANTS, INC. Participants in
this Plan who were employed as Presidents of a General Mills Restaurants, Inc.
division as of May 31, 1994, were not eligible for any benefit accrual under the
terms of the Base Plan in which they participated for the period from January 1,
1989 through May 31, 1994. Benefits shall accrued under the terms of this Plan
equal to the entire benefit which would have accrued to such individuals under
the applicable Base Plan for this period. The form and timing of such payments
shall be subject to all provisions of this Plan.
<PAGE>
ARTICLE IV
PLAN ADMINISTRATION
Section 4.1 COMPENSATION COMMITTEE. The Supplemental Plan shall be
administered by the Compensation Committee, and the Compensation Committee shall
have full authority to interpret the Supplemental Plan. Such interpretations of
the Compensation Committee shall be final and binding on all parties, including
the Participants, their beneficiaries, surviving spouses and the Company.
Section 4.2 DELEGATED DUTIES. The Compensation Committee shall have the
authority to delegate the duties and responsibilities of administering the
Supplemental 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.
Section 4.3 AMENDMENT AND TERMINATION. The Board, or if specifically
delegated, its delegate, may amend, modify or terminate the Supplemental Plan at
any time, provided, however, that no such amendment, modification or termination
shall adversely affect any accrued benefit under the Supplemental Plan to which
a Participant, or the Participant's Beneficiary, is entitled under Article III
prior to the date of such amendment or termination, and in which such
Participant, or the Participant's Beneficiary, would have been vested if such
benefit had been provided under the applicable Base Plan, unless the
Participant, or the Participant's Beneficiary, becomes entitled to an amount
equal to the cash 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 Supplemental Plan
prior to such amendment, modification or termination may occur after a Change in
Control without the written consent of a majority of the Participants determined
as of the day before such Change in Control. Each year the Compensation
Committee shall notify, in writing, those individuals who have any accrued
benefits under the Supplemental Plan.
Section 4.4 PAYMENTS. The Company will pay all benefits arising under this
Supplemental Plan and all costs, charges and expenses relating thereto. The
benefits payable under this Supplemental Plan to each Participant shall not be
greater that what would have been paid in the aggregate under the Base Plan (i)
in the absence of federal limitations on benefit amounts, (ii) if amounts
deferred had been paid to the Participant when earned, and (iii) with respect to
Section 3.5, the Participant had actually been eligible for Early Retirement
under the Base Plan.
Section 4.5 ARBITRATION.
(a) 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.
(b) 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.
(c) 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.
(d) Arbitration under this Section shall be conducted by a single
arbitrator selected jointly by the Company and the Participant (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 which 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.
(e) 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.
(f) 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.
(g) 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.
Section 4.6 NON-ASSIGNABILITY OF BENEFITS. Neither any benefit payable
hereunder nor the right to receive any future benefit payable under the
Supplemental 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 Supplemental Plan of the person affected may be
terminated by the Compensation 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.
Section 4.7 APPLICABLE LAW. All questions pertaining to the construction,
validity and effect of the Supplemental Plan shall be determined in accordance
with the laws of the United States and the laws of the State applicable to the
Base Plan covering the Participant.
Section 4.8 SUPPLEMENTAL BENEFITS 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 Supplemental Plan and certain
other plans of deferred compensation of the Company. In the event of a Change in
Control as defined in Section 2.3 hereof, 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 Supplemental Plan. Any Participant of the
Supplemental Plan shall have the right to demand and secure specific performance
of this provision. The Company may fund the Trust in the event of the occurrence
of a Potential Change in Control as determined by the Finance Committee of the
Board. 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 Supplemental
Plan, are unsecured contractual claims of the Participant against the Company.
EXHIBIT 10.7
EXECUTIVE SURVIVOR INCOME PLAN
OF
GENERAL MILLS
AMENDED AND RESTATED AUGUST 1, 1999
<PAGE>
EXECUTIVE SURVIVOR INCOME PLAN
OF
GENERAL MILLS
ARTICLE I-DEFINITIONS
1.01 "Administrator" shall mean the Minor Amendment Committee.
1.02 "Company" shall mean General Mills, Inc. and its subsidiaries.
1.03 "Dependent" shall mean surviving unmarried children of the Participant
(including legally adopted, step-children and children of the
Participant's Domestic Partner) less than age twenty-two (22) provided
they (i) attend school full-time or reside with Participant, and (ii)
depended upon the Participant for support and maintenance; and
surviving unmarried children of the Participant (including legally
adopted and step-children) age twenty-two (22) or older provided they
(i) are totally disabled or attending school full-time, and (ii)
depended upon the Participant for support and maintenance.
1.04 "Earnable Compensation" shall mean all compensation for services paid
to a Participant of the Plan including salary, bonuses, commissions,
Deferred Cash Awards as accrued under the General Mills, Inc. Deferred
Compensation Plan (excluding interest thereon) and all other special
payments made as compensation for services as determined by the
Administrator, excluding the Company Stock Option Plans.
1.05 "Final Average Earnings" shall mean the greater of the amounts
determined under (a) and (b) below:
(a) The average of the five highest full calendar years of Earnable
Compensation received by an Employee prior to the Determination
Date, with the result divided by 12. If the Employee has less
than sixty months of Earnable Compensation, Final Average
Earnings shall mean the average of all Earnable Compensation
received by such Employee prior to the Determination Date, stated
on a monthly basis.
(b) Beginning with the sum of the five highest full calendar years of
Earnable Compensation received by the Employee prior to the
Determination Date (the "selected years"), add the Earnable
Compensation received by the Employee during the calendar year in
which the Determination Date occurs; and subtract the product of
(A) the Earnable Compensation received during the lowest year of
the selected years and (B) the fractional Period of Service in
the Participant's final year of employment, measured from January
1 through the Determination Date. Divide the resulting number by
60.
For the purposes of this Section, any calendar year in which a
Participant has no Earnable Compensation shall be disregarded
when calculating Final Average Earnings.
1.06 "Participant" shall mean any employee of the Company who is a
Participant of the Plan at the date of his or her death.
1.07 "Plan" shall mean the Executive Survivor Income Plan of General Mills,
Inc.
1.08 "Surviving Spouse" shall mean the then living spouse (excluding a
legally separated spouse) of the Participant, or a Domestic Partner
for which the Participant has a valid Domestic Partner Statement on
file with the Company (Domestic Partner).
ARTICLE II-BENEFITS
2.01 SURVIVING SPOUSE'S BENEFIT
Upon the death of a Participant of the Plan, the Surviving Spouse
shall be entitled to receive a monthly benefit equal to one-twelfth
(1/12) of twenty-five percent (25%) of the Participant's Final Average
Earnings.
2.02 SURVIVING SPOUSE'S BENEFIT PAYMENT
Upon receipt of written proof of the death of the Participant
satisfactory to the Plan Administrator, the Surviving Spouse's benefit
shall become payable as of the first day of the calendar month next
following the date of death of the Participant and the last payment
shall be made as of the first day of the calendar month in which the
Surviving Spouse's death occurs. This benefit shall continue to be
payable in the event the Surviving Spouse remarries.
2.03 DEPENDENT'S BENEFIT
In the event there is no Surviving Spouse of the Participant or in the
event the Surviving Spouse thereafter dies and there are one or more
Dependents, a monthly benefit equal to one-twelfth (1/12) of twelve
and one-half percent (12 1/2%) of the Participant's Final Average
Earnings shall be paid to Participant's Dependents, apportioned
equally among such Dependents, so long as they qualify as dependents
as defined herein. Any adjustment in the benefit caused by the change
in the number of Dependents as determined by the Administrator shall
take effective immediately.
2.04 DEPENDENT'S BENEFITS PAYMENT
Upon receipt of written proof of the status of persons as Dependents
satisfactory to the Plan Administrator, and where such has not
previously been furnished written proof of the death of the
Participant, the Dependent's benefits shall become payable as of the
first day of the calendar month next following the death of the
Participant if there is no Surviving Spouse or as of the first day of
the calendar month next following the death of the Surviving Spouse.
2.05 BENEFIT REDUCTION
Any benefit payable hereunder shall be reduced by amounts payable
under all other Company-paid survivor income benefit plans, including
qualified and nonqualified pension plans, international retirement
plans and Company-paid individual life insurance policies. Any amounts
payable from Company-paid defined contribution plans shall be restated
to a monthly benefit basis. Amounts payable under Company-paid group
life insurance policies shall not reduce benefits payable hereunder.
2.06 PAYMENT TO TRUSTS
A Participant may, upon written notice to the Administrator, direct
that the benefits payable hereunder be paid to a trust, provided that
at the time of such designation, the Administrator shall be furnished
a copy of the trust instrument for review and approval. The trust
instrument must provide that the benefits payable hereunder shall
accrue to the Surviving Spouse or Dependents to the same extent and
manner as if the said benefits were paid in accordance with this Plan.
Payments of benefits to such trust shall discharge the Company from
all liability or obligation to the extent of the amount so paid.
2.07 MINORITY OR INCOMPETENCY PAYMENT
If any benefit is payable to a minor or to a person otherwise
incapable of giving a valid release for any payment due, and until a
claim is made by a duly appointed guardian or committee of such
person, payment may be made to such person or to any person or
institution appearing to the Administrator to have assumed the custody
and principal support of such person, and the liability of the Company
shall be discharged to the extent of the amount so paid.
ARTICLE III - ADMINISTRATION OF THE PLAN
3.01 ADMINISTRATOR
The Plan shall be supervised by the Administrator, who shall have the
authority to construe and interpret the Plan. Interpretations and
decisions of the Administrator shall be final and binding on all
parties, including the Company and the Participants.
3.02 DELEGATED DUTIES
The Administrator shall delegate to the Benefits Department the duties
and responsibilities of maintaining records, issuing such rules and
regulations as it deems appropriate, and directing and making the
payment of benefits provided hereunder.
3.03 DESIGNATION AND TERMINATION OF PARTICIPANT STATUS
The Administrator shall designate by written instrument those
employees chosen to be Participants in the Plan, which shall include
participants in the General Mills, Inc. Executive Incentive Plan.
Participants may be added or deleted at any time at the discretion of
the Administrator.
3.04 AMENDMENT AND TERMINATION OF PLAN
The Company may amend, modify or terminate the Plan and all benefits
hereunder at any time.
3.05 NON-ASSIGNABILITY OF BENEFIT
Except to the extent required by law and other than as provided
herein, the benefits payable hereunder or the right to receive future
benefits under the Plan may not be anticipated, alienated, sold,
transferred, assign, pledged, encumbered, or subjected to any charge
or legal process, and if a person eligible for any benefits becomes
bankrupt, the interest under the Plan of the person affected may be
terminated by the Administrator, who, in his or her 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 as he or she deems appropriate.
3.06 APPLICABLE LAW
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.
3.07 EFFECTIVE DATE
This Plan became effective as of January 1, 1980.
EXHIBIT 10.9
SUPPLEMENTAL SAVINGS PLAN
OF GENERAL MILLS, INC.
Working Copy
Restated as of January 1, 1989
With Certain Provisions Effective as of January, 1992
Further Amended as of November, 1991,
December, 1992, and August, 1993
<PAGE>
SUPPLEMENTAL SAVINGS PLAN
OF GENERAL MILLS, INC.
The Supplemental Savings Plan of General Mills, Inc., a non-qualified deferred
compensation plan for the exclusive benefit of its employees, is hereby amended
and restated as of January 1, 1989, with certain provisions effective as of
January 1, 1992, pursuant to authorization of the Board of Directors of General
Mills, Inc.
ARTICLE I
INTRODUCTION
Section 1.1 Name of Plan. The name of the Plan is the "Supplemental Savings
Plan of General Mills, Inc." It is also referred to as the "Supplemental Savings
Plan" or the "Plan."
Section 1.2 Effective Date. The effective date of the Plan is July 25,
1983.
Section 1.3 Purpose. The purposes of the Supplemental Savings Plan are
to: (i) provide a means by which a Participant may, under certain circumstances,
be credited with benefits which, in the absence of restrictions imposed by Code
Sections 401(a)(17), 401(k), 401(m) or 415, would be provided as Company
Contributions under a Base Plan; and (ii) provide a means by which certain
individuals, who are otherwise eligible to participate in this Plan, may be
credited with amounts set forth under individual arrangements which the Minor
Amendment Committee has approved for inclusion in this Plan.
ARTICLE II
DEFINITIONS
Section 2.1 Account shall mean a Participant's individual account, as
described in Section 3.2 of this Plan.
Section 2.2 Base Plan shall mean a defined contribution plan sponsored by
the Company, which is qualified under the provisions of Code Section 401,
including the Voluntary Investment Plan of General Mills, Inc. (VIP), the Profit
Sharing & Savings Plan for General Mills Restaurants, Inc. (PSSP), the General
Mills, Inc. Employee Stock Ownership Plan (ESOP), the Retirement Savings Plan of
General Mills, Inc. (RSP), and such other defined contribution plans as have
been declared by the Board to be covered by this Plan.
Section 2.3 Beneficiary shall mean the beneficiary or beneficiaries
designated by the Participant in writing to receive the balance, if any,
remaining in the Participant's Account upon the Participant's death.
Section 2.4 Board shall mean the Board of Directors of General Mills, Inc.
Section 2.5 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) 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 either 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.
Section 2.6 Code shall mean the Internal Revenue Code of 1986, as amended
from time to time.
Section 2.7 Company shall mean General Mills, Inc., and any of its
subsidiaries or affiliated business entities authorized to participate in a Base
Plan by the Board, or its delegate.
Section 2.8 Company Contribution shall mean any contribution or other
addition to be made or allocated by the Company under a Base Plan, other than a
contribution made pursuant to a Participant's election to make contributions
under Code Sections 401(k) or 401(m).
Section 2.9 ERISA shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
Section 2.10 Limitation Year shall mean the calendar year.
Section 2.11 Minor Amendment Committee shall mean the Minor Amendment
Committee appointed by the Compensation Committee of the Board.
Section 2.12 Participant shall mean an employee who is eligible to
participate in a formal non-qualified deferred compensation program adopted by
the Company and who participates in this Supplemental Savings Plan pursuant to
Article III.
Section 2.13 Defined Terms. Capitalized terms which are not defined herein
shall have the meaning ascribed to them in the relevant Base Plan.
ARTICLE III
PARTICIPATION
Section 3.1 Participation. An employee described in Section 2.12 will
participate in this Plan if:
(a) as a result of the application of Code Section 415, no additional
contributions can be made to the Base Plan for the remainder of the
applicable Limitation Year, or as a result of the application of Code
Section 401(a)(17), or the application of the nondiscrimination
testing limitations imposed by Code Sections 401(k) and 401(m), he or
she cannot make any further Participant contributions to the Base Plan
for the remainder of the Plan Year for the Base Plan; or
(b) an individual deferred compensation agreement exists with respect to
the employee, and the Minor Amendment Committee approves the inclusion
of the amounts to be credited under such agreement as "Company
Contributions" under the terms of this Plan. Once credited under this
Plan, such amounts shall be subject to all provisions of this Plan.
Section 3.2 Establishment of Supplemental Savings Plan Accounts. The
Company shall establish an Account for each Participant to which amounts shall
be credited in accordance with Section 3.3. Such amounts shall be credited to
Participants' Accounts under this Plan as bookkeeping entries only.
Section 3.3 Crediting of Company Contributions. Company Contributions may
be credited to a Participant's Account under the following circumstances:
(a) A Participant shall be credited with amounts under this Plan equal to
the additional Company Contributions that would have been made to the
Base Plan with respect to such Participant for the remainder of the
Plan Year or Limitation Year, as appropriate, as if the restrictions
described in Section 3.1 did not apply. Such amounts shall be credited
to such Participant's Account under this Plan as of the last day of
the month coincident with or next following the date the additional
Company Contributions would have been made to the Base Plan if the
restrictions described in Section 3.1 did not apply.
Such credits shall be based on the rate of total contributions elected
by the Participant under the Base Plan as in effect for the period in
which the applicable restriction first applies, but not more than the
maximum percentage of Earnable Compensation with respect to which
Company Contributions may be made pursuant to the Base Plan as in
effect for the period without regard to any limitations on Company
Contributions which may be imposed under the Base Plan in order to
comply with the applicable limitations. In no event will amounts be
credited under this Plan with respect to any Participant if the
Participant is able to make any additional contributions under the
Base Plan without violating: (a) the limitations of Code Section
401(a)(17); (b) the limitations of Code Section 415; or (c) the
application of the nondiscrimination limitations under Code Sections
401(k) and 401(m).
In no event shall a Participant be credited with Contributions under a
Base Plan and this Plan during a given period that would exceed the
Contributions that would have been made to the Base Plan in the
absence of the restrictions imposed by Code Sections 401(a)(17),
401(k), 401(m) and 415.
(b) Under the terms of an individual agreement, the amount of Company
Contributions shall be determined at the time the Minor Amendment
Committee approves the inclusion of such amounts as Company
Contributions under this Plan.
Section 3.4 Changes in Amounts Credited to a Supplemental Savings Plan
Account. Amounts credited to a Participant's Supplemental Savings Plan Account
shall be treated as if invested in the Fixed Income Fund of the VIP, unless the
Participant has specifically requested, in writing, that the contribution be
attributed to a different fund, or combination of funds otherwise available from
time to time under the VIP. Effective as of January 1, 1992, the fund elections
available for Accounts under this Plan shall be the Fixed Income Fund, the
Equity Fund, the International Fund and the U. S. Treasury Fund of the VIP.
Participants who had previously elected to have a portion of their Account under
this Plan credited as if in the Company Stock Fund shall be given an opportunity
to make a written election to have such amounts credited as if in any
combination of the Fixed Fund, Equity Fund, U. S. Treasury Fund or International
Fund for periods beginning January 1, 1992. In the absence of a written election
from a Participant with amounts credited under the Company Stock Fund as of
December 31, 1991, such amounts shall be credited under this Plan as if the
Participant elected to have such amounts credited in the Fixed Income Fund for
periods beginning on and after January 1, 1992. Transfers of amounts already
credited to a Participant's Supplemental Savings Plan Account shall be permitted
as of the first day of any month, provided a written request is received by the
Minor Amendment Committee, or its delegate, on or before the last business day
of the preceding month.
Section 3.5 Distribution of Amounts Credited to a Supplemental Savings Plan
Account. Amounts credited to a Participant's Supplemental Savings Plan Account
shall be available for distribution only at such times as set forth in this
Section.
(a) Hardship Withdrawals. If an active Participant withdraws 100% of the
account balance available for withdrawal under all Base Plans in which
he or she participates, such Participant may request a hardship
withdrawal under this Plan, by filing such a request in writing with
the Minor Amendment Committee. The Minor Amendment Committee, in its
sole discretion, may approve such a request if it finds that the
Participant has incurred 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. If such a request is approved, the
Participant shall receive amounts reasonably necessary to alleviate
the financial hardship from the value of such Participant's
Supplemental Savings Plan Account, effective as of the first day of
the month following the approval of such hardship withdrawal by the
Minor Amendment Committee.
(b) Death. In the event of the death of a Participant prior to the date a
full distribution has been made from the Participant's Supplemental
Savings Plan Account, the Company shall make distribution of the
balance in such Account to the Participant's Beneficiary, effective as
of the January 1 coincident with or next following the date of the
Participant's death.
(c) Termination and Retirement. Unless an effective "Participant
Election," described below, has been filed with the Minor Amendment
Committee, the Company shall make distribution of the amount credited
to a Participant's Supplemental Savings Plan Account to the
Participant, in a single sum, as soon as practical after the January 1
coincident with or next following the Participant's last day of
employment with the Company. A Participant may elect a later
distribution date and/or distribution in installments by filing a
Participant Election with the Minor Amendment Committee, specifying
the date and form of distribution of his or her Supplemental Savings
Plan Account. Such election shall be effective provided all of the
following requirements are met:
(1) the Participant Election is filed with the Minor Amendment
Committee at least one year prior to the date the distribution
would otherwise be made;
(2) unless the date of the initial distribution from this Plan
pursuant to the Participant Election is during the same calendar
year as the date of distribution would otherwise have been made
in the absence of such Participant election, the date of the
initial distribution from this Plan pursuant to the Participant
Election is at least one year after the date the distribution
would otherwise have been made in the absence of such Participant
Election; and
(3) the form of distribution is specified as either a single sum
payment, or annual installment payments, for a specified period
of time, not to exceed ten years.
A retired or terminated Participant (or Beneficiary of a deceased
Participant) may, at any time prior or subsequent to the
commencement of payments under this Plan, elect in writing to
have his or her form of payment of all amounts due under this
Plan changed to an immediate single 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 single sum
distribution shall be reduced by an amount equal to the product
of (X) the total single 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 month in which the lump-sum is
paid, determined by multiplying the actual rate of return for
such month by a fraction, the numerator of which is the number of
days in the month 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 single sum
distribution is received by the Company.
Notwithstanding any other provisions 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 revenue 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), it believes that a Participant or Beneficiary has
recognized or will recognize income for federal income tax purposes with respect
to amounts that are or will be payable under the Plan before they are to be
paid. In making this determination, the Minor Amendment Committee shall take
into account the hardship that would be imposed on the Participant or
Beneficiary by the payment of federal income taxes under such circumstances. All
distributions under this Plan shall be in cash paid by check.
Section 3.6 No Forfeitures of Amounts in a Supplemental Savings Plan
Account. All credited amounts in the Plan shall be fully vested. The Participant
shall not forfeit any amount credited to his or her Supplemental Savings Plan
Account even though such amount would have been forfeited if such amount had
been a Company Contribution under the Base Plan to which it was attributable.
Section 3.7 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 had 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.
Section 3.8 Supplemental Benefits 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 2.5 hereof, 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 of the Plan shall have the
right to demand and secure specific performance of this provision. The Company
may fund the Trust in the event of the occurrence of a Potential Change in
Control as determined by the Finance Committee of the Board. 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.
ARTICLE IV
PLAN ADMINISTRATION
Section 4.1 Administration. The Plan shall be administered by the Minor
Amendment Committee. The Minor Amendment Committee shall have the authority to
interpret the Plan and any such interpretation shall be final and binding on all
parties. The Minor Amendment Committee shall have the authority to delegate the
duties and responsibilities of maintaining records, issuing such regulations as
it deems appropriate, and making distributions hereunder. The Board, or if
specifically delegated, its delegate, may amend or terminate the Plan at any
time, provided that no such amendment or termination shall adversely affect the
amounts credited to a Supplemental Savings Plan Account before the time of such
amendment or termination unless the Participant becomes entitled to a benefit
equal in value to such amount under another plan or practice adopted by the
Company, and provided, further, that the Plan may not be amended with respect to
benefits accrued under this Plan prior to such amendment after a Change in
Control without the written consent of a majority of Participants determined as
of the day before such Change in Control. The Company will pay for all
distributions made pursuant to the Plan and for all costs, charges and expenses
relating to the administration of the Plan.
Section 4.2 Applicable Law. All questions pertaining to the construction,
validity and effect of the Plan shall be determined in accordance with the laws
of the United States of America and the laws of the State applicable to the Base
Plan covering the Participant.
Section 4.3 Arbitration.
(a) 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.
(b) 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.
(c) 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.
(d) 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
which 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.
(e) 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.
(f) 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.
(g) 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.
EXHIBIT 10.10
GENERAL MILLS, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended Through June 28, 1999
<PAGE>
GENERAL MILLS, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
PART I
GENERAL PROVISIONS
A. PURPOSE
The purpose of the General Mills, Inc. 1996 Compensation Plan for
Non-Employee Directors (the "Plan") is to provide a compensation program which
will attract and retain qualified individuals not employed by General Mills,
Inc. or its subsidiaries (the "Company") to serve on the Board of Directors of
the Company (the "Board") and to further align the interests of non-employee
directors with those of the stockholders by providing that a portion of
compensation will be linked directly to increases in stockholder value.
B. EFFECTIVE DATE, DURATION OF PLAN AND TRANSITION RIGHTS
This Plan shall become effective as of September 30, 1996, subject to the
approval of the Plan by the stockholders. The Plan will terminate on September
30, 2001 or such earlier date as determined by the Board or the Compensation
Committee of the Board (the "Committee"); provided that no such termination
shall affect rights earned or accrued under the Plan prior to the date of
termination.
This Plan supersedes and replaces the General Mills, Inc. Compensation Plan
for Non-Employee Directors, effective as of January 1, 1979 (the "1979 Plan"),
the General Mills, Inc. Retirement Plan for Non-Employee Directors, effective as
of April 28, 1986 (the "1986 Plan") and the General Mills Stock Plan for
Non-Employee Directors, effective as of September 17, 1990 (the "1990 Plan").
Participant rights accrued as of September 30, 1996 under the 1979 Plan and the
1990 Plan shall remain in effect but no new rights or benefits shall accrue
pursuant to such plans. The 1986 Plan was terminated in February 1996.
Participants who have accrued rights under the 1986 Plan shall receive a one
time grant of Stock Units ("Stock Units") representing the right to receive
shares of General Mills, Inc. Common Stock ($.10 per value) ("Common Stock")
equal to the value as of September 30, 1996 of the participant's accrued benefit
under the 1986 Plan. The value of each Stock Unit shall be deemed equal to the
mean of the high and low price of shares of Common Stock on the New York
Exchange on September 30, 1996. Common Stock issued in respect of Stock Units
granted in lieu of accrued benefits under the 1986 Plan shall be distributed
commencing on the director's retirement from the Board, on the date or dates
elected by the director at least one year prior to the date of his or her
retirement from the Board. In the absence of such an election, such Common Stock
shall be issued in ten substantially equal annual installments on the January 1
of each year following the year in which the participant ceases to be a
director. Each participant awarded Stock Units shall receive, upon distribution,
one share of Common Stock for each Stock Unit awarded, and the Company shall
issue to and register in the name of each such participant a certificate for
that number of shares of Common Stock. Participants receiving Stock Units
pursuant to this Part I, Section B. shall have the same rights, protections and
limitations as those provided participants receiving Stock Units pursuant to
Part III, Section B.3. and Section C.1. hereof.
C. PARTICIPATION
Each member of the Board who is not an employee of the Company at the date
compensation is earned or accrued shall be eligible to participate in the Plan.
D. COMMON STOCK SUBJECT TO THE PLAN
Common Stock to be issued under this Plan may be made available from the
authorized but unissued Common Stock, shares of Common Stock held in the
treasury, or Common Stock purchased on the open market or otherwise. Subject to
the provisions of the next succeeding paragraph, the maximum aggregate number of
shares authorized to be issued under the Plan shall be 250,000.
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, Common Stock, securities of a
subsidiary of the Company, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company or other similar
corporate transaction or event affects the Common Stock such that an adjustment
is appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee may,
in its sole discretion and in such manner as it may deem equitable, adjust any
or all of (i) the number of shares of Common Stock subject to the Plan, (ii) the
number of shares of Common Stock subject to outstanding awards under the Plan,
and (iii) the grant or exercise price with respect to any option and, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
option; provided, that the number of shares of Common Stock subject to any
option denominated in Common Stock shall always be a whole number.
PART II
ANNUAL RETAINER AND MEETING FEES
A. COMPENSATION STRUCTURE
1. Each non-employee director shall be entitled to receive an annual
retainer and meeting fees as shall be determined from time to time by
the Board.
2. Each non-employee director of the Company may elect by written notice
to the Company on or before each annual stockholders' meeting to
participate in the compensation alternative provisions of the Plan.
Any combination of the alternatives -- Cash, Deferred Cash and/or
Common Stock -- may be elected, provided the aggregate of the
alternatives elected equals one hundred percent of the non-employee
director's compensation at the time of the election.
3. The election shall remain in effect for a one-year period which shall
begin the day of the annual stockholders' meeting and terminate the
day before the succeeding annual stockholders' meeting (hereinafter
"Plan Year").
4. The Plan Year shall include four plan quarters (hereinafter "Plan
Quarters"). Plan quarters shall correspond to the Company's fiscal
quarters.
5. A director elected to the Board at a time other than the annual
stockholders' meeting may elect, by written notice to the Company
before such director's term begins, to participate in the compensation
alternatives for the remainder of that Plan Year, and elections for
succeeding years shall be on the same basis as other directors.
6. Periodically, the Company shall supply to each participant an account
statement of participation under the Plan.
B. CASH ALTERNATIVE
1. Each non-employee director who elects to participate under the cash
compensation provision of the Plan shall be paid all or the specified
percentage of his or her compensation for the Plan Year in cash, and
such cash payment shall be made as of the end of each Plan Quarter.
2. If a participant dies during a Plan Year, the balance of the amount
due to the date of the participant's death shall be payable in full to
such participant's designated beneficiary, or, if none, the estate as
soon as practicable following the date of death.
C. DEFERRED CASH ALTERNATIVE
1. Each non-employee director may elect to have all or a specified
percentage of his or her compensation for the Plan Year deferred until
the participant ceases to be a director.
2. For each director who has made this deferred cash election, the
Company shall establish a deferred compensation account and shall
credit such account at the end of each plan quarter for the
compensation due. Interest shall be credited to each such account
monthly based on the following rates as specified by the Committee
from time to time:
a. the rate of return as from time to time earned by the Fixed
Income Fund of the Voluntary Investment Plan of General Mills,
Inc. (VIP); or
b. the rate of return as from time to time earned by the Equity Fund
of the VIP; or
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, or its delegate, in
its discretion, may from time to time establish.
3. Distribution of the participant's deferred compensation account shall
be as follows:
a. at the time, and in the form of payment, elected by the
participant at the time of deferral; or
b. in the absence of an election at the time of deferral, in ten
substantially equal annual installments beginning on January 1 of
each year following the year in which the participant ceases to
be a director; provided, however, that for compensation earned in
Plan Years commencing after December 9, 1996, distributions must
be made or commenced by the later of (i) the date the participant
attains age 70 and (ii) five years after the director's
retirement from the Board.
4. In the event of the termination of a participant from Board service
other than by retirement, the Committee may in its sole discretion
require that distribution of all amounts allocated to a participant's
deferred compensation account be accelerated and distributed as of the
first business day of the calendar year next following termination.
5. The Company has established a Supplemental Benefits Trust with Norwest
Bank Minnesota, N.A. as Trustee to hold assets of the company under
certain circumstances as a reserve for the discharge of the Company's
obligations as to deferred cash compensation under the Plan and
certain other plans of deferred compensation of the Company. In the
event of a Change in Control as defined in Part IV hereinbelow, the
Company shall be obligated to immediately contribute such amounts to
the Trust as may be necessary to fully fund all cash benefits payable
under the Plan. Any participant of 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.
D. GMI COMMON STOCK ALTERNATIVE
1. Each participant may elect to receive all or a specified percentage of
his or her compensation in shares of Common Stock, which will be
issued at the end of each Plan Quarter.
2. The Company shall ensure that an adequate number of shares of Common
Stock are available for distribution to those participants making this
election.
3. Only whole numbers of shares will be issued, with any fractional share
amounts paid in cash.
4. For purposes of computing the number of shares earned each Plan
Quarter, the value of each share shall be equal to the mean of the
high and low price of shares of Common Stock on the New York Stock
Exchange on the third Business Day preceding the last day of each Plan
Quarter. For the purposes of this Plan, "Business Day" shall mean a
day on which the New York Stock Exchange is open for trading.
5. If a participant dies during a Plan Year, the balance of the amount
due to the date of the participant's death shall be payable in full to
the participant's designated beneficiary, or, if none, to the
participant's estate, in cash, as soon as practicable following the
date of death.
PART III
STOCK COMPENSATION
A. NON-QUALIFIED STOCK OPTIONS
1. Grant of Options. Each non-employee director on the effective date of
the Plan (or, if first elected after the effective date of the Plan,
on the date the non-employee director is first elected) shall be
awarded an option (an "Option") to purchase 2,500 shares of Common
Stock. As of the close of business on each successive annual
stockholders' meeting date after the date of the original award, each
non-employee director re-elected to the Board shall be granted an
additional Option to purchase 2,500 shares of Common Stock (or,
beginning September 27, 1999, an Option to purchase 5,000 shares of
Common Stock). All Options granted under the Plan shall be
non-statutory options not entitled to special tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended.
2. 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.
3. Term of Option. Each Option shall expire ten (10) years from the date
of grant.
4. Exercise and Vesting of Option. Each Option will vest on the date of
the annual stockholders' meeting next following the date the Option is
granted. If, for any reason, a non-employee director ceases to serve
on the Board prior to the date an Option vests, such Option shall be
forfeited and all further rights of the non-employee director to or
with respect to such Option shall terminate. If a participant should
die while employed by the Company, any vested Option may be exercised
by the person designated in such participant's last will and testament
or, in the absence of such designation, by the participant's estate
and any unvested Options shall vest and become exercisable in a
proportionate amount, based on the full months of service completed
during the vesting period of the Option from the date of grant to the
date of death.
5. 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.
6. Non-transferability. Except as provided by rule adopted by the
Committee, 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.
B. DEFERRAL OF STOCK OPTION GAINS
Under the Plan, Participants may defer receipt of the net shares of
Common Stock to be issued upon the stock-for-stock exercise of an Option issued
hereunder, as well as dividend equivalents on the net shares.
1. Option Gain Deferral Election. A participant can elect to defer
receipt of Net Shares (defined below) of Common Stock resulting from a
stock-for-stock exercise of an exercisable Option issued to the
participant by completing and submitting to the Company an irrevocable
stock option deferral election at least six months in advance of
exercising the Option (which exercise must be done on or prior to the
expiration of the Option) and, on or prior to the exercise date,
delivering personally-owned shares equal in value to the Option
exercise price on the date of the exercise. "Net Shares" means the
difference between the number of shares of Common Stock subject to the
Option exercise and the number of shares of Common Stock delivered to
satisfy the Option exercise price. A participant may not revoke an
Option gain deferral election after it is received by the Company. A
participant may choose to defer receipt of all or only a portion of
the Net Shares to be received upon exercise of an Option. If only a
portion of the Net Shares is deferred, the balance will be issued at
the time of exercise.
2. Distribution of Deferred Common Stock. At the time of a participant's
election to defer receipt of Common Stock issuable upon an Option
exercise or upon the election to receive Stock Units as provided in
Part III, Section C.1. a participant must also select a distribution
date and a form of distribution. The distribution date may be any date
that is at least one year subsequent to either the exercise date for
the related Option or the date of grant in the case of Stock Units
granted under Part III, Section C.1. but the distribution must be made
or commenced by the later of (i) the date the participant attains age
70 and (ii) five year after the date of the director's retirement from
the Board.
A participant may elect to have deferred Common Stock distributed in a
single payment or in substantially equal annual installments for a
period not to exceed ten (10) years, or in another form requested by
the Participant, in writing, and approved by the Committee. In the
absence of an election, Common Stock issued in respect of Stock Units
shall be distributed in ten substantially equal annual installments
beginning on January 1 of each year following the year in which the
participant ceases to be a director. Common Stock issuable under a
single Option grant or pursuant to a single grant under Part III,
Section C.1. shall have the same distribution date and form of
distribution. Notwithstanding the above, the following provisions
shall apply:
a. If an Option as to which a participant has made an Option gain
deferral election terminates prior to the exercise date selected
by the participant, or if the participant dies or fails to
deliver personally-owned shares in payment of the exercise price,
then the deferral election shall not become effective.
b. In the event of the termination of a participant from Board
service other than by retirement, the Committee may, in its sole
discretion, require that distribution of all Stock Units
allocated to a participant's Deferred Stock Unit Accounts (as
defined in Part III, Section B.3.a. below) be accelerated and
distributed as of the first business day of the calendar year
next following the date of termination.
c. At the time elected by the participant for distribution of Common
Stock attributable to allocations under the participant's
Deferred Stock Unit Accounts, the Company shall cause to be
issued to the Participant, within three (3) days of the date of
distribution, shares of Common Stock equal to the number of Stock
Units credited to the Deferred Stock Unit Account and cash equal
to any dividend equivalent amounts which had not been used to
"purchase" additional Stock Units as provided below. Prior to
distribution and pursuant to any rules the Committee may adopt, a
Participant may authorize the Company to withhold a portion of
the shares of Common Stock to be distributed for the payment of
all federal, state, local and foreign withholding taxes required
to be collected in respect of the distribution.
3. Deferred Stock Unit Accounts and Dividend Equivalents.
a. A deferred stock unit account ("Deferred Stock Unit Account")
will be established for each Option grant covered by a
participant election to defer the receipt of Common Stock under
Part III, Section B.1. above and, for each Net Share deferred, a
Stock Unit will be credited to the Deferred Stock Unit Account as
of the date of the Option exercise. A Deferred Stock Unit Account
will also be established each time a participant elects to
receive Stock Units pursuant to Part III, Section C.1. hereof.
Participants may make an election to receive dividend equivalents
on Stock Units in cash or reinvest such amount, and any change to
such election shall become effective six months after the date of
the change. If the amounts are reinvested, on each dividend
payment date for the Company's Common Stock, the Company will
credit each Deferred Stock Unit Account with an amount equal to
the dividends paid by the Company on the number of shares of
Common Stock equal to the number of Stock Units in the Deferred
Stock Unit Account. Dividend equivalent amounts credited to each
Deferred Stock Unit Account shall be used to "purchase"
additional Stock Units for the Deferred Stock Unit Account at a
price equal to the mean of the high and low price of the Common
Stock on the New York Stock Exchange on the dividend date. No
fractional Stock Units will be credited. The Committee may, in
its sole discretion, direct either that all dividend equivalent
amounts be paid currently or all such amounts be reinvented if,
for any reason, such Committee believes it is in the best
interest of the Company to do so. If the participant fails to
make an election, the dividend equivalent amounts shall be
reinvested. Periodically, each participant will receive a
statement of the number of Stock Units in his or her Deferred
Stock Unit Account(s).
b. Participants who elect under the Plan to defer the receipt of
Common Stock issuable upon the exercise of Options or elect to
receive Stock Units under Part III, Section C.1. below will have
no rights as stockholders of the Company with respect to
allocations made to their Deferred Stock Unit Account(s), except
the right to receive dividend equivalent allocations under Part
III, Section B.3.a. above. Stock Units may not be sold,
transferred, assigned, pledged or otherwise encumbered or
disposed.
C. RESTRICTED STOCK AND STOCK UNITS
1. Awards. Until September 27, 1999, on the effective date of the Plan
(or, if a non-employee director is first elected after the effective
date of the Plan, on the date the non-employee director is first
elected) and at the close of business on each successive annual
stockholders' meeting date, each non-employee director may elect to
receive either (i) an award of five hundred (500) shares of Restricted
Stock subject to vesting and restricted as described in subsection 2
hereof (the "Restricted Stock") or (ii) an award of five hundred
(500)Stock Units, subject to vesting as provided in subsection 2. Only
non-employee directors re-elected to the Board shall be entitled to a
grant under this Section III. C.1. of Restricted Stock or Stock Units
awarded at the close of business on an annual meeting date after the
date of the original grant to the non-employee director. Beginning
September 27, 1999, only Stock Units and not Restricted Stock will be
awarded under the Plan.
2. Vesting of and Restrictions on Restricted Stock and Stock Units. A
participant's interest in the Restricted Stock and Stock Units shall
vest on the date of the annual stockholders' meeting next following
the date of the award of the Restricted Stock or Stock Units (the
"Restricted Period"). If, for any reason, a non-employee director
ceases to serve on the Board prior to the date the non-employee
director's interest in a grant of Restricted Stock or Stock Units
vests, such Restricted Stock and Stock Units shall be forfeited and
all further rights of the non-employee director to or with respect to
such Restricted Stock or Stock Units shall terminate. A participant
who dies prior to the vesting of Restricted Stock or Stock Units shall
vest in a proportionate number of shares of Restricted Stock or Stock
Units, based on the full months of service completed during the
vesting period of the Restricted Stock or Stock Units from the date of
grant to the date of death. Restricted Stock may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed
until the Restricted Period has expired and Stock Units may not be
sold, transferred, assigned, pledged or otherwise encumbered or
disposed until such time as share certificates for Common Stock are
issued to the participants.
3. Distribution of Stock Units.
a. Each participant electing the award of Stock Units under Part
III, Section C.1. above must select a date of distribution and
form of distribution as provided under Part III, Section B.2. The
participant may also elect to have dividend equivalents payable
on Stock Units paid currently or reinvested in Stock Units as
provided under Part III, Section B.3.
4. Other Terms and Conditions. Any shares of Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, book-entry registration or
issuance of stock certificates, and may be held in escrow. Each
participant granted Restricted stock shall have all rights as a
stockholder with respect to such shares, including the right to vote
the shares and receive dividends and other distributions. The Company
may require payment of the amount of any federal, state or local
withholding tax attributable to the constructive or actual delivery of
shares of Common Stock pursuant to the terms of this Agreement.
D. GENERAL PROVISIONS FOR DEFERRED CASH, OPTION GAINS AND RSU's
The following provisions shall apply to the deferral of cash compensation
described in Part II, Section C hereof, the deferral of receipt of Common Stock
issued upon exercise of Options described in Part III, Section B hereof and the
treatment of Stock Units granted under Part III, Section C hereof.
1. A participant may, at any time prior or subsequent to the commencement
of benefit payments or distribution of Common Stock in respect of
Stock Units under this Plan, elect in writing to have his or her form
of distribution under this Plan changed to an immediate single
distribution which shall be made within one (1) business day of
receipt by the Company of such request in the case of deferred cash
and three (3) business days in the case of Common Stock; provided that
the cash amount or number of shares of Common Stock subject to such
single distribution shall be reduced by an amount or number of shares
of Common Stock equal to the product of (X) the rate for 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 single sum distribution is received by the Company and
(Y) either (i) as to a cash distribution, the total single sum
distribution otherwise payable (based on the value of the account as
of the first day of the month in which the single sum amount is paid,
adjusted by a pro-rata portion of the specified rate of return for the
prior month in which the single 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), or (ii) as to a
distribution of Common Stock in respect of Stock Units, the number of
Stock Units held on behalf of the participant multiplied by the mean
of the high and low price of shares of Common Stock on the New York
Stock Exchange on the date of the request or, if the date of the
request is not a Business Day, on the Business Day preceding the date
of the request.
2. 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, including a distribution of Common Stock in respect of
Stock Units, earlier than initially elected. The Committee may, in its
sole discretion, either approve or deny the request. The determination
made by the Committee will be final and binding on all parties. If the
request is granted, the distributions will be accelerated only to the
extent reasonably necessary to alleviate the financial hardship.
3. If the death of a participant occurs before a full distribution of
deferred cash amounts or Common Stock in respect of Stock Units is
made, a single distribution shall be made to the beneficiary
designated by the participant to receive such amounts. This
distribution shall be made as soon as practical following notification
that death has occurred. In the absence of any such designation, the
distribution shall be made to the personal representative, executor or
administrator of the participant's estate.
4. As to all previous and future Plan years, and subject to the last
sentence of the first paragraph of Part III, Section B.2. hereof, a
participant who (a) has elected a distribution date and distribution
in either a single distribution or substantially equal installments
and (b) is not within twelve (12) months of the date that such
deferred amount, deferred Common Stock or the first installment
thereof would be distributed under this Plan, shall be permitted to
make no more than two amendments to the initial election to defer
distributions 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 distribution is changed to
substantially equal annual installments for a period not to exceed ten
(10) years or is changed to a single distribution.
5. Notwithstanding any other provision of this Plan to the contrary, the
Committee, by majority approval, may, in its sole discretion, direct
that distributions be made before such distributions 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 or her
delegate, or a decision by a court of competent jurisdiction involving
a participant or beneficiary), it believes that a participant or
beneficiary has recognized or will recognize income for federal income
tax purposes with respect to distributions that are or will be payable
to such participants under the Plan before they are paid to him. In
making this determination, the Committee shall take into account the
hardship that would be imposed on the participant or beneficiary by
the payment of federal income taxes under such circumstances.
E. CHANGE OF CONTROL
Stock Options granted under the Plan will become immediately exercisable,
restrictions on the Restricted Stock will lapse and Common Stock and dividend
equivalents to be issued in respect of Stock Units will be immediately
distributed upon the occurrence of a "Change of Control" as defined in Part IV
hereinbelow.
PART IV
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
full power to interpret the Plan, formulate additional details and regulations
for carrying out the Plan and amend or modify the Plan as from time to time it
deems proper and in the best interests of the Company, provided that after a
"Change in Control" no amendment, modification of or action to terminate the
Plan may be made which would affect compensation earned or accrued prior to such
amendment, modification or termination without the written consent of a majority
of participants determined as of the day before a "Change in Control." Any
decision or interpretation adopted by the Committee shall be final and
conclusive. A "Change of Control" means:
1. The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934
Act) of voting securities of the Company where such acquisition causes
such Person to own 20% or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not be deemed to
result in a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of subsection (3) below; and
provided, further, that if any Person's beneficial ownership of the
Outstanding Company Voting Securities reaches or exceeds 20% as a
result of a transaction described in clause (i) or (ii) above, and
such Person subsequently acquires beneficial ownership of additional
voting securities of the Company, such subsequent acquisition shall be
treated as an acquisition that causes such Person to own 20% or more
of the Outstanding Company Voting Securities; or
2. Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
3. The approval by the shareholders of the Company of a reorganization,
merger, consolidation, sale or other disposition of all or
substantially all of the assets of the Company ("Business
Combination") or, if consummation of such Business Combination is
subject, at the time of such approval by shareholders, to the consent
of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly by consummation); excluding,
however, such a Business Combination pursuant to which (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation that as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business combination of the Outstanding Company Voting Securities,
(ii) no Person (excluding any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
4. Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
PART V
ADDITIONAL PROVISIONS
A. GOVERNING LAW
The validity, construction and effect of the Plan and any such actions
taken under or relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.
B. NOTICES
Unless otherwise notified, all notices under this Plan shall be sent in
writing to the Company, attention Corporate Compensation, P.O. Box 1113,
Minneapolis, Minnesota 55440. All correspondence to the participants shall be
sent to the address which is their recorded address as listed on the election
forms.
Effective as of September 30, 1996
As amended December 9, 1996
As amended April 2, 1998
As amended June 22, 1998
As amended June 28, 1999
EXHIBIT 10.13
GENERAL MILLS, INC.
SUPPLEMENTAL BENEFITS TRUST
TRUST AGREEMENT
This TRUST AGREEMENT, amended and restated as of September 26, 1988, is
between General Mills, Inc. (the "Grantor") and Norwest Bank Minnesota, N.A.
(formerly known as Norwest Bank Minneapolis, N.A.) (the "Trustee").
1. Purpose. The purpose of this trust (the "Trust"), originally established
on February 9, 1987, is to provide a vehicle to (a) hold assets of the Grantor
as a reserve for the discharge of the Grantor's obligations to certain
individuals (the "Beneficiaries") entitled to receive benefits under the
Supplemental Savings Plan of General Mills, Inc., amended and restated as of
January 1, 1986, and any other plan of deferred compensation that the Grantor so
designates in writing to the Trustee, including those plans designated in
Exhibit A attached hereto and made a part hereof (the "Plans"), and (b) invest,
reinvest, disburse and distribute those assets and the earnings thereon as
provided hereunder and in the Plans.
2. Trust Corpus. The Grantor hereby transfers to the Trustee and the
Trustee hereby accepts and agrees to hold, in trust, the sum of Ten Dollars
($10.00) plus such cash and/or property, if any, transferred to the Trustee by
the Grantor or on behalf of the Grantor pursuant to obligations incurred under
any or all of the Plans and the earnings thereon, and such cash and/or property,
together with the earnings thereon and together with any other cash or property
received by the Trustee pursuant to Section 8(a) of this Trust Agreement, shall
constitute the trust estate and shall be held, managed and distributed as
hereinafter provided. The Grantor shall execute any and all instruments
necessary to vest the Trustee with full title to the property hereby
transferred.
3. Grantor Trust. The Trust is intended to be a trust of which the Grantor
is treated as the owner for federal income tax purposes in accordance with the
provisions of Sections 671 through 679 of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Trustee, in its sole discretion, deems it necessary
or advisable for the Grantor and/or the Trustee to undertake or refrain from
undertaking any actions (including, but not limited to, making or refraining
from making any elections or filings) in order to ensure that the Grantor is at
all times treated as the owner of the Trust for federal income tax purposes, the
Grantor and/or the Trustee will undertake or refrain from undertaking (as the
case may be) such actions. The Grantor hereby irrevocably authorizes the Trustee
to be its attorney-in-fact for the purpose of performing any act which the
Trustee, in its sole discretion, deems necessary or advisable in order to
accomplish the purposes and the intent of this Section 3. The Trustee shall be
fully protected in acting or refraining from acting in accordance with the
provisions of this Section 3.
4. Irrevocability of Trust. The Trust shall be irrevocable and may not be
altered or amended in any substantive respect, or revoked or terminated by the
Grantor in whole or in part, without the express written consent of a majority
of the Beneficiaries of the Trust; provided, however, that the Trust may be
amended, as may be necessary either (i) to obtain a favorable ruling from the
Internal Revenue Service with respect to the tax consequences of the
establishment and settlement of the Trust, or (ii) to make nonsubstantive
changes, which have no effect upon the amount of any Beneficiary's benefits, the
time of receipt of benefits, the identity of any recipient of benefits, or the
reversion of any assets to the Grantor prior to the Trustee's satisfaction of
all the Trustee's obligations hereunder; provided, further, that in the event of
a "Change of Control" as defined in Section 12.4 of the Retirement Income Plan
of General Mills, Inc. (hereinafter referred to as a "Change in Control"), the
Trust may not be altered or amended in any substantive respect, or revoked or
terminated by the Grantor's successor unless a majority of the Beneficiaries,
determined as of the day before such Change in Control, agree in writing to such
an alteration, amendment, revocation or termination.
5. Investment of Trust Assets.
(a) Subject to the provisions of paragraph (b) below, until the
Trustee has distributed all of the assets of the Trust in accordance with the
terms hereof, the Trustee shall invest and reinvest such assets (without regard
to any state law limiting the investment powers of fiduciaries) in such
securities and other property as the Trustee deems advisable, considering the
probable income (including capital appreciation potential) from any such
investment, the probable safety of the assets of the Trust and, where
appropriate, the rate of return at which the assets would have been invested on
behalf of each Beneficiary under any applicable qualified defined contribution
plan maintained by the Grantor. Within the limitations of the foregoing, the
Trustee is specifically authorized to acquire, for cash or on credit, every kind
of property, real, personal or mixed, and to make every kind of investment,
specifically including, but not limited to, corporate and governmental
obligations of every kind, preferred or common stocks, securities of any
regulated investment company or trust, interests in common trust funds now or
hereafter established by a corporate trustee, and property in which the Trustee
owns an undivided interest in any other trust capacity. The Trustee is expressly
authorized and empowered to purchase such insurance in its own name (and with
itself as the beneficiary) as it shall determine to be necessary or advisable to
advance best the purposes of the Trust and the interests of the Beneficiaries.
(b) The Trustee shall invest and reinvest the assets of the Trust in
accordance with such investment objectives, guidelines, restrictions or
directions as the Grantor may furnish to the Trustee at the time of the
execution of the Trust or at any later date; provided, however, that if there is
a Change in Control the Trust's investment objectives, guidelines, restrictions
or directions may not be changed by the Grantor's successor unless a majority of
the Beneficiaries, determined as of the day before such Change in Control,
agree, in writing, to such a change.
6. Distribution of Trust Assets.
(a) Subject to the provisions of paragraph (b) below, at such time as
a Beneficiary is entitled to a payment under any of the Plans, he shall be
entitled to receive from the Trust (i) an amount in cash equal to the amount to
which he is entitled under the Plan or Plans at such time, less (ii) any
payments previously made to him by the Grantor with respect to such amount
pursuant to the terms of the Plans. The commencement of payments from the Trust
shall be conditioned on the Trustee's prior receipt of a written instrument from
the Beneficiary in a form satisfactory to the Trustee containing representations
as to (A) the amount to which the Beneficiary is entitled under the Plans, (B)
the fact that he has requested the payment of such amount from the Grantor
pursuant to the terms of the Plans, (C) the amount, if any, he has received from
the Grantor under the Plans with respect to such amount, and (D) the amount to
be paid him by the Trust (i.e., the difference between (A) and (C) above). All
payments to a Beneficiary from the Trust shall be made in accordance with the
provisions of the applicable Plan. The Trustee shall be fully protected in
making any payment in accordance with the provisions of this paragraph.
(b) The Trustee shall make or commence payment to the Beneficiary in
accordance with his representations not later than 30 business days after its
receipt thereof; provided, however, that before the Trustee makes or commences
any such payment and not later than 7 business days after its receipt of the
Beneficiary's representations, the Trustee shall request in writing the
Grantor's agreement that the Beneficiary's representations are accurate with
respect to the amount, fact, and time of payment to him. The Trustee shall
enclose with such request a copy of the Beneficiary's representations and
written advice to the Grantor that it must respond to the Trustee's request on
or before the 20th business day (which date shall be set forth in such written
advice) after the Beneficiary furnished such representations to the Trustee. If
the Grantor, in a writing delivered to the Trustee, agrees with the
Beneficiary's representations in all respects, or if the Grantor does not
respond to the Trustee's request by the 20th day deadline, the Trustee shall
make payment in accordance with the Beneficiary's representations. If the
Grantor advises the Trustee in writing on or before the 20th day deadline that
it does not agree with any or all of the Beneficiary's representations, the
Trustee immediately shall take whatever steps it in its sole discretion, deems
appropriate, including, but not limited to, a review of any notice furnished by
the Grantor pursuant to paragraph (e) hereof, to attempt to resolve the
difference(s) between the Grantor and the Beneficiary. If, however, the Trustee
is unable to resolve such difference(s) to its satisfaction within 60 business
days after its receipt of the Beneficiary's representations, the Trustee shall
make payment at such time and in such form and manner as is allowed under the
Plans as of the date first stated above and as the Trustee, in its sole
discretion, selects. The Trustee shall be fully protected in making or
refraining from making any payment in accordance with the provisions of this
paragraph.
(c) Notwithstanding any other provision of the Trust Agreement to the
contrary, the Trustee shall make payments hereunder before such payments are
otherwise due if it determines, based on 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 Beneficiary, or a closing agreement made under Code Section 7121
that is approved by the Internal Revenue Service and involves a Beneficiary,
that a Beneficiary has recognized or will recognize income for federal income
tax purposes with respect to amounts that are or will be payable to him under
the Plans before they are paid to him.
(d) Unless (contemporaneously with his submission of the written
instrument referred to in paragraph (a) hereof) a Beneficiary furnishes
documentation in form and substance satisfactory to the Trustee that no
withholding is required with respect to a payment to be made to him from the
Trust, the Trustee may deduct from any such payment any federal, state or local
taxes required by law to be withheld by the Trustee.
(e) The Trustee shall provide the Grantor with written confirmation
of the fact and time of any commencement of payments hereunder within 10
business days after any payments commence to a beneficiary. The Grantor shall
notify the Trustee in the same manner of any payments it commences to make to a
Beneficiary pursuant to the Plans.
(f) The Trustee shall be fully protected in making or refraining from
making any payment or any calculations in accordance with the provisions of this
Section 6.
7. Termination of the Trust and Reversion of Trust Assets. The Trust shall
terminate upon the first to occur of (i) the payment by the Grantor of all
amounts due the Beneficiaries under each of the Plans and the receipt by the
Trustee of a valid release to that effect from each of the Beneficiaries with
respect to payments made to him, or (ii) the twenty-first anniversary of the
death of the last survivor of the Beneficiaries who are in being on the date of
the execution of this Trust Agreement. Upon termination of the Trust, any and
all assets remaining in the Trust, after the payment to the Beneficiaries of all
amounts to which they are entitled and after payment of the expenses and
compensation in Sections 10 and 15(i) of this Trust Agreement, shall revert to
the Grantor and the Trustee shall promptly take such action as shall be
necessary to transfer any such assets to the Grantor. Notwithstanding the above,
the Grantor shall be obligated to take whatever steps are necessary to ensure
that the Trust is not terminated for a period of five (5) years following a
Change in Control as of the date of the execution of this Trust Agreement, such
steps to include, but not being limited to, the transfer to the Trustee of cash
or other assets pursuant to the provisions of Section 8(a) hereof.
8. Powers of the Trustee. To carry out the purposes of the Trust and
subject to any limitations herein expressed, the Trustee is vested with the
following powers until final distribution, in addition to any now or hereafter
conferred by law affecting the trust or estate created hereunder. In exercising
such powers, the Trustee shall act in a manner reasonable and equitable in view
of the interests of the Beneficiaries and in a manner in which persons of
ordinary prudence, diligence, discretion and judgment would act in the
management of their own affairs
(a) Receive and Retain Property. To receive and retain any property
received at the inception of the Trust or at any other time, whether
or not such property is unproductive of income or is property in which
the Trustee is personally interested or in which the Trustee owns an
undivided interest in any other trust capacity.
(b) Dispose of, Develop, and Abandon Assets. To dispose of an asset, for
cash or on credit, at public or private sale and, in connection with
any sale or disposition, to give such warranties and indemnifications
as the Trustee shall determine; to manage, develop, improve, exchange,
partition, change the character of or abandon a Trust asset or any
interest therein.
(c) Borrow and Encumber. To borrow money for any Trust purpose upon such
terms and conditions as may be determined by the Trustee; to obligate
the Trust or any part thereof by mortgage, deed of trust, pledge or
otherwise, for a term within or extending beyond the term of the
Trust.
(d) Lease. To enter for any purpose into a lease as lessor or lessee, with
or without an option to purchase or renew, for a term.
(e) Grant or Acquire Options. To grant or acquire options and rights of
first refusal involving the sale or purchase of any Trust assets,
including the power to write covered call options listed on any
securities exchange.
(f) Powers Respecting Securities. To have all the rights, powers,
privileges and responsibilities of an owner of securities, including,
without limiting the foregoing, the power to vote, to give general or
limited proxies, to pay calls, assessments, and other sums; to assent
to, or to oppose, corporate sales or other acts; to participate in, or
to oppose, any voting trusts, pooling agreements, foreclosures,
reorganizations, consolidations, mergers and liquidations, and, in
connection therewith, to give warranties and indemnifications and to
deposit securities with and transfer title to any protective or other
committee; to exchange, exercise or sell stock subscription or
conversion rights; and, regardless of any limitations elsewhere in
this instrument relative to investments by the Trustee, to accept and
retain as an investment hereunder any securities received through the
exercise of any of the foregoing powers.
(g) Use of Nominee. To hold securities or other property in the name of
the Trustee, in the name of a nominee of the Trustee, or in the name
of a custodian (or its nominee) selected by the Trustee, with or
without disclosure of the Trust, the Trustee being responsible for the
acts of such custodian or nominee affecting such property.
(h) Advance Money. To advance money for the protection of the Trust, and
for all expenses, losses and liabilities sustained or incurred in the
administration of the Trust or because of the holding or ownership of
any Trust assets, for which advances, with interest, the Trustee has
a lien on the Trust assets as against the Beneficiaries.
(i) Pay, Contest or Settle Claims. To pay, contest or settle any claim by
or against the Trust by compromise, arbitration or otherwise; to
release, in whole or in part, any claim belonging to the Trust to the
extent that the claim is uncollectible. Notwithstanding the foregoing,
the Trustee may only pay or settle a claim asserted against the Trust
by the Grantor if it is compelled to do so by a final order of a court
of competent jurisdiction.
(j) Litigate. To prosecute or defend actions, claims or proceedings for
the protection of Trust assets and of the Trustee in the performance
of its duties.
(k) Employ Advisers and Agents. To employ persons, corporations or
associations, including attorneys, auditors, investment advisers or
agents, even if they are associated with the Trustee, to advise or
assist the Trustee in the performance of its administrative duties; to
act without independent investigation upon their recommendations.
(l) Use Custodian. If no bank or trust company is acting as Trustee
hereunder, the Trustee shall appoint a bank or trust company to act as
custodian (the "Custodian") for securities and any other Trust assets.
Any such appointment shall terminate when a bank or trust company
begins to serve as Trustee hereunder. The Custodian shall keep the
deposited property, collect and receive the income and principal, and
hold, invest, disburse or otherwise dispose of the property or its
proceeds (specifically including selling and purchasing securities,
and delivering securities sold and receiving securities purchased)
upon the order of the Trustee.
(m) Execute Documents. To execute and deliver all instruments which will
accomplish or facilitate the exercise of the powers vested in the
Trustee.
(n) Grant of Powers Limited. The Trustee is expressly prohibited from
exercising any powers vested in it primarily for the benefit of the
Grantor rather than for the benefit of the Beneficiaries. The Trustee
shall not have the power to purchase, exchange, or otherwise deal with
or dispose of the assets of the Trust for less than adequate and full
consideration in money or money's worth.
(o) Deposit Assets. To deposit Trust assets in commercial, savings or
savings and loan accounts (including such accounts in a corporate
Trustee's banking department) and to keep such portion of the Trust
assets in cash or cash balances as the Trustee may, from time to time,
deem to be in the best interests of the Trust, without liability for
interest thereon.
9. Resignation of Trustee and Appointment of Successor Trustee. Each
Trustee shall have the right to resign upon 30 days' written notice to the
Grantor, during which time the Grantor shall appoint a "Qualified Successor
Trustee." If no Qualified Successor Trustee accepts such appointment, the
resigning Trustee shall petition a court of competent jurisdiction for the
appointment of a "Qualified Successor Trustee." For this purpose, a "Qualified
Successor Trustee" may be an individual or a corporation but may not be the
Grantor, any person who would be a "related or subordinate party" to the Grantor
within the meaning of Section 672(c) of the Code or a corporation that would be
a member of an "affiliated group" of corporations including the Grantor within
the meaning of Section 1504(a) of the Code if the words "80 percent" wherever
they appear in that section were replaced by the words "50 percent." Upon the
written acceptance by the Qualified Successor Trustee of the trust and upon
approval of the resigning Trustee's final account by those entitled thereto, the
resigning Trustee shall be discharged.
10. Trustee Compensation. The Trustee shall be entitled to receive as
compensation for its services hereunder the compensation (a) as negotiated and
agreed to by the Grantor and the Trustee, or (b) if not negotiated or if the
parties are unable to reach agreement, as allowed a trustee under the laws of
the State of Minnesota in effect at the time such compensation is payable. Such
compensation shall be paid by the Grantor; provided, however, that to the extent
such compensation is not paid by the Grantor, subject to the provisions of
Section 15(i) hereof, it shall be charged against and paid from the Trust and
the Grantor shall reimburse the Trust for any such payment made from the Trust
within 30 days of its receipt from the Trustee of written notice of such
payment.
11. Trustee's Consent to Act and Indemnification of the Trustee. The
Trustee hereby grants and consents to act as Trustee hereunder. The Grantor
agrees to indemnify the Trustee and hold it harmless from and against all
claims, liabilities, legal fees and expenses that may be asserted against it,
otherwise than on account of the Trustee's own negligence or willful misconduct
(as found by a final judgment of a court of competent jurisdiction) by reason of
the Trustee's taking or refraining from taking any action in connection with the
Trust, whether or not the Trustee is a party to a legal proceeding or otherwise.
12. Prohibition Against Assignment. No Beneficiary shall have any preferred
claim on, or any beneficial ownership interest in, any assets of the Trust
before such assets are paid to the Beneficiary as provided in Section 6, and all
rights created under the Trust and the Plans shall be unsecured contractual
rights of the Beneficiary against the Grantor. No part of, or claim against, the
assets of the Trust may be assigned, anticipated, alienated, encumbered,
garnished, attached or in any other manner disposed of by any of the
Beneficiaries, and no such part or claim shall be subject to any legal process
or claims of creditors of any of the Beneficiaries.
13. Annual Accounting. The Trustee shall keep accurate and detailed
accounts of all investments, receipts and disbursements and other transactions
hereunder, and, within ninety days following the close of each calendar year,
and within ninety days after the Trustee's resignation or termination of the
Trust as provided herein, the Trustee shall render a written account of its
administration of the Trust to the Grantor by submitting a record of receipts,
investments, disbursements, distributions, gains, losses, assets on hand at the
end of the accounting period and other pertinent information, including a
description of all securities and investments purchased and sold during such
calendar year. Written approval of an account shall, as to all matters shown in
the account, be binding upon the Grantor and shall forever release and discharge
the Trustee from any liability or accountability. The Grantor will be deemed to
have given his written approval if he does not object in writing to the Trustee
within one hundred and twenty days after the date of receipt of such account
from the Trustee. The Trustee shall be entitled at any time to institute an
action in a court of competent jurisdiction for a judicial settlement of its
account.
14. Notices. Any notice or instructions required under any of the
provisions of this Trust Agreement shall be deemed effectively given only if
such notice is in writing and is delivered personally or by certified or
registered mail, return receipt requested and postage prepaid, addressed to the
addresses as set forth below of the parties hereto. The address of the parties
are as follows:
(i) The Grantor:
General Mills, Inc.
Post Office Box 1113
Number One General Mills Boulevard
Minneapolis, MN 55440
Attention: Treasurer
(ii) The Trustee:
Norwest Bank Minnesota, N.A.
6th and Marquette Avenue
Minneapolis, MN 55479-0069
Attention: Administrative Officer
The Grantor or Trustee may at any time change the address to which notices are
to be sent to it by giving written notice thereof in the manner provided above.
15. Miscellaneous Provisions.
(a) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to contracts made
and to be performed therein and the Trustee shall not be required to account in
any court other than one of the courts of such state.
(b) All section headings herein have been inserted for convenience of
reference only and shall in no way modify, restrict or affect the meaning or
interpretation of any of the terms or provisions of this Trust Agreement.
(c) This Trust Agreement is intended as a complete and exclusive
statement of the agreement of the parties hereto, supersedes all previous
agreements or understandings among them and may not be modified or terminated
orally.
(d) The term "Trustee" shall include any successor Trustee.
(e) If a Trustee or Custodian hereunder is a bank or trust company,
any corporation resulting from any merger, consolidation or conversion to which
such bank or trust company may be a party, or any corporation otherwise
succeeding generally to all or substantially all of the assets or business of
such bank or trust company, shall be the successor to it as Trustee or custodian
hereunder, as the case may be without the execution of any instrument or any
further action on the part of any party hereto.
(f) If any provision of this Trust Agreement shall be invalid and
unenforceable, the remaining provisions hereof shall subsist and be carried into
effect.
(g) The Plans are by this reference expressly incorporated herein and
made a part hereof with the same force and effect as if fully set forth at
length. As of the date first stated above, the terms of the Plans are as set
forth in Exhibit A attached hereto.
(h) The assets of the Trust shall be subject only to the claims of
the Grantor's general creditors in the event of the Grantor's bankruptcy or
insolvency. The Grantor shall be considered "bankrupt" or "insolvent" if the
Grantor is (A) unable to pay its debts when due or (B) engaged as a debtor in a
proceeding under the Bankruptcy Code, 11 U.S.C. Section 101 et seq. The Board of
Directors and the chief executive officer of the Grantor must notify the Trustee
of the Grantor's bankruptcy or insolvency within three (3) days following the
occurrence of such event. Upon receipt of such a notice, or, upon receipt of a
written allegation from a person or entity claiming to be a creditor of the
Grantor that the Grantor is bankrupt or insolvent, the Trustee shall discontinue
payments to Beneficiaries. The Trustee shall, as soon as practicable after
receipt of such notice or written allegation, determine whether the Grantor is
bankrupt or insolvent. If the Trustee determines, based on such notice, written
allegation, or such other information as it deems appropriate, that the Grantor
is bankrupt or insolvent, the Trustee shall hold the assets of the Trust for the
benefit of the Grantor's general creditors, and deliver any undistributed assets
to satisfy the claims of such creditors as a court of competent jurisdiction may
direct. The Trustee shall resume payments to Beneficiaries only after it has
determined that the Grantor is not bankrupt or insolvent, is no longer bankrupt
or insolvent (if the Trustee determined that the Grantor was bankrupt or
insolvent), pursuant to an order of a court of competent jurisdiction. Unless
the Trustee has actual knowledge of the Grantor's bankruptcy or insolvency, the
Trustee shall have no duty to inquire whether the Grantor is bankrupt or
insolvent. The Trustee may in all events rely on such evidence concerning the
Grantor's solvency as may be furnished to the Trustee which will give the
Trustee a reasonable basis for making a determination concerning the Grantor's
solvency.
If the Trustee discontinues payment of benefits from the Trust
pursuant to this Section 15(h) and subsequently resumes such payments, the first
payment following such discontinuance shall include the aggregate amount of all
payments which would have been made to each Beneficiary (together with interest)
during the period of such discontinuance, less the aggregate amount of payments
made to the Beneficiary by the Grantor in lieu of the payments provided for
hereunder during any such period of discontinuance.
(i) Any and all taxes, expenses (including, but not limited to, the
Trustee's compensation) and costs of litigation relating to or concerning the
adoption, administration and termination of the Trust shall be borne and
promptly paid by the Grantor; provided, however, that, to the extent such taxes,
expenses and costs relating to the Trust are due and owing and (A) are not paid
by the Grantor, and (B) do not in the aggregate exceed $1,000, they shall be
charged against and paid from the Trust, and the Grantor shall reimburse the
Trust for any such payment made from the Trust within 30 days of its receipt
from the Trustee of written notice of such payment.
(j) Any reference hereunder to a Beneficiary shall expressly be
deemed to include, where relevant, the beneficiaries of a Beneficiary duly
appointed under the terms of the Plans. A Beneficiary shall cease to have such
status once any and all amounts due such Beneficiary under the Plan have been
satisfied.
(k) Any reference hereunder to the Grantor shall expressly be deemed
to include the Grantor's successor and assigns.
(l) Whenever used herein, and to the extent appropriate, the
masculine, feminine or neuter gender shall include the other two genders, the
singular shall include the plural and the plural shall include the singular.
IN WITNESS WHEREOF, the parties hereto have executed this amended and
restated TRUST AGREEMENT as of this 26th day of September, 1988.
GRANTOR:
GENERAL MILLS, INC.
Attest:
/s/ Ivy S. Bernhardson By: /s/ C. L. Whitehill
Name: Ivy S. Bernhardson Name: C. L. Whitehill
Title: Assistant Secretary Title: Senior Vice President
TRUSTEE:
NORWEST BANK MINNESOTA, N.A.
Attest:
/s/ Gary R. Porter By: /s/ Jill Greene
Name: Gary R. Porter Name: Jill Greene
Title: Vice President Title: Asst. Vice President
<PAGE>
EXHIBIT A
A. Deferred Compensation Plan, Amended and Restated as of January 1, 1986.
B. Executive Incentive and Estate Building Program, Amended and Restated as of
June 1, 1986.
C. Supplemental Retirement Plan of General Mills,Inc., Amended and Restated
effective as of January 1, 1986.
D. Supplemental Savings Plan of General Mills, Inc., Amended and Restated
effective as of January 1, 1986.
EXHIBIT 10.14
GENERAL MILLS, INC.
SUPPLEMENTAL BENEFITS TRUST
TRUST AGREEMENT
This TRUST AGREEMENT is made as of September 26, 1988, is between General
Mills, Inc. (the "Grantor") and Norwest Bank Minnesota, N.A. (the "Trustee").
1. PURPOSE. The purpose of this trust (the "Trust") is to provide a vehicle
to (a) hold assets of the Grantor as a reserve for the discharge of the
Grantor's obligations to certain individuals (the "Beneficiaries") entitled to
receive benefits under the General Mills, Inc. Compensation Plan for
Non-Employee Directors and the General Mills, Inc. Retirement Plan for
Non-Employee Directors and any other plan of deferred compensation that the
Grantor so designates in writing to the Trustee (the "Plans"), and (b) invest,
reinvest, disburse and distribute those assets and the earnings thereon as
provided hereunder and in the Plans.
2. TRUST CORPUS. The Grantor hereby transfers to the Trustee and the
Trustee hereby accepts and agrees to hold, in trust, the sum of Ten Dollars
($10.00) plus such cash and/or property, if any, transferred to the Trustee by
the Grantor or on behalf of the Grantor pursuant to obligations incurred under
any or all of the Plans and the earnings thereon, and such cash and/or property,
together with the earnings thereon and together with any other cash or property
received by the Trustee pursuant to Section 8(a) of this Trust Agreement, shall
constitute the trust estate and shall be held, managed and distributed as
hereinafter provided. The Grantor shall execute any and all instruments
necessary to vest the Trustee with full title to the property hereby
transferred.
3. GRANTOR TRUST. The Trust is intended to be a trust of which the Grantor
is treated as the owner for federal income tax purposes in accordance with the
provisions of Sections 671 through 679 of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Trustee, in its sole discretion, deems it necessary
or advisable for the Grantor and/or the Trustee to undertake or refrain from
undertaking any actions (including, but not limited to, making or refraining
from making any elections or filings) in order to ensure that the Grantor is at
all times treated as the owner of the Trust for federal income tax purposes, the
Grantor and/or the Trustee will undertake or refrain from undertaking (as the
case may be) such actions. The Grantor hereby irrevocably authorizes the Trustee
to be its attorney-in-fact for the purpose of performing any act which the
Trustee, in its sole discretion, deems necessary or advisable in order to
accomplish the purposes and the intent of this Section 3. The Trustee shall be
fully protected in acting or refraining from acting in accordance with the
provisions of this Section 3.
4. IRREVOCABILITY OF TRUST. The Trust shall be irrevocable and may not be
altered or amended in any substantive respect, or revoked or terminated by the
Grantor in whole or in part, without the express written consent of a majority
of the Beneficiaries of the Trust; provided, however, that the Trust may be
amended, as may be necessary either (i) to obtain a favorable ruling from the
Internal Revenue Service with respect to the tax consequences of the
establishment and settlement of the Trust, or (ii) to make nonsubstantive
changes, which have no effect upon the amount of any Beneficiary's benefits, the
time of receipt of benefits, the identity of any recipient of benefits, or the
reversion of any assets to the Grantor prior to the Trustee's satisfaction of
all the Trustee's obligations hereunder; provided, further, that in the event of
a "Change of Control" as defined in Section 2.2 of the General Mills, Inc.
Retirement Plan for Non-Employee Directors (hereinafter referred to as a "Change
in Control"), the Trust may not be altered or amended in any substantive
respect, or revoked or terminated by the Grantor's successor unless a majority
of the Beneficiaries, determined as of the day before such Change in Control,
agree in writing to such an alteration, amendment, revocation or termination.
5. INVESTMENT OF TRUST ASSETS.
(a) Subject to the provisions of paragraph (b) below, until the Trustee has
distributed all of the assets of the Trust in accordance with the terms hereof,
the Trustee shall invest and reinvest such assets (without regard to any state
law limiting the investment powers of fiduciaries) in such securities and other
property as the Trustee deems advisable, considering the probable income
(including capital appreciation potential) from any such investment, the
probable safety of the assets of the Trust and, where appropriate, the rate of
return at which the assets would have been invested on behalf of each
Beneficiary under any applicable qualified defined contribution plan maintained
by the Grantor. Within the limitations of the foregoing, the Trustee is
specifically authorized to acquire, for cash or on credit, every kind of
property, real, personal or mixed, and to make every kind of investment,
specifically including, but not limited to, corporate and governmental
obligations of every kind, preferred or common stocks, securities of any
regulated investment company or trust, interests in common trust funds now or
hereafter established by a corporate trustee, and property in which the Trustee
owns an undivided interest in any other trust capacity. The Trustee is expressly
authorized and empowered to purchase such insurance in its own name (and with
itself as the beneficiary) as it shall determine to be necessary or advisable to
advance best the purposes of the Trust and the interests of the Beneficiaries.
(b) The Trustee shall invest and reinvest the assets of the Trust in
accordance with such investment objectives, guidelines, restrictions or
directions as the Grantor may furnish to the Trustee at the time of the
execution of the Trust or at any later date; provided, however, that if there is
a Change in Control the Trust's investment objectives, guidelines, restrictions
or directions may not be changed by the Grantor's successor unless a majority of
the Beneficiaries, determined as of the day before such Change in Control,
agree, in writing, to such a change.
6. Distribution of Trust Assets.
(a) Subject to the provisions of paragraph (b) below, at such time as a
Beneficiary is entitled to a payment under any of the Plans, he shall be
entitled to receive from the Trust (i) an amount in cash equal to the amount to
which he is entitled under the Plan or Plans at such time, less (ii) any
payments previously made to him by the Grantor with respect to such amount
pursuant to the terms of the Plans. The commencement of payments from the Trust
shall be conditioned on the Trustee's prior receipt of a written instrument from
the Beneficiary in a form satisfactory to the Trustee containing representations
as to (A) the amount to which the Beneficiary is entitled under the Plans, (B)
the fact that he has requested the payment of such amount from the Grantor
pursuant to the terms of the Plans, (C) the amount, if any, he has received from
the Grantor under the Plans with respect to such amount, and (D) the amount to
be paid him by the Trust (i.e., the difference between (A) and (C) above). All
payments to a Beneficiary from the Trust shall be made in accordance with the
provisions of the applicable Plan. The Trustee shall be fully protected in
making any payment in accordance with the provisions of this paragraph.
(b) The Trustee shall make or commence payment to the Beneficiary in
accordance with his representations not later than 30 business days after its
receipt thereof; provided, however, that before the Trustee makes or commences
any such payment and not later than 7 business days after its receipt of the
Beneficiary's representations, the Trustee shall request in writing the
Grantor's agreement that the Beneficiary's representations are accurate with
respect to the amount, fact, and time of payment to him. The Trustee shall
enclose with such request a copy of the Beneficiary's representations and
written advice to the Grantor that it must respond to the Trustee's request on
or before the 20th business day (which date shall be set forth in such written
advice) after the Beneficiary furnished such representations to the Trustee. If
the Grantor, in a writing delivered to the Trustee, agrees with the
Beneficiary's representations in all respects, or if the Grantor does not
respond to the Trustee's request by the 20th day deadline, the Trustee shall
make payment in accordance with the Beneficiary's representations. If the
Grantor advises the Trustee in writing on or before the 20th day deadline that
it does not agree with any or all of the Beneficiary's representations, the
Trustee immediately shall take whatever steps it in its sole discretion, deems
appropriate, including, but not limited to, a review of any notice furnished by
the Grantor pursuant to paragraph (e) hereof, to attempt to resolve the
difference(s) between the Grantor and the Beneficiary. If, however, the Trustee
is unable to resolve such difference(s) to its satisfaction within 60 business
days after its receipt of the Beneficiary's representations, the Trustee shall
make payment at such time and in such form and manner as is allowed under the
Plans as of the date first stated above and as the Trustee, in its sole
discretion, selects. The Trustee shall be fully protected in making or
refraining from making any payment in accordance with the provisions of this
paragraph.
(c) Notwithstanding any other provision of the Trust Agreement to the
contrary, the Trustee shall make payments hereunder before such payments are
otherwise due if it determines, based on 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 Beneficiary, or a closing agreement made under Code Section 7121
that is approved by the Internal Revenue Service and involves a Beneficiary,
that a Beneficiary has recognized or will recognize income for federal income
tax purposes with respect to amounts that are or will be payable to him under
the Plans before they are paid to him.
(d) Unless (contemporaneously with his submission of the written instrument
referred to in paragraph (a) hereof) a Beneficiary furnishes documentation in
form and substance satisfactory to the Trustee that no withholding is required
with respect to a payment to be made to him from the Trust, the Trustee may
deduct from any such payment any federal, state or local taxes required by law
to be withheld by the Trustee
(e) The Trustee shall provide the Grantor with written confirmation of the
fact and time of any commencement of payments hereunder within 10 business days
after any payments commence to a beneficiary. The Grantor shall notify the
Trustee in the same manner of any payments it commences to make to a Beneficiary
pursuant to the Plans.
(f) The Trustee shall be fully protected in making or refraining from
making any payment or any calculations in accordance with the provisions of this
Section 6.
7. Termination of the Trust and Reversion of Trust Assets. The Trust shall
terminate upon the first to occur of (i) the payment by the Grantor of all
amounts due the Beneficiaries under each of the Plans and the receipt by the
Trustee of a valid release to that effect from each of the Beneficiaries with
respect to payments made to him, or (ii) the twenty-first anniversary of the
death of the last survivor of the Beneficiaries who are in being on the date of
the execution of this Trust Agreement. Upon termination of the Trust, any and
all assets remaining in the Trust, after the payment to the Beneficiaries of all
amounts to which they are entitled and after payment of the expenses and
compensation in Sections 10 and 15(i) of this Trust Agreement, shall revert to
the Grantor and the Trustee shall promptly take such action as shall be
necessary to transfer any such assets to the Grantor. Notwithstanding the above,
the Grantor shall be obligated to take whatever steps are necessary to ensure
that the Trust is not terminated for a period of five (5) years following a
Change in Control as of the date of the execution of this Trust Agreement, such
steps to include, but not being limited to, the transfer to the Trustee of cash
or other assets pursuant to the provisions of Section 8(a) hereof.
8. Powers of the Trustee. To carry out the purposes of the Trust and
subject to any limitations herein expressed, the Trustee is vested with the
following powers until final distribution, in addition to any now or hereafter
conferred by law affecting the trust or estate created hereunder. In exercising
such powers, the Trustee shall act in a manner reasonable and equitable in view
of the interests of the Beneficiaries and in a manner in which persons of
ordinary prudence, diligence, discretion and judgment would act in the
management of their own affairs.
(a) Receive and Retain Property. To receive and retain any property
received at the inception of the Trust or at any other time, whether
or not such property is unproductive of income or is property in which
the Trustee is personally interested or in which the Trustee owns an
undivided interest in any other trust capacity.
(b) Dispose of, Develop, and Abandon Assets. To dispose of an asset, for
cash or on credit, at public or private sale and, in connection with
any sale or disposition, to give such warranties and indemnifications
as the Trustee shall determine; to manage, develop, improve, exchange,
partition, change the character of or abandon a Trust asset or any
interest therein.
(c) Borrow and Encumber. To borrow money for any Trust purpose upon such
terms and conditions as may be determined by the Trustee; to obligate
the Trust or any part thereof by mortgage, deed of trust, pledge or
otherwise, for a term within or extending beyond the term of the
Trust.
(d) Lease. To enter for any purpose into a lease as lessor or lessee, with
or without an option to purchase or renew, for a term.
(e) Grant or Acquire Options. To grant or acquire options and rights of
first refusal involving the sale or purchase of any Trust assets,
including the power to write covered call options listed on any
securities exchange.
(f) Powers Respecting Securities. To have all the rights, powers,
privileges and responsibilities of an owner of securities, including,
without limiting the foregoing, the power to vote, to give general or
limited proxies, to pay calls, assessments, and other sums; to assent
to, or to oppose, corporate sales or other acts; to participate in, or
to oppose, any voting trusts, pooling agreements, foreclosures,
reorganizations, consolidations, mergers and liquidations, and, in
connection therewith, to give warranties and indemnifications and to
deposit securities with and transfer title to any protective or other
committee; to exchange, exercise or sell stock subscription or
conversion rights; and, regardless of any limitations elsewhere in
this instrument relative to investments by the Trustee, to accept and
retain as an investment hereunder any securities received through the
exercise of any of the foregoing powers.
(g) Use of Nominee. To hold securities or other property in the name of
the Trustee, in the name of a nominee of the Trustee, or in the name
of a custodian (or its nominee) selected by the Trustee, with or
without disclosure of the Trust, the Trustee being responsible for the
acts of such custodian or nominee affecting such property.
(h) Advance Money. To advance money for the protection of the Trust, and
for all expenses, losses and liabilities sustained or incurred in the
administration of the Trust or because of the holding or ownership of
any Trust assets, for which advances, with interest, the Trustee has a
lien on the Trust assets as against the Beneficiaries.
(i) Pay, Contest or Settle Claims. To pay, contest or settle any claim by
or against the Trust by compromise, arbitration or otherwise; to
release, in whole or in part, any claim belonging to the Trust to the
extent that the claim is uncollectible. Notwithstanding the foregoing,
the Trustee may only pay or settle a claim asserted against the Trust
by the Grantor if it is compelled to do so by a final order of a court
of competent jurisdiction.
(j) Litigate. To prosecute or defend actions, claims or proceedings for
the protection of Trust assets and of the Trustee in the performance
of its duties.
(k) Employ Advisers and Agents. To employ persons, corporations or
associations, including attorneys, auditors, investment advisers or
agents, even if they are associated with the Trustee, to advise or
assist the Trustee in the performance of its administrative duties; to
act without independent investigation upon their recommendations.
(l) Use Custodian. If no bank or trust company is acting as Trustee
hereunder, the Trustee shall appoint a bank or trust company to act as
custodian (the "Custodian") for securities and any other Trust assets.
Any such appointment shall terminate when a bank or trust company
begins to serve as Trustee hereunder. The Custodian shall keep the
deposited property, collect and receive the income and principal, and
hold, invest, disburse or otherwise dispose of the property or its
proceeds (specifically including selling and purchasing securities,
and delivering securities sold and receiving securities purchased)
upon the order of the Trustee.
(m) Execute Documents. To execute and deliver all instruments which will
accomplish or facilitate the exercise of the powers vested in the
Trustee.
(n) Grant of Powers Limited. The Trustee is expressly prohibited from
exercising any powers vested in it primarily for the benefit of the
Grantor rather than for the benefit of the Beneficiaries. The Trustee
shall not have the power to purchase, exchange, or otherwise deal with
or dispose of the assets of the Trust for less than adequate and full
consideration in money or money's worth.
(o) Deposit Assets. To deposit Trust assets in commercial, savings or
savings and loan accounts (including such accounts in a corporate
Trustee's banking department) and to keep such portion of the Trust
assets in cash or cash balances as the Trustee may, from time to time,
deem to be in the best interests of the Trust, without liability for
interest thereon.
9. Resignation of Trustee and Appointment of Successor Trustee. Each
Trustee shall have the right to resign upon 30 days' written notice to the
Grantor, during which time the Grantor shall appoint a "Qualified Successor
Trustee." If no Qualified Successor Trustee accepts such appointment, the
resigning Trustee shall petition a court of competent jurisdiction for the
appointment of a "Qualified Successor Trustee." For this purpose, a "Qualified
Successor Trustee" may be an individual or a corporation but may not be the
Grantor, any person who would be a "related or subordinate party" to the Grantor
within the meaning of Section 672(c) of the Code or a corporation that would be
a member of an "affiliated group" of corporations including the Grantor within
the meaning of Section 1504(a) of the Code if the words "80 percent" wherever
they appear in that section were replaced by the words "50 percent." Upon the
written acceptance by the Qualified Successor Trustee of the trust and upon
approval of the resigning Trustee's final account by those entitled thereto, the
resigning Trustee shall be discharged.
10. Trustee Compensation. The Trustee shall be entitled to receive as
compensation for its services hereunder the compensation (a) as negotiated and
agreed to by the Grantor and the Trustee, or (b) if not negotiated or if the
parties are unable to reach agreement, as allowed a trustee under the laws of
the State of Minnesota in effect at the time such compensation is payable. Such
compensation shall be paid by the Grantor; provided, however, that to the extent
such compensation is not paid by the Grantor, subject to the provisions of
Section 15(i) hereof, it shall be charged against and paid from the Trust and
the Grantor shall reimburse the Trust for any such payment made from the Trust
within 30 days of its receipt from the Trustee of written notice of such
payment.
11. Trustee's Consent to Act and Indemnification of the Trustee. The
Trustee hereby grants and consents to act as Trustee hereunder. The Grantor
agrees to indemnify the Trustee and hold it harmless from and against all
claims, liabilities, legal fees and expenses that may be asserted against it,
otherwise than on account of the Trustee's own negligence or willful misconduct
(as found by a final judgment of a court of competent jurisdiction) by reason of
the Trustee's taking or refraining from taking any action in connection with the
Trust, whether or not the Trustee is a party to a legal proceeding or otherwise.
12. Prohibition Against Assignment. No Beneficiary shall have any preferred
claim on, or any beneficial ownership interest in, any assets of the Trust
before such assets are paid to the Beneficiary as provided in Section 6, and all
rights created under the Trust and the Plans shall be unsecured contractual
rights of the Beneficiary against the Grantor. No part of, or claim against, the
assets of the Trust may be assigned, anticipated, alienated, encumbered,
garnished, attached or in any other manner disposed of by any of the
Beneficiaries, and no such part or claim shall be subject to any legal process
or claims of creditors of any of the Beneficiaries.
13. Annual Accounting. The Trustee shall keep accurate and detailed
accounts of all investments, receipts and disbursements and other transactions
hereunder, and, within ninety days following the close of each calendar year,
and within ninety days after the Trustee's resignation or termination of the
Trust as provided herein, the Trustee shall render a written account of its
administration of the Trust to the Grantor by submitting a record of receipts,
investments, disbursements, distributions, gains, losses, assets on hand at the
end of the accounting period and other pertinent information, including a
description of all securities and investments purchased and sold during such
calendar year. Written approval of an account shall, as to all matters shown in
the account, be binding upon the Grantor and shall forever release and discharge
the Trustee from any liability or accountability. The Grantor will be deemed to
have given his written approval if he does not object in writing to the Trustee
within one hundred and twenty days after the date of receipt of such account
from the Trustee. The Trustee shall be entitled at any time to institute an
action in a court of competent jurisdiction for a judicial settlement of its
account.
14. Notices. Any notice or instructions required under any of the
provisions of this Trust Agreement shall be deemed effectively given only if
such notice is in writing and is delivered personally or by certified or
registered mail, return receipt requested and postage prepaid, addressed to the
addresses as set forth below of the parties hereto. The address of the parties
are as follows:
(i) The Grantor:
General Mills, Inc.
Post Office Box 1113
Number One General Mills Boulevard
Minneapolis, MN 55440
Attention: Treasurer
(ii) The Trustee:
Norwest Bank Minnesota, N.A.
6th and Marquette Avenue
Minneapolis, MN 55479-0069
Attention: Administrative Officer
The Grantor or Trustee may at any time change the address to which notices are
to be sent to it by giving written notice thereof in the manner provided above.
15. Miscellaneous Provisions.
(a) This Trust Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota applicable to contracts made and to be
performed therein and the Trustee shall not be required to account in any court
other than one of the courts of such state.
(b) All section headings herein have been inserted for convenience of
reference only and shall in no way modify, restrict or affect the meaning or
interpretation of any of the terms or provisions of this Trust Agreement.
(c) This Trust Agreement is intended as a complete and exclusive statement
of the agreement of the parties hereto, supersedes all previous agreements or
understandings among them and may not be modified or terminated orally.
(d) The term "Trustee" shall include any successor Trustee.
(e) If a Trustee or Custodian hereunder is a bank or trust company, any
corporation resulting from any merger, consolidation or conversion to which such
bank or trust company may be a party, or any corporation otherwise succeeding
generally to all or substantially all of the assets or business of such bank or
trust company, shall be the successor to it as Trustee or custodian hereunder,
as the case may be without the execution of any instrument or any further action
on the part of any party hereto.
(f) If any provision of this Trust Agreement shall be invalid and
unenforceable, the remaining provisions hereof shall subsist and be carried into
effect.
(g) The Plans are by this reference expressly incorporated herein and made
a part hereof with the same force and effect as if fully set forth at length. As
of the date first stated above, the terms of the Plans are as set forth in
Exhibit A attached hereto.
(h) The assets of the Trust shall be subject only to the claims of the
Grantor's general creditors in the event of the Grantor's bankruptcy or
insolvency. The Grantor shall be considered "bankrupt" or "insolvent" if the
Grantor is (A) unable to pay its debts when due or (B) engaged as a debtor in a
proceeding under the Bankruptcy Code, 11 U.S.C. Section 101 et seq. The Board of
Directors and the chief executive officer of the Grantor must notify the Trustee
of the Grantor's bankruptcy or insolvency within three (3) days following the
occurrence of such event. Upon receipt of such a notice, or, upon receipt of a
written allegation from a person or entity claiming to be a creditor of the
Grantor that the Grantor is bankrupt or insolvent, the Trustee shall discontinue
payments to Beneficiaries. The Trustee shall, as soon as practicable after
receipt of such notice or written allegation, determine whether the Grantor is
bankrupt or insolvent. If the Trustee determines, based on such notice, written
allegation, or such other information as it deems appropriate, that the Grantor
is bankrupt or insolvent, the Trustee shall hold the assets of the Trust for the
benefit of the Grantor's general creditors, and deliver any undistributed assets
to satisfy the claims of such creditors as a court of competent jurisdiction may
direct. The Trustee shall resume payments to Beneficiaries only after it has
determined that the Grantor is not bankrupt or insolvent, is no longer bankrupt
or insolvent (if the Trustee determined that the Grantor was bankrupt or
insolvent), pursuant to an order of a court of competent jurisdiction. Unless
the Trustee has actual knowledge of the Grantor's bankruptcy or insolvency, the
Trustee shall have no duty to inquire whether the Grantor is bankrupt or
insolvent. The Trustee may in all events rely on such evidence concerning the
Grantor's solvency as may be furnished to the Trustee which will give the
Trustee a reasonable basis for making a determination concerning the Grantor's
solvency.
If the Trustee discontinues payment of benefits from the Trust pursuant to
this Section 15(h) and subsequently resumes such payments, the first payment
following such discontinuance shall include the aggregate amount of all payments
which would have been made to each Beneficiary (together with interest) during
the period of such discontinuance, less the aggregate amount of payments made to
the Beneficiary by the Grantor in lieu of the payments provided for hereunder
during any such period of discontinuance.
(i) Any and all taxes, expenses (including, but not limited to, the
Trustee's compensation) and costs of litigation relating to or concerning the
adoption, administration and termination of the Trust shall be borne and
promptly paid by the Grantor; provided, however, that, to the extent such taxes,
expenses and costs relating to the Trust are due and owing and (A) are not paid
by the Grantor, and (B) do not in the aggregate exceed $1,000, they shall be
charged against and paid from the Trust, and the Grantor shall reimburse the
Trust for any such payment made from the Trust within 30 days of its receipt
from the Trustee of written notice of such payment.
(j) Any reference hereunder to a Beneficiary shall expressly be deemed to
include, where relevant, the beneficiaries of a Beneficiary duly appointed under
the terms of the Plans. A Beneficiary shall cease to have such status once any
and all amounts due such Beneficiary under the Plan have been satisfied.
(k) Any reference hereunder to the Grantor shall expressly be deemed to
include the Grantor's successor and assigns.
(l) Whenever used herein, and to the extent appropriate, the masculine,
feminine or neuter gender shall include the other two genders, the singular
shall include the plural and the plural shall include the singular.
IN WITNESS WHEREOF, the parties hereto have executed this TRUST AGREEMENT
as of this 26th day of September, 1988.
GRANTOR:
GENERAL MILLS, INC.
Attest:
/s/ Ivy S. Bernhardson By: /s/ C. L. Whitehill
Name: Ivy S. Bernhardson Name: C. L. Whitehill
Title: Assistant Secretary Title: Senior Vice President
TRUSTEE:
NORWEST BANK MINNESOTA, N.A.
Attest:
/s/ Gary R. Porter By: /s/ Jill Greene
Name: Gary R. Porter Name: Jill Greene
Title: Vice President Title: Assistant Vice President
EXHIBIT 10.17
GENERAL MILLS, INC.
1990 SALARY REPLACEMENT
STOCK OPTION PLAN
As Amended Through June 27, 1994
<PAGE>
GENERAL MILLS, INC.
1990 SALARY REPLACEMENT STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of the General Mills, Inc. 1990 Salary Replacement Stock
Option Plan (the "Plan") is to give key employees of General Mills, Inc.
(the "Company") and its subsidiaries who are primarily responsible for the
management of the business of the Company the opportunity to receive stock
option grants in lieu of salary increases, and, as to employees who are not
subject to Section 16 of the 1934 Act (each as hereinafter defined), an
opportunity to receive stock option grants in lieu of certain other
compensation and employee benefits thereby encouraging focus on the growth
and profitability of the Company and its Common Stock.
2. EFFECTIVE DATE OF PLAN
This Plan shall become effective as of September 17, 1990, subject to
the approval of the stockholders of the Company at the Annual Meeting on
September 17, 1990.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee (the
"Committee"). The Committee shall be made up of non-management members of
the Board of Directors (the "Board") appointed in accordance with the
Company's Certificate of Incorporation. The Committee shall have authority
to adopt rules and regulations for carrying out the purpose of the Plan,
select the employees to whom grants will be made ("Optionees"), the number
of shares to be optioned and interpret, construe and implement the
provisions of the Plan; provided that if at any time Rule 16b-3 or any
successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), so permits without adversely affecting the
ability of the Plan to comply with the conditions for exemption from
Section 16 of the 1934 Act (or any successor provisions) provided by Rule
16b-3, the Committee may delegate the administration of the Plan in whole
or in part, on such terms and conditions, and to such person or persons as
it may determine in its discretion, as it relates to persons not subject to
Section 16 of the 1934 Act, or any successor provision. Decisions of the
Committee (or its delegate as permitted herein) shall be final, conclusive
and binding upon all parties, including the Company, stockholders and
Optionees.
4. COMMON STOCK SUBJECT TO THE PLAN
The shares of "Common Stock" of the Company ($.10 par value) to be
issued upon the exercise of a non-qualified option to purchase Common Stock
granted hereunder (an "Option") may be made available from the authorized
but unissued Common Stock, shares of Common Stock held in the treasury, or
Common Stock purchased on the open market or otherwise.
Approval of the Plan by the stockholders of the Company shall
constitute authorization to use such shares for the Plan, subject to the
discretion of the Board or as such discretion may be delegated to the
Committee.
Subject to the provisions of the next succeeding paragraph, the
maximum aggregate number of shares originally authorized under the Plan for
which Options could be granted under the Plan shall was 3,000,000 shares.
As of June 1, 1992, and subject to the provisions of the next succeeding
paragraph, there remain 4,493,000 shares authorized to be issued under the
Plan (as adjusted for stock splits). If an Option granted under the Plan is
terminated without having been exercised in full, the unpurchased or
forfeited shares or rights to receive shares shall become available for
grant to other employees.
The number of shares of Common Stock subject to the Plan, the
outstanding Salary Stock Options, and the exercise price per share of
outstanding Options 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. ELIGIBLE PERSONS
Only persons who are officers or key employees of the Company or a
subsidiary shall be eligible to receive grants under the Plan. No grant
shall be made to any member of the Committee or any other non-employee
director.
6. PURCHASE PRICE OF SALARY STOCK OPTIONS
The purchase price for each share of Common Stock issuable under an Option
shall not be less than 100 percent of the Fair Market Value of the Shares
of Common Stock of the Company subject to such option on the date of grant.
"Fair Market Value" as used in the Plan shall equal the mean of the high
and low price of the Common Stock on the New York Stock Exchange on the
applicable date.
7. OPTION TERM
The term of each Option grant as determined by the Committee shall not
exceed ten (10) years and one (1) month from the date of that grant and
shall expire as of the last day of the designated term, unless terminated
earlier under the provisions of the Plan.
8. OPTION TYPE
Option grants will be Non-Qualified Stock Options governed by Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision.
9. NON-TRANSFERABILITY OF OPTIONS
No Option granted under this Plan shall be transferable by the Optionee
otherwise than by the Optionee's Last Will and Testament or by the laws of
descent and distribution. An Optionee shall forfeit any Option assigned or
transferred, voluntarily or involuntarily, other than as permitted under
this Section. Each Option shall be exercised during the Optionee's lifetime
only by the Optionee or his or her guardian or legal representative.
10. EXERCISE OF OPTIONS
Except as provided in Sections 12, 13 and 14, each Option shall be
vested and may be exercised in accordance with such terms and conditions as
may be determined by the Committee for grants to officers or executives and
by the Chief Executive Officer of the Company for grants to other
management participants.
Subject to the provision of this Section 10, each Option may be
exercised in whole or, from time to time, in part with respect to the
number of then exercisable shares in any sequence desired by the Optionee
without regard to the date of grant of stock options under other plans of
the Company.
An Optionee exercising an Option shall give notice to the Company of
such exercise and of the number of shares elected to be purchased prior to
4:30 P.M. CST/CDT on the day of exercise, which must be a business day at
the executive offices of the Company. At the time of purchase, the Optionee
shall tender the full purchase price of the shares purchased. Until such
payment has been made and a certificate or certificates for the shares
purchased has been issued in the Optionee's name, the Optionee shall
possess no stockholder rights with respect to any such shares. Payment of
such purchase price shall be made to the Company, subject to any applicable
rule or regulation adopted by the Committee:
(i) in cash (including check, draft, money order or wire transfer
made payable to the order of the Company);
(ii) through the delivery of shares of Common Stock owned by the
Optionee; or
(iii) by a combination of (i) and (ii) above.
For determining the payment, Common Stock delivered pursuant to (ii)
or (iii) shall have a value equal to the Fair Market Value of the Common
Stock on the date of exercise.
11. WITHHOLDING TAXES ON OPTION EXERCISE
Each Optionee shall deliver to the Company cash in an amount equal to
all federal, state and local withholding taxes required to be collected by
the Company in respect of the exercise of an Option, and until such payment
is made, the Company may, in its discretion, retain all or a portion of the
shares to be issued.
Notwithstanding the foregoing, to the extent permitted by law and
pursuant to such rules as the Committee may adopt, an Optionee may
authorize the Company to satisfy any such withholding requirement by
directing the Company to withhold from any shares to be issued such number
of shares as shall be sufficient to satisfy the withholding obligation.
12. EXERCISE OF OPTIONS IN EVENT OF CERTAIN CHANGES OF CONTROL
Each outstanding Option shall become immediately and fully exercisable
for a period of six (6) months following the date of the following
occurrences, each constituting a "Change of Control":
(i) 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 twenty (20) percent or more of the shares of the Company
entitled to vote for the election of directors;
(ii) 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
(iii)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.
After such six (6) month period the normal option exercise provisions
of the Plan shall govern. In the event an Optionee is terminated as an
employee of the Company or a Subsidiary within two (2) years of any of the
events specified in (i), (ii) or (iii), all outstanding Stock Options at
that date of termination shall become immediately exercisable for a period
of three (3) months.
13. TERMINATION OF EMPLOYMENT OR LEAVE OF ABSENCE OF AN OPTIONEE
(a) Normal Termination
If the Optionee's employment by the Company or a subsidiary
terminates for any reason other than as specified in subsections (b),
(c), (d) or (e), the Options shall terminate three (3) months after
such termination. If the employment by the Company or a subsidiary of
an Optionee, other than an Optionee subject to Section 16 of the 1934
Act, is terminated for the convenience of the Company, as determined
by the Committee, and, at the time of termination the sum of the
Optionee's age and service with the Company equals or exceeds 70, the
Committee, in its sole discretion, may permit any Option previously
granted to the Optionee under the Plan to be exercised to the full
extent that such Option could have been exercised by such Optionee
immediately prior to the Optionee's termination and may permit such
Option to remain exercisable until the expiration of the Option in
accordance with its original term.
(b) Death
If the termination of employment is due to the Optionee's death,
the Options may be exercised as provided in Section 14.
(c) Retirement
If the termination of employment is due to the Optionee's
retirement, the Optionee thereafter may exercise an Option within the
period remaining under the original term of the Option.
(d) Spin-offs
If the termination of employment is due to the cessation,
transfer, or spin-off of a complete line of business of the Company,
the Committee, in its sole discretion, may determine that all
outstanding Options granted more than one (1) year prior to the date
of such termination shall immediately become exercisable for a period
of three (3) years after the date of such termination, subject to the
provisions of Section 7.
(e) Leave of Absence
Unless the Committee shall otherwise determine, if an Optionee is
placed on an unpaid leave of absence, such Optionee's Options shall
terminate at the expiration of the unpaid leave of absence.
If an Optionee is placed on an unpaid leave of absence, retires
during such leave, and the Committee had decided not to terminate the
Optionee's right to exercise an Option at the date of the inception of
said leave of absence, then such Optionee may exercise an Option in
accordance with subsection (c).
14. DEATH OF OPTIONEE
If an Optionee should die while employed by the Company or a
subsidiary or after retirement, any Option previously granted to the
Optionee under this Plan may be exercised by the person designated in such
Optionee's Last Will and Testament or, in the absence of such designation,
by the Optionee's estate, to the full extent that such Option could have
been exercised by such Optionee immediately prior to the Optionee's death,
subject to the original term of the Option.
15. AMENDMENTS TO THE PLAN
The Plan may be terminated, modified, or amended by the Board of
Directors of the Company.
Subject to the approval of the Board of Directors, the Committee may
at any time terminate, modify or suspend the operation of the Plan,
provided that no such amendment, alteration or discontinuation shall be
made without the approval of the stockholders of the Company:
(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 materially increase the number of shares which may be issued
under the Plan or materially modify the requirements as to
eligibility for participating in the Plan.
The Board of Directors shall have authority to cause the Company to
take any action related to the Plan which may be required to comply with
the provisions of the Securities Act of 1933, as amended, the 1934 Act, and
the rules and regulations prescribed by the Securities and Exchange
Commission. Any such action shall be at the expense of the Company.
No termination, modification, suspension or amendment of the Plan
shall alter or impair the rights of any Optionee pursuant to a prior grant,
without the consent of the Optionee.
16. FOREIGN JURISDICTIONS
The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or
desirable to make available tax or other benefits of laws of any foreign
jurisdiction, to key employees of the Company who are subject to such laws
and who are eligible to receive Option grants under the Plan.
17. DURATION OF THE PLAN
Grants may be made under the Plan until September 30, 1995.
18. NOTICE
All notices and communications to the Company shall be in writing,
effective as of actual receipt by the Company, and shall be sent to:
General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, Minnesota 55426
Attention: Corporate Compensation
If by Telex: 170360 Gen Mills
If by Facsimile: (612) 540-4925
19. SECTION 16 OFFICERS
With respect to persons subject to Section 16 of the 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 as of September 17, 1990
As amended effective June 1, 1992
As amended effective June 27, 1994
EXHIBIT 12
GENERAL MILLS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------
May 30, May 31, May 25, May 26, May 28,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.....6.67 5.63 6.54 6.94 4.10
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent pretax income from continuing operations, plus pretax earnings or
losses of joint ventures, 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
MANAGEMENT'S DISCUSSION AND ANALYSIS
General Mills' overarching business goal is to generate superior financial
returns for our shareholders over the long term. We believe the key to creating
shareholder value is to deliver a combination of good earnings growth, high
returns on invested capital, and strong cash flows. Our specific financial
objectives are to:
o Achieve consistent, low double-digit growth in earnings per share.
o Generate a minimum 25 percent return on invested capital.
o Return cash generated in excess of capital-investment needs to shareholders
through dividends and share repurchases.
o Maintain financial strength that warrants an "A" bond rating.
This section of the annual report discusses our performance against these goals,
including recent earnings growth and returns, cash flows, financial position and
risk management.
RESULTS OF OPERATIONS - 1999 VS. 1998
General Mills achieved record financial performance in fiscal 1999. Despite
difficult comparisons with a 53-week fiscal year in 1998, reported sales grew 4
percent to reach $6.25 billion. Earnings after tax grew 9 percent before unusual
items to $566.8 million. Earnings per share grew 12 percent before unusual items
to $3.70 basic and $3.60 diluted.
The 1999 sales increase reflected broad-based growth in domestic unit
volumes, which rose 3 percent before acquisitions. Lloyd's Barbeque Company, a
refrigerated entree business acquired Jan. 15, 1999, and the Farmhouse Foods
pasta and rice side-dish business, acquired Feb. 10, 1999, each contributed
incremental volume.
U.S. FOODS
UNIT VOLUME
-----------
1995 1996 1997 1998 1999
-4% +7% +4% +8% +3%
Big G cereal sales grew to $2.47 billion and annual unit volume
increased 1 percent to set a new record. These results reflected strong
performance from Big G's established brands, particularly those supported by
specific consumer health messages, including Cheerios, Total and several brands
recently fortified with calcium. Cereal industry pound volume in
ACNielsen-measured outlets declined 1 percent for the year, but grew slightly in
the second half. Big G outpaced the market, increasing its pound share to a
record 25.6 percent, and growing its share of category dollar sales to a record
31.2 percent. In the fourth quarter, new Honey Nut Chex cereal expanded from 20
percent of the U.S. to national distribution, and Big G launched Sunrise organic
cereal and NesQuik cereal nationwide. Combined unit volume for domestic
non-cereal operations rose 5 percent in 1999. Yogurt volume grew at a
double-digit pace for the third consecutive year, led by good gains from each of
Yoplait's established product lines and strong initial performance from new
Yoplait Go-Gurt. This portable yogurt in a tube entered distribution in western
states during the summer of 1998. In June 1999, Go-Gurt availability was
expanded to the Northeast and Mid-Atlantic regions, and we expect to complete
national distribution later in this calendar year. Snacks volume growth included
gains of 15 percent for Chex Mix, 8 percent for Pop Secret microwave popcorn,
and 8 percent for fruit snacks. Combined unit volume for Betty Crocker baking,
side dish and dinner mix products grew 1 percent, led by the growing line of
pouch mixes and a new five-item line of Chicken Helper dinner mixes introduced
in January 1999. Foodservice volume declined 2 percent in total, reflecting
lower baking mix volume, but cereal, snacks and cup yogurt all posted volume
gains.
International operations posted good unit volume growth in 1999, but
after-tax earnings declined to $2.7 million from $15.1 million a year earlier.
This decline was due to three factors: negative foreign exchange effects on
Canadian results; difficult economic conditions in Russia, Brazil and the ASEAN
countries; and costs associated with actions by Snack Ventures Europe (SVE) to
divest the BN cookie business and acquire certain United Biscuit snack
operations. In Canada, cereal volume grew 7 percent and pound market share
reached a record 17.2 percent, as General Mills reclaimed the No. 2 market
position. Cereal Partners Worldwide (CPW), the company's joint venture with
Nestle, recorded 6 percent volume growth for the 12 months included in fiscal
1999 results. Annual sales for CPW reached $849 million and the venture
increased its combined market share to 19 percent. Total volume for Snack
Ventures Europe was down 1 percent, reflecting the BN divestiture, but volume
for continuing businesses was up 6 percent.
Productivity gains, operating leverage created by unit volume growth,
and favorable raw material costs combined to reduce cost of goods sold to 41.5
percent of sales in 1999, down from 42.1 percent in the prior year. Selling,
general and administrative expense was unchanged as a percent of sales, at 42.2
percent. As a result, earnings before interest and taxes (EBIT) totaled 16.3
percent of sales in 1999, a margin improvement of 0.5 percentage points.
EBIT MARGIN
(percent)
1997 1998 1999
15.3 15.8 16.3
We generated this good operating earnings growth while improving our
return on capital (ROC). Our ROC before unusual items increased from 23.9
percent last year to 25.0 percent in 1999, in line with our targeted objective.
Our ROC ranks us well within the top decile of major U.S. companies on this
measure.
Net earnings for 1999 included a restructuring charge of 21 cents per
diluted share, recorded in the second quarter. This charge was primarily related
to streamlining supply-chain activities. These actions are expected to
contribute cost savings beginning in fiscal 2000 of approximately 11 cents per
share. Net after- tax earnings in fiscal 1998 included a second-quarter charge
of 62 cents per diluted share primarily related to restructuring the company's
North American cereal operations. Including these unusual items, diluted annual
earnings per share were $3.40 in 1999 and $2.60 in 1998.
Net interest expense totaled $119.4 million in 1999, compared to $117.2
million in the previous year. Given the acquisitions made during the second half
of 1999, our continuing share repurchases and other investments, we expect
somewhat higher net interest expense in fiscal 2000.
The effective tax rate on earnings as reported was 35.9 percent in 1999
compared to 36.3 percent in 1998. Excluding the unusual items described above,
our effective tax rate was 36.0 percent in 1999 and 37.0 percent in the previous
year. We currently expect an effective tax rate of approximately 36 percent in
fiscal 2000.
It is our view that changes in the general rate of inflation have not
had a significant effect on profitability over the three most recent years. We
attempt to minimize the effects of inflation through appropriate planning and
operating practices. Our market risk management practices are discussed later in
this section.
For a discussion of new accounting rules that take effect in future
fiscal years, see Note One to the consolidated financial statements.
1998 COMPARED TO 1997
For the 53-week period ended May 31, 1998, reported sales grew 8 percent to
$6.03 billion. Earnings after tax grew 10 percent to reach $522 million before
unusual items. Diluted earnings per share also grew 10 percent, to $3.22
compared with $2.94 in the previous year.
Domestic unit volume grew 8 percent in 1998, reflecting strong
performance by established businesses, and contributions from the branded cereal
and snacks businesses acquired from Ralcorp on Jan. 31, 1997. Big G cereals led
U.S. performance, with volume up 1 percent excluding incremental volume from
acquired brands, and up 8 percent in total. Convenience Foods volume grew 16
percent, with double-digit gains recorded by both the snacks business and by our
Yoplait-Colombo yogurt operations. Excluding the incremental volume provided by
Chex Mix, Convenience Foods volume was up 8 percent for the year. Betty Crocker
baking, dinner and side-dish mix volume rose 2 percent, and Foodservice volume
grew 6 percent.
International volume, including our proportionate share of joint venture
results, grew 15 percent in 1998. International earnings increased 35 percent to
$15 million after tax, reflecting strong profit progress by CPW.
Fiscal 1997 earnings before unusual items totaled $474.6 million and
diluted earnings per share were $2.94. These results were essentially flat
compared to 1996, due to three primary factors: price reductions taken by Big G
cereals; lower-than-expected unit volume growth in the second half of the year;
and a 5-cent per share reduction in earnings due to the acquisition of the
Ralcorp cereal and snacks businesses.
CASH FLOWS
Sources and uses of cash in the past three years are shown in the table below.
Over the past three years, General Mills' operations have generated more than $2
billion in cash. In 1999, cash flow from operations totaled $690.1 million. That
was lower than last year's total, principally due to increased use of working
capital associated with our surge of new product activity at year end. We
currently expect cash flow from operations in 2000 to exceed the $775 million
generated two years ago, in 1998, based on anticipated earnings growth and an
expected positive impact from working capital.
CASH SOURCES (USES)
In Millions 1999 1998 1997
- ----------------------------------------------------------------------
From continuing operations $ 690.1 $ 775.3 $ 594.1
From discontinued operations (3.9) (5.8) (6.8)
Fixed assets, net (269.1) (181.5) (159.9)
Investments in businesses,
intangibles and affiliates, net (151.5) (9.5) (42.0)
Change in marketable
securities 7.7 29.7 39.7
Other investments, net 38.0 (42.0) (23.4)
Increase in
outstanding debt - net 273.8 198.9 221.9
Common stock issued 92.8 92.5 60.5
Treasury stock purchases (340.7) (524.9) (361.8)
Dividends paid (331.4) (336.3) (320.7)
Other (8.3) (2.8) (9.4)
- -----------------------------------------------------------------------
Decrease in cash and
cash equivalents $ (2.5) $ (6.4) $ (7.8)
- -----------------------------------------------------------------------
Capital investment spending for fixed assets and joint venture
development totaled $299 million in 1999, compared with $211 million in the
previous year. The higher level reflected investments to add capacity for
several fast-growing businesses, including Chex cereal and snack mixes, fruit
snacks and yogurt. Current plans call for fiscal 2000 capital investment at
levels comparable to 1999.
Shareholder dividends grew 2 percent in 1999 to $2.16 per share, a
payout of 58 percent of earnings before unusual items. The company expects
continued dividend growth over time, but at a rate slower than earnings growth
until the payout ratio aligns with the food industry average. Today, that
average is in the low to mid 40-percent range.
Cash returned to shareholders through share repurchases totaled $340.7
million in 1999, representing 4.7 million shares. The goal of our ongoing share
repurchase program is to achieve an average 1 to 2 percent annual reduction in
shares outstanding, net of stock option exercises.
Uses of Cash, Fiscal 1999
(dollars in millions)
Funding Growth
Capital Investments $299
Cash Returned to Shareholders
Share Repurchases $341
Dividends 331
----
$672
FINANCIAL CONDITION
We intend to manage our businesses and financial ratios so as to maintain an "A"
bond rating, which allows access to financing at reasonable costs. We believe
that the most important measures of our financial strength are the ratios of
fixed charge coverage and cash flow to debt. In fiscal 1999, fixed charge
coverage excluding unusual items increased to 7.0 times. Cash flow to debt
declined slightly to 33.6 percent, reflecting higher debt levels associated with
our two acquisitions, higher working capital use, and share repurchases. General
Mills' publicly issued long-term debt currently carries ratings of "A2" (Moody's
Investors Services, Inc.) and "A+" (Standard & Poor's Corporation). 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 (Dominion Bond Rating Service).
FINANCIAL STRENGTH
Fixed Charge Coverage Cash Flow to Debt
--------------------- -----------------
1998 1999 1998 1999
---- ---- ---- ----
6.8x 7.0x 34.6% 33.6%
Our capital structure is shown in the table below. The book equity
balance reflects the impact of the 1995 spin-off of our restaurant operations,
which reduced stockholders' equity by $1.2 billion. Share repurchases made as
part of our ongoing program were the primary reason 1999 stockholders' equity
declined slightly from 1998 levels. Market value of stockholders' equity as of
May 30, 1999, was $12.2 billion, as shown in the chart to the right.
CAPITAL STRUCTURE
In Millions May 30, 1999 May 31, 1998
- ----------------------------------------------------------------
Notes payable $ 524.4 $ 264.1
Current portion of
long-term debt 90.5 153.2
Long-term debt 1,702.4 1,640.4
Deferred income taxes -
tax leases 111.3 129.1
- ----------------------------------------------------------------
Total debt 2,428.6 2,186.8
Debt adjustments:
Leases - debt equivalent 235.0 218.1
Marketable investments,
at cost (96.5) (103.2)
- ----------------------------------------------------------------
Adjusted debt 2,567.1 2,301.7
Stockholders' equity 164.2 190.2
- ----------------------------------------------------------------
Total capital $2,731.3 $2,491.9
- ----------------------------------------------------------------
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 above, shows the
composition of our debt structure including the impact of the use of derivative
instruments.
DEBT STRUCTURE
Dollars in Millions May 30, 1999 May 31, 1998
- -----------------------------------------------------------
Floating-rate debt $ 984.5 39% $ 819.3 36%
Fixed-rate debt 1,236.3 48% 1,135.2 49%
Leases - debt
equivalent 235.0 9% 218.1 9%
Deferred income
taxes - tax leases 111.3 4% 129.1 6%
- -----------------------------------------------------------
Adjusted debt $2,567.1 100% $2,301.7 100%
- -----------------------------------------------------------
Total Capitalization
(dollars in billions)
May 25, 1997 May 31, 1998 May 30, 1999
------------ ------------ ------------
Equity (Market Value) $10.2 $10.6 $12.2
Adjusted Debt 2.1 2.3 2.6
------ ------ ------
$12.3 $12.9 $14.8
Commercial paper is a continuing source of short-term financing. We can
issue commercial paper in the United States and Canada, as well as in Europe
through a program established during fiscal 1999. Bank credit lines are
maintained to ensure availability of short-term funds on an as-needed basis. As
of May 30, 1999, we had fee-paid credit lines of $755 million.
Our domestic shelf registration statement permits us to issue up to $782
million net proceeds in unsecured debt securities. The shelf registration
authorizes a medium-term note program that provides additional flexibility in
quickly accessing the debt markets.
MARKET RISK MANAGEMENT
Our company is exposed to market risks stemming from changes in interest rates,
foreign exchange rates and commodity prices. Changes in these factors could
cause fluctuations in our earnings and cash flows. In the normal course of
business, we actively manage our exposure to these market risks by entering into
various hedging transactions, authorized under company policies that place clear
controls on these activities. The counterparties in these transactions are
highly rated financial institutions. Our hedging transactions include (but are
not limited to) the use of a variety of derivative financial instruments. We use
derivatives only where there is an underlying exposure; we do not use them for
trading or speculative purposes. Additional information regarding our use of
financial instruments is included in Note Seven to the consolidated financial
statements.
INTEREST RATES - We manage our debt structure and our interest-rate
risk through the use of fixed- and floating-rate debt, and through the use of
derivatives. We use interest-rate swaps to hedge our exposure to interest rate
changes, and also to lower our financing costs. Generally under these swaps, we
agree with a counterparty to exchange the difference between fixed-rate and
floating-rate interest amounts based on an agreed notional principal amount. Our
primary exposure is to U.S. interest rates.
FOREIGN CURRENCY RATES - Foreign
currency fluctuations can affect our net investments and earnings denominated in
foreign currencies. We primarily use foreign currency forward contracts and
option contracts to selectively hedge our exposure to changes in exchange rates.
These contracts function as hedges, since they change in value inversely to the
change created in the underlying exposure as foreign exchange rates fluctuate.
Our primary exchange rate exposure is with various European currencies and the
Canadian dollar against the U.S. dollar.
COMMODITIES - Certain raw materials
used in our products are exposed to commodity price changes. We manage this risk
through an integrated set of financial instruments, including purchase orders,
non-cancelable contracts, futures contracts, futures options and swaps. Our
primary commodity price exposures are to cereal grains, sugar, fruits, other
agricultural products, vegetable oils, packaging materials and energy costs.
VALUE AT RISK - These estimates are intended to measure the maximum potential
fair value or earnings General Mills could lose in one day from adverse changes
in market interest rates, foreign exchange rates or commodity prices, under
normal market conditions. A variance/co-variance value at risk (VAR) methodology
was used to quantify the market risk for our exposures. The models assumed
normal market conditions and used a 95 percent confidence level.
The VAR calculation used historical interest rates, foreign exchange
rates and commodity prices from the past year to estimate the potential
volatility and correlation of these rates in the future. For interest rate and
foreign exchange rate market factors, the data were drawn from the JP Morgan
RiskMetrics(TM) data set. The calculations are not intended to represent actual
losses in fair value or pre-tax earnings that we expect to incur. The model does
not consider favorable changes in market rates. Further, since the hedging
instrument (the derivative) inversely correlates with the underlying exposure,
we would expect that any loss or gain in the fair value of our derivatives would
be generally offset by an increase or decrease in the fair value of our
underlying exposures. The positions included in the calculations were: debt,
investments, interest rate swaps, foreign exchange forwards and options, and
commodity swaps, futures, and options. The calculations do not include the
underlying foreign exchange and commodities-related positions that are hedged by
these market-risk sensitive instruments.
The table below presents the estimated maximum potential one-day loss in
fair value or pre-tax earnings for our interest rate, foreign currency, and
commodity market-risk sensitive instruments outstanding on May 30, 1999. The
figures were calculated using the VAR methodology described above.
Fair Value Impact
- -------------------------------------------------------------
At Average At
In Millions 5/30/99 during 1999 5/31/98
- -------------------------------------------------------------
Interest rate instruments $6.8 $6.9 $5.3
Foreign exchange rate
instruments 0.8 1.1 0.6
Commodity instruments 1.1 1.1 1.5
- -------------------------------------------------------------
- -------------------------------------------------------------
Pre-tax Earnings Impact
- -------------------------------------------------------------
At Average At
In Millions 5/30/99 during 1999 5/31/98
- -------------------------------------------------------------
Interest rate instruments $0.3 $0.3 $0.2
Foreign exchange rate
instruments 0.4 0.7 0.2
Commodity instruments 1.1 1.1 1.5
- -------------------------------------------------------------
YEAR 2000
We are devoting significant resources throughout the company to minimize the
risk of potential disruption from year 2000 issues related to computers or other
equipment with date-sensitive software and embedded chip systems. If we, or our
significant customers, suppliers or other third parties fail to correct year
2000 issues, our ability to operate our businesses could be adversely affected.
We have completed the assessment, inventory and classification of year
2000 issues on all of our information systems infrastructure and non-technical
assets (e.g., plant production equipment). Information systems that were year
2000 deficient have been modified, upgraded or replaced and tested for
compliance. Project plans anticipate that all non-technical assets (including
production equipment) will be year 2000 compliant by September 1999. Based on
assessments and testing to date, we do not expect the financial impact of
addressing internal system year 2000 issues will be material to our financial
position, results of operations or cash flows. Total costs are estimated to be
approximately $26 million, of which about 90 percent has been incurred to date.
We surveyed significant customers, suppliers and third parties critical
to our business operations to determine their year 2000 compliance.
Cross-functional planning teams were formed to assess risk and they have
developed contingency plans that can be executed readily, in the event that any
third party failure disrupts our operations. These contingency plans include
identifying and securing alternate suppliers, adjusting manufacturing schedules,
stockpiling of materials and equipment, contracting additional staff, procuring
backup generators, and other measures considered appropriate by management.
Additionally, we have established backup manual procedures similar to procedures
already in place for our disaster recovery process.
Our contingency plans will not guarantee that circumstances beyond our
control will not adversely impact our operations. However, these plans will
continue to be evaluated and modified through the year 2000 transition period as
additional information becomes available.
FORWARD-LOOKING STATEMENTS
Our year 2000 compliance program is an ongoing process, and the risk assessments
and timetable previously described are forward-looking statements that are
subject to change. In addition, throughout this report to shareholders, we
discuss some of our expectations regarding the company's future performance. All
of these forward-looking statements are based on our current views and
assumptions. Actual results could differ materially from these current
expectations, and from historical performance.
In the case of our year 2000 planning, several factors could cause
changes in our risk assessments or project timetable. Those factors include the
timely ability to remedy all date-sensitive computer-related assets; the actions
of third parties, such as public utilities; and the occurrence of broad-based
systemic failures.
With respect to our expectations for future company performance, actual
results could differ as a consequence of numerous factors, including:
competitive dynamics in the U.S. ready-to-eat cereal market; our unit volume
growth rate and our sales mix; fluctuations in the cost and availability of
supply-chain resources; currency rate fluctuations; and the effect of stock
market conditions on our share repurchase activity. Our 1999 Form 10-K contains
further discussion of these matters.
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 30, 1999 and May 31, 1998, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the fiscal years in the three-year period ended May 30, 1999. 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 30, 1999 and May 31, 1998, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended May 30, 1999 in conformity with generally accepted
accounting principles.
As discussed in Note Three to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," in fiscal 1997.
/s/ KPMG LLP
Minneapolis, Minnesota
June 28, 1999
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
In Millions, Except per Share Data,
Fiscal Year Ended May 30, 1999 May 31, 1998 May 25, 1997
- --------------------------------------------------------------------------------
Sales $6,246.1 $6,033.0 $5,609.3
Costs and Expenses:
Cost of sales 2,593.5 2,537.9 2,474.8
Selling, general and administrative 2,634.9 2,544.9 2,275.6
Interest, net 119.4 117.2 100.5
Unusual items 51.6 166.4 48.4
- --------------------------------------------------------------------------------
Total Costs and Expenses 5,399.4 5,366.4 4,899.3
- --------------------------------------------------------------------------------
Earnings before Taxes and Earnings
(Losses) from Joint Ventures 846.7 666.6 710.0
Income Taxes 304.0 241.9 258.3
Earnings (Losses) from Joint Ventures (8.2) (2.9) (6.3)
- --------------------------------------------------------------------------------
Net Earnings $ 534.5 $ 421.8 $ 445.4
- --------------------------------------------------------------------------------
Earnings per Share - Basic $ 3.49 $ 2.67 $ 2.82
- --------------------------------------------------------------------------------
Average Number of Common Shares 153.2 158.1 158.2
- --------------------------------------------------------------------------------
Earnings per Share - Diluted $ 3.40 $ 2.60 $ 2.76
- --------------------------------------------------------------------------------
Average Number of Common Shares
- Assuming Dilution 157.3 162.3 161.6
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
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<PAGE>
CONSOLIDATED BALANCE SHEETS
In Millions May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3.9 $ 6.4
Receivables, less allowance for doubtful
Accounts of $4.7 in 1999 and $4.2 in 1998 490.6 395.1
Inventories 426.7 389.7
Prepaid expenses and other current assets 83.7 107.2
Deferred income taxes 97.6 136.9
- --------------------------------------------------------------------------------
Total Current Assets 1,102.5 1,035.3
Land, Buildings and Equipment at cost, net 1,294.7 1,186.3
Other Assets 1,743.5 1,639.8
- --------------------------------------------------------------------------------
Total Assets $4,140.7 $3,861.4
- --------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 647.4 $ 593.1
Current portion of long-term debt 90.5 153.2
Notes payable 524.4 264.1
Accrued taxes 135.0 148.5
Accrued payroll 138.6 129.7
Other current liabilities 164.4 155.1
- --------------------------------------------------------------------------------
Total Current Liabilities 1,700.3 1,443.7
Long-term Debt 1,702.4 1,640.4
Deferred Income Taxes 288.9 284.8
Deferred Income Taxes - Tax Leases 111.3 129.1
Other Liabilities 173.6 173.2
- --------------------------------------------------------------------------------
Total Liabilities 3,976.5 3,671.2
- --------------------------------------------------------------------------------
Stockholders' Equity:
Cumulative preference stock, none issued - -
Common stock, 204.2 shares issued 657.9 619.6
Retained earnings 1,827.4 1,622.8
Less common stock in treasury, at cost,
shares of 52.2 in 1999 and 49.4 in 1998 (2,195.3) (1,935.7)
Unearned compensation (68.9) (75.4)
Accumulated other comprehensive income (56.9) (41.1)
Total Stockholders' Equity 164.2 190.2
- --------------------------------------------------------------------------------
Total Liabilities and Equity $4,140.7 $3,861.4
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
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<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
In Millions, Fiscal Year Ended May 30, 1999 May 31, 1998 May 25, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows - Operating Activities:
Net earnings $ 534.5 $ 421.8 $ 445.4
Adjustments to reconcile net earnings
to cash flow:
Depreciation and amortization 194.2 194.9 182.8
Deferred income taxes 42.0 (29.3) 20.9
Change in current assets and liabilities,
net of effects from businesses acquired (93.3) 54.5 (86.4)
Unusual items 51.6 166.4 48.4
Other, net (38.9) (33.0) (17.0)
- -----------------------------------------------------------------------------------------------
Cash provided by continuing operations 690.1 775.3 594.1
Cash used by discontinued operations (3.9) (5.8) (6.8)
- -----------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 686.2 769.5 587.3
- -----------------------------------------------------------------------------------------------
Cash Flows - Investment Activities:
Purchases of land, buildings and equipment (280.9) (183.6) (162.5)
Investments in businesses, intangibles and affiliates,
net of investment returns and dividends (151.5) (9.5) (42.0)
Purchases of marketable securities (11.5) (10.6) (8.0)
Proceeds from sale of marketable securities 19.2 40.3 47.7
Proceeds from disposal of land, buildings
and equipment 11.8 2.1 2.6
Proceeds from disposition of businesses - - 6.5
Other, net 38.0 (42.0) (29.9)
Net Cash Used by Investment Activities (374.9) (203.3) (185.6)
- -----------------------------------------------------------------------------------------------
Cash Flows - Financing Activities:
Change in notes payable 260.0 63.9 312.7
Issuance of long-term debt 208.6 286.6 76.2
Payment of long-term debt (194.8) (151.6) (167.0)
Common stock issued 92.8 92.5 60.5
Purchases of common stock for treasury (340.7) (524.9) (361.8)
Dividends paid (331.4) (336.3) (320.7)
Other, net (8.3) (2.8) (9.4)
- -----------------------------------------------------------------------------------------------
Net Cash Used by Financing Activities (313.8) (572.6) (409.5)
- -----------------------------------------------------------------------------------------------
(Decrease) in Cash and Cash Equivalents (2.5) (6.4) (7.8)
Cash and Cash Equivalents - Beginning of Year 6.4 12.8 20.6
- -----------------------------------------------------------------------------------------------
Cash and Cash Equivalents - End of Year $ 3.9 $ 6.4 $ 12.8
- -----------------------------------------------------------------------------------------------
Cash Flow from Changes in
Current Assets and Liabilities:
Receivables $ (82.7) $ 23.7 $ (80.0)
Inventories (28.7) (26.4) 45.0
Prepaid expenses and other current assets 9.2 1.6 2.5
Accounts payable 44.7 4.0 (27.8)
Other current liabilities (35.8) 51.6 (26.1)
- -----------------------------------------------------------------------------------------------
Change in Current Assets and Liabilities $ (93.3) $ 54.5 $ (86.4)
- -----------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
$.10 Par Value Common Stock
(One Billion Shares Authorized)
--------------------------------- Accumulated
Issued Treasury Other
--------------------------------- Retained Unearned Comprehensive
In Millions, Except per Share Data Shares Amount Shares Amount Earnings Compensation Income Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 26, 1996 204.2 $384.3 (45.2) $(1,367.4) $1,408.6 $(85.2) $(32.6) $307.7
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 445.4 445.4
Other comprehensive income, net of tax:
Unrealized losses on available-for-sale
securities, net of reclassification
of $.4 (.1) (.1)
Foreign currency translation, net of
reclassification of $(6.1) (2.3) (2.3)
Minimum pension liability adjustment (1.9) (1.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (4.3) (4.3)
-------------
Total comprehensive income 441.1
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared ($2.03
per share), net of income
taxes of $2.1 (318.6) (318.6)
Shares issued in acquisition - 181.4 5.4 173.0 354.4
Stock compensation plans (includes
income tax benefits of $25.6) - 9.3 1.7 57.4 66.7
Shares purchased (6.2) (368.0) (368.0)
Put and call option premium/
settlements, net - 3.0 - 3.1 6.1
Unearned compensation related to
restricted stock awards (7.9) (7.9)
Earned compensation and other 13.1 13.1
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at May 25, 1997 204.2 $578.0 (44.3) $(1,501.9) $1,535.4 $(80.0) $(36.9) $494.6
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
Net earnings 421.8 421.8
Other comprehensive income, net of tax:
Unrealized gains on available-for-sale
securities, net of reclassification of $.1 8.2 8.2
Foreign currency translation (9.5) (9.5)
Minimum pension liability adjustment (2.9) (2.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (4.2) (4.2)
---------------
Total comprehensive income 417.6
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared ($2.12
per share), net of income
taxes of $1.9 (334.4) (334.4)
Stock compensation plans (includes
income tax benefits of $39.2) - 29.3 2.4 83.9 113.2
Shares purchased (7.5) (518.7) (518.7)
Put and call option premium/
settlements, net - 12.3 - 1.0 13.3
Unearned compensation related to
restricted stock awards (7.3) (7.3)
Earned compensation and other 11.9 11.9
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1998 204.2 $619.6 (49.4) $(1,935.7) $1,622.8 $(75.4) $(41.1) $190.2
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
Net earnings 534.5 534.5
Other comprehensive income, net of tax:
Unrealized losses on available-for-sale
securities, net of reclassification
of $.5 (3.2) (3.2)
Foreign currency translation (11.0) (11.0)
Minimum pension liability adjustment (1.6) (1.6)
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (15.8) (15.8)
----------------
Total comprehensive income 518.7
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared ($2.16
per share), net of income
taxes of $1.5 (329.9) (329.9)
Stock compensation plans (includes
income tax benefits of $33.6) - 29.8 1.9 77.3 107.1
Shares purchased (4.7) (340.7) (340.7)
Put and call option premium/
settlements, net - 8.5 - 3.8 12.3
Unearned compensation related to
restricted stock awards (9.6) (9.6)
Earned compensation and other 16.1 16.1
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at May 30, 1999 204.2 $657.9 (52.2) $(2,195.3) $1,827.4 $(68.9) $(56.9) $164.2
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the Consolidated Financial Statements in conformity with
generally accepted accounting principles requires us to make estimates and
assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Certain
prior years' amounts have been reclassified to conform with the current year
presentation.
(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, which are recorded on an equity basis.
Our fiscal year ends on the last Sunday in May. Years 1999 and 1997 each
consisted of 52 weeks and 1998 consisted of 53 weeks.
(B) LAND, BUILDINGS, EQUIPMENT AND DEPRECIATION - Buildings and
equipment are depreciated over estimated useful lives, primarily using the
straight-line method. Buildings are usually depreciated over 40 to 50 years and
equipment over three to 15 years. The charges for 1999, 1998 and 1997 were
$171.6 million, $171.5 million and $168.6 million, respectively. 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 the
purchase price of acquired companies and the related fair value of net assets
acquired and accounted for by the purchase method of accounting. Goodwill 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. The costs of patents, copyrights and
other intangible assets are amortized evenly over their estimated useful lives.
(E) RECOVERABILITY OF LONG-LIVED ASSETS - We review long-lived assets,
including identifiable intangibles and associated goodwill, for impairment when
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. An asset is deemed impaired and written down to its fair
value if estimated related future cash flows are less than its carrying amount.
(F) 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 classified within Accumulated
Other Comprehensive Income in Stockholders' Equity.
(G) FINANCIAL INSTRUMENTS - See Note Seven for a description of our
accounting policies related to financial instruments.
(H) RESEARCH AND DEVELOPMENT - All expenditures for research and
development are charged against earnings in the year incurred. The charges for
1999, 1998 and 1997 were $70.0 million, $66.3 million and $61.4 million,
respectively.
(I) ADVERTISING COSTS - Advertising expense (including production and
communication costs) for 1999, 1998 and 1997 was $348.3 million, $366.1 million
and $306.5 million, respectively. Prepaid advertising costs (including
syndication properties) of $21.9 million and $25.5 million were reported as
assets at May 30, 1999 and May 31, 1998, respectively. We expense the production
costs of advertising the first time that the advertising takes place.
(J) STOCK-BASED COMPENSATION - We use the "intrinsic value-based method"
for measuring the cost of compensation paid in Company common stock. This method
defines our cost as the excess of the stock's market value at the time of the
grant over the amount that the employee is required to pay. Our stock option
plans require that the employee's payment (i.e., exercise price) be the market
value as of the grant date.
(K) EARNINGS PER SHARE - Basic EPS is computed by dividing net earnings
by the weighted average number of common shares outstanding. Diluted EPS
includes the effect of all dilutive potential common shares (primarily related
to stock options).
(L) STATEMENTS OF CASH FLOWS - For purposes of the statement of cash
flows, we consider all investments purchased with an original maturity of three
months or less to be cash equivalents.
(M) NEW ACCOUNTING RULES - During 1999, we adopted SFAS No. 130,
"Reporting Comprehensive Income," SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," and SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." These standards
revised related disclosures, but their adoption had no impact on our financial
position, results of operations or cash flows.
We adopted the American Institute of Certified Public Accountants
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 did not have a material impact
on our financial position, results of operations or cash flows.
During 1999, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 will be effective for us in our fiscal 2002 and we are assessing its
impact on our financial statements.
2. ACQUISITIONS
On January 15, 1999, we acquired Lloyd's Barbeque Company, St. Paul, Minnesota,
a producer of refrigerated entrees. On February 10, 1999, we acquired Farmhouse
Foods Company, Union City, California, a West Coast marketer of rice and pasta
side-dish mixes. The aggregate purchase price of these acquisitions, both of
which were accounted for using the purchase method, totaled approximately $130
million. Goodwill of $113 million associated with these acquisitions is being
amortized on a straight-line basis over 40 years. The results of the acquired
businesses have been included in the consolidated financial statements since
their respective acquisition dates. Our fiscal 1999 financial results would not
have been materially different if we had made these acquisitions at the
beginning of the fiscal year.
On January 31, 1997, we acquired the branded ready-to-eat cereal and
snack mix businesses of Ralcorp Holdings, Inc., including the CHEX and COOKIE
CRISP brands. This acquisition included a Cincinnati, Ohio, manufacturing
facility, and trademark and technology rights for the branded products in the
Americas. The purchase price of $570 million involved the issuance of about $355
million in General Mills common stock (approximately 5.4 million shares) to
Ralcorp shareholders and the assumption of about $215 million of Ralcorp public
debt and accrued interest. This acquisition was accounted for using the purchase
method of accounting. Goodwill of approximately $550 million is being amortized
on a straight-line basis over 40 years. The results of the acquired businesses
have been included in the consolidated financial statements since the
acquisition date.
3. UNUSUAL ITEMS
In 1999, we recorded restructuring charges of $51.6 million pretax, $32.3
million after tax ($.21 per diluted share), primarily related to streamlining
manufacturing and distribution activities. These supply chain actions included
consolidating manufacturing of certain products into fewer locations, and
consolidating warehouse, distribution and sales activities across our packaged
food, foodservice and milling operations. In addition, the 1999 charge included
our share of restructuring costs for the Snack Ventures Europe (SVE) joint
venture with PepsiCo to improve its manufacturing cost structure. Slightly more
than half of the total charge reflects write-down of assets; the remaining cash
portion is primarily related to severance and asset redeployment expenses. These
restructuring activities will be substantially completed at the end of fiscal
2000. At May 30, 1999, there was a remaining reserve of $30.5 million.
In 1998, we recorded a net charge of $166.4 million pre-tax, $100.2
million after tax ($.62 per diluted share). The charge was primarily related to
shutting down one cereal system at our Lodi, California, facility and closing
our two smallest cereal plants based in Chicago, Illinois, and Etobicoke,
Ontario. In addition, our SVE joint venture recorded restructuring charges
primarily related to production consolidation. We also recorded charges
associated with restructuring our sales regions and our trade and promotion
organization. These charges were partially offset by an insurance settlement
from one of our carriers related to costs incurred in fiscal 1995 and 1996
(charged against fiscal 1994) from the improper use of a pesticide by an
independent contractor in treating some of the Company's oat supplies. The net
charge included approximately $147 million in non-cash items primarily related
to asset write-offs and approximately $19 million of net cash outflows,
primarily related to disposal of assets, severance costs and the receipt of an
insurance settlement. These restructuring activities were substantially
completed in fiscal 1999 and there has been no adjustment to the original
reserve. At May 30, 1999, there was a remaining reserve of $14.1 million.
In 1997, we adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The initial,
non-cash charge upon adoption of SFAS No. 121 was $48.4 million pre-tax, $29.2
million after tax ($.18 per diluted share). The charge represented a reduction
in the carrying amounts of certain impaired assets to their estimated fair
value, determined on the basis of estimated cash flows or net realizable value.
The impairments related to assets not currently in use, assets significantly
underutilized and assets with limited planned future use.
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4. INVESTMENTS IN JOINT VENTURES
We have a 50% equity interest in Cereal Partners Worldwide (CPW), our joint
venture with Nestle that manufactures and markets ready-to-eat cereals outside
North America. We have a 40.5% equity interest in Snack Ventures Europe, our
joint venture with PepsiCo that manufactures and markets snack foods in
continental Europe. In late fiscal 1999, decisions were made to end the
International Dessert Partners (IDP) joint venture with Bestfoods for baking
mixes and desserts in Latin America, and the snack joint venture in China with
Want Want Holdings Ltd., called Tong Want, which had not yet begun operating.
These decisions will not have a material impact on our financial position,
results of operations or cash flows.
The joint ventures are reflected in our financial statements on an
equity accounting basis. We record our share of the earnings or (losses) of
these joint ventures. (The table that follows in this note reflects the joint
ventures on a 100% basis.) We also receive royalty income from these joint
ventures, incur various expenses (primarily research and development), and
record the tax impact of certain of the joint venture operations that are
structured as partnerships. Including all these factors, and excluding the
impact of fiscal 1999 and 1998 SVE restructuring charges, which are included in
unusual items, the effect on our net income related to the joint ventures was a
charge of $8.2 million, $2.9 million and $6.3 million in 1999, 1998 and 1997,
respectively.
Our cumulative investment in these joint ventures (including our share
of earnings and losses) was $189.4 million, $214.3 million and $234.6 million at
the end of 1999, 1998 and 1997, respectively. We made aggregate investments in
the joint ventures of $18.3 million, $6.8 million (net of a $20.9 million loan
repayment) and $46.5 million in 1999, 1998 and 1997, respectively. We received
aggregate dividends from the joint ventures of $1.6 million, $.9 million and
$7.5 million in 1999, 1998 and 1997, respectively.
Summary combined financial information for the joint ventures on a 100%
basis follows. Since we record our share of CPW and IDP results on a two-month
lag, their information is included as of and for the 12 months ended March 31.
The SVE information is consistent with our May year-end.
COMBINED FINANCIAL INFORMATION -
JOINT VENTURES - 100% BASIS
In Millions, Fiscal Year .......... 1999 1998 1997
- --------------------------------------------------------------------------------
Sales ............................. $ 1,833.5 $ 1,732.5 $ 1,627.6
Gross Profit ...................... 981.8 907.7 843.5
Earnings (losses)
before Taxes .................... (13.2) 20.1 (7.3)
Earnings (losses)
after Taxes ..................... (35.0) (6.3) (24.7)
================================================================================
In Millions .................................. May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
Current Assets ............................... $ 473.8 $ 432.4
Non-current Assets ........................... 738.1 675.6
Current Liabilities .......................... 703.6 609.0
Non-current Liabilities ...................... 36.2 47.6
================================================================================
Our proportionate share of the sales of the joint ventures was $826.3
million, $780.7 million and $728.2 million for 1999, 1998 and 1997,
respectively.
5. BALANCE SHEET INFORMATION
The components of certain balance sheet accounts are as follows:
In Millions .................................. May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
Land, Buildings and Equipment:
Land ...................................... $ 16.0 $ 17.8
Buildings ................................. 542.3 539.9
Equipment ................................. 1,912.5 1,790.4
Construction in progress .................. 248.1 140.9
- --------------------------------------------------------------------------------
Total land, buildings
and equipment ...................... 2,718.9 2,489.0
Less accumulated
depreciation ........................... (1,424.2) (1,302.7)
- --------------------------------------------------------------------------------
Net land, buildings
and equipment ...................... $ 1,294.7 $ 1,186.3
================================================================================
Other Assets:
Prepaid pension ........................... $ 528.1 $ 471.8
Marketable securities,
at market ............................. 144.6 142.1
Investments in and
advances to affiliates ................ 180.8 201.9
Net intangible assets,
primarily goodwill .................... 722.0 630.4
Miscellaneous ............................. 168.0 193.6
- --------------------------------------------------------------------------------
Total other assets .................. $ 1,743.5 $ 1,639.8
================================================================================
Accumulated amortization included in net intangible assets was $85.1
million and $62.7 million at May 30, 1999, and May 31, 1998, respectively.
<PAGE>
As of May 30, 1999, a comparison of cost and market values of our
marketable securities (all of which are debt securities and considered
available-for-sale) was as follows:
Market Gross Gross
In Millions Cost Value Gain Loss
- ----------------------------------------------------------------
Total marketable
securities $96.5 $144.6 $48.1 $--
================================================================
Realized gains from sales of marketable securities were $.9 million, $.1
million and $.6 million in 1999, 1998 and 1997, respectively. In addition,
realized losses from purchases of our related debt (see Note Nine) were $.8
million and $.9 million in 1999 and 1997, respectively. The aggregate unrealized
gains and losses on available-for-sale securities, net of tax effects, are
classified in Accumulated Other Comprehensive Income within Stockholders'
Equity.
Scheduled maturities of our marketable securities are as follows:
In Millions ................................... Cost Market Value
- -------------------------------------------------------------------------------
Under one year (current) ...................... $ -- $ --
From 1 to 3 years ............................. 1.9 1.9
From 4 to 7 years ............................. 34.4 47.0
Over 7 years .................................. 60.2 95.7
- -------------------------------------------------------------------------------
Totals .................................. $96.5 $144.6
===============================================================================
6. INVENTORIES
The components of inventories are as follows:
In Millions .................................. May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
Raw materials, work in
process and supplies ................... $ 100.8 $ 83.3
Finished goods ............................... 286.2 262.5
Grain 73.7 ................................... 83.0
Reserve for LIFO
valuation method ....................... (34.0) (39.1)
- --------------------------------------------------------------------------------
Total inventories ...................... $ 426.7 $ 389.7
================================================================================
At May 30, 1999 and May 31, 1998, respectively, inventories of $254.5
million and $221.4 million were valued at LIFO. The impact of LIFO accounting
increased 1999, 1998 and 1997 earnings by $.02, $.03 and $.03 per diluted share,
respectively.
7. 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 (based on
current market quotes and interest rates) of our financial instruments at the
balance-sheet dates are as follows:
May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
Carrying Fair Carrying Fair
In Millions Amount Value Amount Value
- --------------------------------------------------------------------------------
Assets:
Cash and
cash equivalents ........ $ 3.9 $ 3.9 $ 6.4 $ 6.4
Receivables ................ 490.6 490.6 395.1 395.1
Marketable securities ...... 144.6 144.6 156.8 156.8
Liabilities:
Accounts payable ........... 647.4 647.4 593.1 593.1
Debt ....................... 2,317.3 2,406.6 2,057.7 2,180.1
Derivatives relating to:
Marketable securities ...... -- -- (.1) (.1)
Debt ....................... -- 26.6 -- 19.2
Commodities ................ -- (3.2) -- (.4)
Foreign currencies ......... -- (.4) -- 1.0
================================================================================
Each derivative transaction we enter into is designated at inception as
a hedge of risks associated with specific assets, liabilities or future
commitments and is monitored to determine if it remains an effective hedge. The
effectiveness of the derivative as a hedge is based on changes in its market
value or cash flows being highly correlated with changes in market value or cash
flows of the underlying hedged item. We do not enter into 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.
We enter into interest rate swap, foreign exchange, and commodity swap
agreements with a diversified group of highly rated financial institutions.
Commodity futures transactions are entered into through various regulated
exchanges. These transactions expose the Company to credit risk 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.
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<PAGE>
(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 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.
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 during time periods ranging from 2000 to 2023.
May 30, 1999 May 31, 1998
- --------------------------------------------------------------------------------
Dollars in Millions Asset Liability Asset Liability
- --------------------------------------------------------------------------------
Pay floating swaps -
notional amount ................ - $ 70.0 -- $118.3
Average receive rate ......... - 6.1% -- 5.9%
Average pay rate ............. - 4.8% -- 5.4%
Pay fixed swaps -
notional amount ................ - $216.5 $14.3 $116.5
Average receive rate ......... - 4.9% 5.5% 5.6%
Average pay rate ............. - 5.2% 7.1% 5.8%
================================================================================
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. At May 30, 1999,
we had no interest rate options outstanding.
(2) FOREIGN-CURRENCY EXPOSURE - We are exposed to potential losses from
foreign currency fluctuations affecting net investments and earnings denominated
in foreign currencies. We selectively hedge the potential effect of these
foreign currency fluctuations related to operating activities and net
investments in foreign operations by entering into foreign exchange contracts
with highly rated 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 Accumulated Other Comprehensive Income in Stockholders'
Equity.
The components of our net balance sheet exposure by geographic region
are as follows:
In Millions May 30, 1999 May 31, 1998
- --------------------------------------------------------
Europe $130.9 $140.1
North/South America 28.5 28.5
Asia 1.0 1.5
- --------------------------------------------------------
Total exposure $160.4 $170.1
========================================================
At May 30, 1999, we had forward and option contracts maturing in 2000 to
sell $83.4 million of foreign currencies. The fair value of these contracts is
based on third-party quotes and was immaterial at May 30, 1999.
(3) COMMODITIES - The Company uses an integrated set of financial
instruments in its commodity purchasing cycle, including purchase orders,
noncancelable contracts, futures contracts, futures options and swaps. Except as
described below, these instruments are all used to manage purchase prices and
inventory values as practical for the Company's production needs. 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 production flows through cost of goods
sold. The net gains and losses deferred and expensed are immaterial. At May 30,
1999 and May 31, 1998, the aggregate fair value of our ingredient and energy
derivatives position was $153.0 million and $156.7 million, respectively.
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<PAGE>
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
determinable market values. Neither results of operations nor the year-end
positions from our grain-merchandising operations was material to the Company's
overall results.
8. NOTES PAYABLE
The components of notes payable and their respective weighted average interest
rates at the end of the periods are as follows:
May 30, 1999 May 31, 1998
- -------------------------------------------------------------------------------
Weighted Weighted
Average Average
Notes Interest Notes Interest
Dollars in Millions Payable Rate Payable Rate
- -------------------------------------------------------------------------------
U.S. commercial paper ............. $ 652.9 4.9% $ 428.2 5.5%
Canadian commercial
paper ........................... 22.8 4.6 20.4 5.0
Euro commercial paper ............. 158.9 4.0 -- --
Financial institutions ............ 169.8 4.8 295.5 5.2
Amounts reclassified
to long-term debt .............. (480.0) -- (480.0) --
- -------------------------------------------------------------------------------
Total notes payable ........ $ 524.4 $ 264.1
===============================================================================
See Note Seven for a description of related interest rate derivative
instruments.
To ensure availability of funds, we maintain bank credit lines sufficient
to cover our outstanding short-term borrowings. As of May 30, 1999, we had
$755.0 million fee-paid lines and $63.5 million uncommitted, no-fee lines
available in the U.S. and Canada. In addition, we had foreign no-fee lines of
$66.8 million, all of which are unused.
We have a revolving credit agreement expiring in January 2002 covering
the fee-paid credit lines that provides us with the ability to refinance
short-term borrowings on a long-term basis; accordingly, a portion of our notes
payable has been reclassified to long-term debt.
9. LONG-TERM DEBT
In Millions May 30, 1999 May 31, 1998
- ------------------------------------------------------------------------------
Medium-term notes, 4.7% to
9.1%, due 1999 to 2078 ................... $ 1,005.6 $ 997.6
Zero coupon notes, yield 11.1%,
$273.8 due August 15, 2013 ............... 59.4 54.3
8.2% ESOP loan guaranty,
due through June 30, 2007 ................ 49.0 57.7
7.0% notes due
September 15, 2004 ....................... 160.9 163.0
Zero coupon notes, yield 11.7%,
$63.4 due August 15, 2004 ................ 35.1 31.8
Notes payable, reclassified .................. 480.0 480.0
Other ........................................ 2.9 9.2
- ------------------------------------------------------------------------------
1,792.9 1,793.6
Less amounts due within
one year ................................. (90.5) (153.2)
- ------------------------------------------------------------------------------
Total long-term debt ................... $ 1,702.4 $ 1,640.4
==============================================================================
See Note Seven for a description of related interest rate derivative
instruments.
As of May 30, 1999, our debt shelf registration permits the issuance of
up to $782.0 million net proceeds in unsecured debt securities to reduce
short-term debt and for other general corporate purposes, and includes a
medium-term note program that allows us to issue debt quickly for selected
amounts, rates and maturities.
In 1999, we issued $199.7 million of debt under our medium-term note
program with maturities varying from five to 80 years and interest rates from
4.7% to 6.3%. In 1998, $268.0 million of debt was issued under this program with
maturities from one to 25 years and interest rates from 5.1% to 5.8%.
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 Unearned Compensation in Stockholders'
Equity.
The sinking fund and principal payments due on long-term debt are (in
millions) $90.5, $62.8, $47.9, $96.6 and $81.2 in 2000, 2001, 2002, 2003 and
2004, respectively. The notes payable that are reclassified under our revolving
credit agreement are not included in these principal payments.
Our marketable securities (see Note Five) 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.
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<PAGE>
10. STOCKHOLDERS' EQUITY
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 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, in which case each
right will entitle the holder (other than the acquirer) to receive, upon
exercise, common stock of either the Company or the acquiring company having a
market value equal to two times the exercise price of the right. The initial
exercise price is $240 per right. The rights are redeemable by the Board at any
time prior to the acquisition of 20 percent or more of the outstanding common
stock. The rights expire on February 1, 2006. At May 30, 1999, there were 152.0
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 1999 and 1998 that are a part of
our stock repurchase program, we issued put options and purchased call options
related to our common stock. In 1999 and 1998, we issued put options for 8.5
million and 6.8 million shares for $25.8 million and $12.7 million in premiums
paid to the Company, respectively. As of May 30, 1999, put options for 4.8
million shares remain outstanding at exercise prices ranging from $74.00 to
$80.25 per share with exercise dates from June 4, 1999 to May 15, 2000. In 1999,
we purchased call options for 2.0 million shares for $11.5 million in premiums
paid by the Company. As of May 30, 1999, call options for 2.0 million shares
remain outstanding at exercise prices ranging from $62.38 to $85.50 per share
with exercise dates from September 10, 1999 to August 15, 2000.
The following table provides detail of activity within Accumulated Other
Comprehensive Income in Stockholders' Equity:
Minimum Accumulated
Foreign Unrealized Pension Other
Currency Gain on Liability Comprehensive
In Millions Items Securities Adjustment Income
- --------------------------------------------------------------------------------
Balance
May 26, 1996 $(56.6) $24.8 $ (.8) $(32.6)
- --------------------------------------------------------------------------------
Pre-tax change (2.3) (.2) (3.2) (5.7)
Tax benefit .1 1.3 1.4
Balance,
May 25, 1997 (58.9) 24.7 (2.7) (36.9)
- --------------------------------------------------------------------------------
Pre-tax change (9.5) 13.4 (4.8) (.9)
Tax (expense)
benefit (5.2) 1.9 (3.3)
Balance,
May 31, 1998 (68.4) 32.9 (5.6) (41.1)
- --------------------------------------------------------------------------------
Pre-tax change (12.2) (5.3) (2.6) (20.1)
Tax benefit 1.2 2.1 1.0 4.3
- --------------------------------------------------------------------------------
May 30, 1999 $(79.4) $29.7 $(7.2) $(56.9)
================================================================================
11. STOCK PLANS
A total of 10,595,205 shares (including 6,700,000 shares for senior management
options, 3,755,168 shares for salary replacement options, and 140,037 shares for
non-employee directors) are available for grants under our 1995 salary
replacement, 1996 director and 1998 senior management stock plans through
September 30, 2000, September 30, 2001, and October 1, 2003, respectively. An
additional 1,670,350 shares, (including up to 403,700 shares of restricted
stock) are available for grants under the 1998 employee plan, which has no
specified duration. Under the 1998 senior management and employee plans, shares
available for grant are reduced by shares issued, net of shares surrendered to
the Company in stock-for-stock exercises. Options may be granted only at a price
100 percent of the fair market value on the date of grant. Options now
outstanding include some granted under the 1988, 1990 and 1993 option plans,
under which no further rights may be granted. All options expire within 10 years
and one month after the date of grant. The stock plans provide for full vesting
of options upon completion of specified service periods, or in the event there
is a change of control.
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<PAGE>
Stock subject to a restricted period and a purchase price, if any (as
determined by the Compensation Committee of the Board of Directors), may be
granted to key employees under the 1998 employee plan and, up to 25 percent of
the value of cash incentive awards, through the Executive Incentive Plan. Most
restricted stock awards require the employee to deposit personally owned shares
(on a one-for-one basis) with the Company during the restricted period. The 1996
plan allows each non-employee director to annually elect to receive either 500
shares of stock restricted for one year or 500 restricted stock units
convertible to common stock at a date of the director's choosing following his
or her one-year term. The 1990 plan also allowed grants of restricted stock to
directors. In 1999, 1998 and 1997, grants of 150,972, 128,466 and 176,955 shares
of restricted stock or units were made with weighted average values at grant of
$67.06, $65.59 and $59.29 per share, respectively. On May 30, 1999, a total of
484,939 restricted shares and units were outstanding under all plans.
The 1988 plan permitted the granting of performance units corresponding
to stock options granted. The value of performance units was 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 30, 1999, there
were 630,132 options outstanding with corresponding performance unit accounts.
The value of these options exceeded the value of the performance unit accounts.
The following table contains information on stock option activity:
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
Exercisable per Share Outstanding per Share
- ------------------------------------------------------------------------------
Balance at
May 26, 1996 ........ 11,315,131 $37.70 23,593,232 $ 44.46
Granted ............. 3,973,277 59.33
Exercised ........... (2,335,956) 31.74
Expired ............. (429,898) 51.84
- ------------------------------------------------------------------------------
Balance at
May 25, 1997 ........ 11,949,600 42.53 24,800,655 47.91
Granted ............. 3,185,783 73.10
Exercised ........... (2,730,311) 31.92
Expired ............. (236,524) 52.51
- ------------------------------------------------------------------------------
Balance at
May 31, 1998 ........ 12,044,170 47.63 25,019,603 52.82
Granted ............. 4,076,004 69.28
Exercised ........... (2,186,620) 39.63
Expired ............. (371,065) 58.91
- ------------------------------------------------------------------------------
Balance at
May 30, 1999 ........... 12,116,034 $50.10 26,537,922 $ 56.35
==============================================================================
The following table provides information regarding options exercisable and
outstanding as of May 30, 1999:
Weighted Weighted Weighted
Range of Average Average Average
Exercise Exercise Exercise Remaining
Price Options Price per Options Price per Contractual
per Share Exercisable Share Outstanding Share Life (years)
- --------------------------------------------------------------------------------
Under $40 1,561,725 $33.80 1,561,725 $33.80 .98
$40-$50 2,815,143 46.33 4,834,603 45.82 4.19
$50-$60 6,618,619 53.22 10,477,629 53.28 4.90
$60-$70 1,117,856 63.83 5,366,880 63.54 7.94
Over $70 2,691 75.80 4,297,085 74.89 9.02
- -------------------------------------------------------------------------------
12,116,034 $50.10 26,537,922 $56.35 5.82
===============================================================================
<PAGE>
Stock-based compensation expense related to restricted stock for 1999,
1998 and 1997 was $7.0 million, $6.0 million and $4.8 million, respectively,
using the "intrinsic value-based method" of accounting for stock-based
compensation plans. Effective with 1997, we adopted the disclosure requirements
of SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 allows
either a fair value based method or an intrinsic value-based method of
accounting for such compensation plans. Had compensation expense for our stock
option plan grants been determined using the fair value based method, net
earnings, basic earnings per share and diluted earnings per share would have
been approximately $513.1 million, $3.35 and $3.28, respectively, for 1999;
$406.1 million, $2.57 and $2.52, respectively, for 1998; and $435.2 million,
$2.75 and $2.71, respectively, for 1997. These pro forma amounts are not likely
to be representative of the difference between the two methods in future years,
because many of our options require employee service over periods longer than
three years for full vesting. The weighted average fair values at grant date of
the options granted in 1999, 1998 and 1997 were estimated as $12.57, $16.59 and
$11.76, respectively, using the Black-Scholes option-pricing model with the
following weighted average assumptions:
1999 1998 1997
- ----------------------------------------------------------------------------
Risk-free interest rate 5.2% 6.1% 6.5%
Expected life 7 years 7 years 7 years
Expected volatility 18% 18% 18%
Expected dividend
growth rate 8% 8% 8%
============================================================================
The Black-Scholes model requires the input of highly subjective
assumptions and may not necessarily provide a reliable measure of fair value.
12. EARNINGS PER SHARE
Basic and diluted earnings per share (EPS) were calculated using the following:
In Millions, Fiscal Year 1999 1998 1997
- ------------------------------------------------------------------------------
Net Earnings ............................... $ 534.5 $ 421.8 $ 445.4
- ------------------------------------------------------------------------------
Average number of common
shares - basic EPS ...................... 153.2 158.1 158.2
- ------------------------------------------------------------------------------
Incremental share effect from:
Stock options ........................... 4.0 4.1 3.4
Restricted stock, stock rights
and puts ............................... .1 .1 --
- ------------------------------------------------------------------------------
Average number of common
shares - diluted EPS .................... 157.3 162.3 161.6
==============================================================================
13. INTEREST EXPENSE
The components of net interest expense are as follows:
In Millions, Fiscal Year 1999 1998 1997
- --------------------------------------------------------------------
Interest expense $133.6 $130.3 $115.7
Capitalized interest (2.7) (.7) (1.1)
Interest income (11.5) (12.4) (14.1)
- --------------------------------------------------------------------
Interest expense, net $119.4 $117.2 $100.5
====================================================================
During 1999, 1998 and 1997, we paid interest (net of amount capitalized)
of $130.1 million, $117.2 million and $103.6 million, respectively.
14. RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS
We have defined-benefit retirement 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 requirements of
federal law. Our principal retirement plan covering salaried employees has a
provision that any excess pension assets would vest in plan participants if the
plan is terminated within five years of a change in control.
We sponsor plans that provide health care benefits to the majority of
our retirees. The salaried health care benefit plan is contributory, with
retiree contributions based on years of service. We fund related trusts for
certain employees and retirees on an annual basis.
Trust assets related to the above plans consist principally of listed
equity securities, corporate obligations and U.S. government securities.
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<PAGE>
Reconciliation of the funded status of the plans and the amounts
included in the balance sheet are as follows:
Postretirement
Pension Plans Benefit Plans
In Millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------
FAIR VALUE OF PLAN
ASSETS
Beginning fair
value $1,384.6 $1,193.8 $194.7 $161.2
Actual return on
assets 89.1 230.2 26.3 34.0
Company
contributions 4.3 27.6 9.5 9.8
Plan participant
contributions - - 2.1 2.1
Benefits paid from
plan assets (60.9) (67.0) (14.0) (12.4)
- -----------------------------------------------------------------------------
Ending Fair Value $1,417.1 $1,384.6 $218.6 $194.7
=============================================================================
PROJECTED BENEFIT
OBLIGATION
Beginning obligations $ 951.5 $ 782.7 $221.6 $182.3
Service cost 19.4 14.7 6.4 4.5
Interest cost 64.6 62.4 16.0 14.4
Plan participant
contributions - - 2.2 2.1
Actuarial loss (gain) (18.3) 152.6 (0.2) 24.8
Acquisitions - - - 1.5
Curtailment loss - 6.1 - 4.3
Actual benefits
paid (60.9) (67.0) (14.5) (12.3)
- -----------------------------------------------------------------------------
Ending Obligations $ 956.3 $ 951.5 $231.5 $221.6
=============================================================================
FUNDED STATUS OF
PLANS $ 460.8 $ 433.1 $ (12.9) $ (26.9)
Unrecognized
actuarial loss 53.0 51.2 6.3 12.8
Unrecognized prior
service credits 45.1 35.9 (7.0) (9.3)
Unrecognized
transition (asset)
obligations (47.5) (61.9) -
- -----------------------------------------------------------------------------
Net Amount
Recognized $ 511.4 $ 458.3 $ (13.6) $ (23.4)
=============================================================================
AMOUNTS
RECOGNIZED ON
BALANCE SHEET
Prepaid asset $ 528.1 $ 471.8 $ 58.7 $ 50.8
Accrued liability (31.3) (26.8) (72.3) (74.2)
Intangible asset 2.9 4.2
Minimum liability
adjustment in
equity 11.7 9.1
- -----------------------------------------------------------------------------
Net $ 511.4 $ 458.3 $ (13.6) $ (23.4)
=============================================================================
Plans with obligations in excess of plan assets:
Postretirement
Pension Plans Benefit Plans
- --------------------------------------------------------------------------
In Millions 1999 1998 1999 1998
- --------------------------------------------------------------------------
Accumulated benefit
obligation $ 31.3 $ 26.8 $125.3 $116.1
Plan assets at fair
value - - 31.4 24.9
==========================================================================
Assumptions as of year-end are:
Postretirement
Pension Plans Benefit Plans
- -----------------------------------------------------------------------------
In Millions 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Discount rate 7.5% 7.0% 7.5% 7.0%
Rate of return on
plan assets 10.4% 10.4% 10.0% 10.0%
Salary increases 4.4% 4.4% - -
Annual increase in
cost of benefits - - 6.9% 6.7%
- -----------------------------------------------------------------------------
The annual increase in cost of postretirement benefits is assumed to decrease
gradually in future years, reaching an ultimate rate of 4.8% in the year 2007.
Components of net benefit (income) or expense each year is as follows:
Postretirement
Pension Plans Benefit Plans
- ----------------------------------------------------------------------------
In Millions 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------
Service cost ...... $ 19.4 $ 14.7 $ 14.3 $ 6.4 $ 4.5 $ 4.6
Interest cost ..... 64.6 62.4 59.0 16.0 14.4 14.2
Expected return
on plan assets . (127.9) (114.5) (103.1) (19.4) (16.1) (13.5)
Amortization of
transition asset (14.4) (14.4) (14.5) -- -- --
Amortization of
(gains) losses . 4.4 .7 4.1 1.5 .2 .6
Amortization of
prior service
cost ........... 4.9 5.0 4.0 (2.2) (2.3) (2.3)
Settlement or
curtailment
(gains) losses . -- 6.1 -- -- 4.3 --
- ---------------------------------------------------------------------------
Net (Income)
Expense ........ $(49.0) $ (40.0) $(36.2) $ 2.3 $ 5.0 $ 3.6
===========================================================================
The settlement or curtailment losses were recorded in fiscal 1998 as part of the
restructuring charge described in Note Three.
<PAGE>
Assumed health-care cost trend rates have a significant effect on the
amounts reported for the postretirement benefit plans. 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 1999 by $3.3 million and the postretirement accumulated benefit
obligation as of May 30, 1999 would increase by $28.4 million. If the
health-care cost trend rate decreased by one percentage point in each future
year, the aggregate of the service and interest cost components of
postretirement expense would decrease for 1999 by $2.9 million and the
postretirement accumulated benefit obligation as of May 30, 1999 would decrease
by $25.1 million.
The General Mills Savings Plan is a defined contribution plan that
covers our salaried and non-union employees. It had net assets of $1,003.4
million at May 30, 1999, and $876.2 million at May 31, 1998. This plan is a
401(k) savings plan that includes several investment funds and an Employee Stock
Ownership Plan (ESOP). The ESOP's only assets are Company common stock and
temporary cash balances. Expense recognized in 1999, 1998 and 1997 was $6.2
million, $4.9 million and $3.2 million, respectively. The ESOP's share of this
expense was $5.7 million, $4.5 million and $2.7 million, respectively. The
ESOP's expense is calculated by the "shares allocated" method.
The ESOP uses Company common stock to convey benefits to employees and,
through increased stock ownership, to further align employee interests with
those 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 common stock.
The ESOP originally purchased Company common stock principally with
funds borrowed from third parties (and guaranteed by the Company). 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 Note Nine.
The Company treats cash 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 unencumbered by debt and
are 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 1999, 1998
and 1997, the ESOP incurred interest expense of $4.5 million, $5.3 million and
$5.7 million, respectively. The ESOP used dividends of $8.6 million, $9.4
million and $8.1 million, along with Company contributions of $5.6 million, $4.4
million and $2.7 million to make interest and principal payments in the
respective years.
The number of shares of Company common stock in the ESOP is summarized
as follows:
Number of Shares May 30, 1999 May 31, 1998
- ------------------------------------------------------------------------------
Unreleased shares .......................... 1,540,197 1,873,000
Committed to be allocated .................. 24,726 19,000
Allocated to participants .................. 2,464,786 2,329,000
- ------------------------------------------------------------------------------
Total shares ............................ 4,029,709 4,221,000
==============================================================================
15. PROFIT-SHARING PLAN
The Executive Incentive Plan provides incentives to key individuals who have the
greatest potential to contribute to current earnings and successful future
operations. These awards are approved by the Compensation Committee of the Board
of Directors, which consists solely of independent, outside directors, and these
awards are based on performance against pre-established goals approved by the
Committee. Profit-sharing expense was $9.0 million, $6.7 million and $4.5
million in 1999, 1998 and 1997, respectively.
16. INCOME TAXES
The components of earnings before income taxes and earnings (losses) of joint
ventures and the income taxes thereon are as follows:
In Millions, Fiscal Year 1999 1998 1997
- ------------------------------------------------------------------------
Earnings before income taxes:
U.S. $825.4 $688.1 $698.5
Foreign 21.3 (21.5) 11.5
- ------------------------------------------------------------------------
Total earnings before
income taxes $846.7 $666.6 $710.0
- ------------------------------------------------------------------------
Income taxes:
Current:
Federal $238.9 $242.8 $208.2
State and local 21.5 31.0 25.7
Foreign 1.6 (2.6) 3.5
- ------------------------------------------------------------------------
Total current 262.0 271.2 237.4
- ------------------------------------------------------------------------
Deferred:
Federal 32.1 (17.1) 17.1
State and local 7.3 (3.3) 3.9
Foreign 2.6 (8.9) (.1)
- -------------------------------------------------------------------------
Total deferred 42.0 (29.3) 20.9
- ------------------------------------------------------------------------
Total income taxes $304.0 $241.9 $258.3
========================================================================
<PAGE>
During 1999, 1998 and 1997, we paid income taxes of $248.6 million,
$185.6 million and $230.3 million, respectively.
In fiscal 1982 and 1983 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 relating
to 1999, 1998 and 1997 operations were increased by approximately $20 million,
$16 million and $16 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 1999 1998 1997
- ----------------------------------------------------------------------------
U.S. statutory rate 35.0% 35.0% 35.0%
- ----------------------------------------------------------------------------
State and local income taxes,
net of federal tax benefits 2.2 2.7 2.7
Other, net (1.3) (1.4) (1.3)
- ----------------------------------------------------------------------------
Effective income tax rate 35.9% 36.3% 36.4%
============================================================================
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are as follows:
In Millions May 30, 1999 May 31, 1998
- -----------------------------------------------------------------------------
Accrued liabilities .............................. $ 81.0 $ 112.5
Unusual charges .................................. 15.2 18.2
Compensation and
employee benefits .............................. 70.6 58.2
Disposition liabilities .......................... 8.6 9.2
Foreign tax loss carryforward .................... -- 4.1
Other ............................................ 13.6 14.3
- -----------------------------------------------------------------------------
Gross deferred tax assets ................... 189.0 216.5
- -----------------------------------------------------------------------------
Depreciation ..................................... 124.1 122.5
Prepaid pension asset ............................ 206.0 185.3
Intangible assets ................................ 2.7 1.8
Other ............................................ 42.5 44.5
- -----------------------------------------------------------------------------
Gross deferred tax liabilities .............. 375.3 354.1
- -----------------------------------------------------------------------------
Valuation allowance .............................. 5.0 10.3
- -----------------------------------------------------------------------------
Net deferred tax liability .................. $ 191.3 $ 147.9
=============================================================================
We have not recognized a deferred tax liability for unremitted earnings
of $80.7 million from 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.
17. LEASES AND OTHER COMMITMENTS
An analysis of rent expense by property leased follows:
In Millions, Fiscal Year 1999 1998 1997
- ----------------------------------------------------------------------
Warehouse space $23.0 $20.9 $17.6
Equipment 8.4 8.2 7.1
Other 6.2 5.8 4.8
- ----------------------------------------------------------------------
Total rent expense $37.6 $34.9 $29.5
======================================================================
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) $33.0 in 2000,
$29.9 in 2001, $17.9 in 2002, $7.4 in 2003, $2.7 in 2004 and $.5 after 2004,
with a cumulative total of $91.4.
We are contingently liable under guaranties and comfort letters for
$71.6 million. The guaranties and comfort letters are principally issued to
support borrowing arrangements, primarily for our joint ventures. We remain the
guarantor on certain leases and other obligations of Darden Restaurants, Inc.
(Darden), an entity we spun off as of May 28, 1995. However, Darden has
indemnified us against any related loss.
<PAGE>
18. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
We operate exclusively in the consumer foods industry, with multiple operating
segments organized generally by product categories.
Under our supply chain organization, substantially all manufacturing,
warehouse, distribution and sales activities are integrated across our
operations in order to maximize efficiency, productivity and deliver significant
cost savings. As a result, balance sheet and certain profit and loss information
is not maintained nor available by operating segment. Consistent with our
organization and the criteria outlined in SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," we have aggregated our
operating segments into one reportable segment.
The following table provides net sales information for our primary
product categories:
In Millions, Fiscal Year ................ 1999 1998 1997
- --------------------------------------------------------------------------
Product Categories:
Cereals ............................. $2,474.1 $2,421.0 $2,187.8
Mix Products/Flour .................. 1,688.8 1,672.5 1,665.3
Convenience Foods ................... 1,397.4 1,244.8 1,081.6
Foodservice & Other ................. 412.2 417.3 400.1
International (incl. export)........ 273.6 277.4 274.5
- --------------------------------------------------------------------------
Total ........................... $6,246.1 $6,033.0 $5,609.3
==========================================================================
The following table provides financial information by geographic area:
In Millions, Fiscal Year ................ 1999 1998 1997
- --------------------------------------------------------------------------------
Net sales
U.S.A ............................... $ 5,972.5 $ 5,755.6 $ 5,334.8
International (incl. export) ........ 273.6 277.4 274.5
- --------------------------------------------------------------------------------
Consolidated Total .............. $ 6,246.1 $ 6,033.0 $ 5,609.3
================================================================================
Long-lived assets
U.S.A ............................... $ 1,292.7 $ 1,184.6 $ 1,262.1
International ....................... 2.0 1.7 17.3
- --------------------------------------------------------------------------------
Consolidated Total .............. $ 1,294.7 $ 1,186.3 $ 1,279.4
================================================================================
The foreign sales reflected above were primarily made by our Canadian
subsidiary. Our proportionate share of the joint ventures' sales (not shown
above) was $826.3 million, $780.7 million and $728.2 million for 1999, 1998 and
1997, respectively. Please refer to Note Four for information regarding the
sales, earnings and assets of our joint ventures.
19. QUARTERLY DATA (UNAUDITED)
Summarized quarterly data for 1999 and 1998 follows:
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
In Millions, Except per Share --------------------------------------------------------------------------------------
and Market Price Amounts 1999 1998 1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $1,473.1 $1,416.5 $1,677.4 $1,638.3 $1,495.1 $1,424.7 $1,600.5 $1,553.5
Gross profit 889.4 834.8 978.4 947.9 876.3 837.0 908.5 875.4
Net earnings 145.0 134.3(b) 143.6(a) 64.6(b) 141.1 131.1 104.8 91.8
Net earnings per share -
Basic .94 .84 .94 .41 .92 .83 .69 .59
Net earnings per share -
Diluted .92 .82 .92 .40 .89 .81 .67 .57
Dividends per share. .53 .53 .53 .53 .55 .53 .55 .53
Market price of
common stock:
High 72 1/4 71 1/2 75 7/8 75 7/16 84 11/16 78 1/4 81 1/2 76 1/16
Low 59 3/16 60 64 1/16 63 3/8 73 5/16 69 9/16 72 1/2 66 7/16
=====================================================================================================================
<FN>
(a) Included an after-tax loss of $32.3 million ($.21 per diluted share) in the
second quarter for unusual items described in Note Three.
(b) Included an after-tax loss of $.1 million in the first quarter and $100.1
million ($.62 per diluted share) in the second quarter for unusual items
described in Note Three.
</FN>
</TABLE>
[LOGO]
<PAGE>
ELEVEN YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
In Millions, May 30, May 31, May 25, May 26, May 28,
Except per Share Data 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FINANCIAL RESULTS
Net earnings per share-Basic (b) $3.49 $2.67 $2.82 $3.00 $2.33
Net earnings per share-Diluted 3.40 2.60 2.76 2.94 2.29
Continuing operations earnings
per share - Basic 3.49 2.67 2.82 3.00 1.64
Continuing operations earnings per
share - Diluted 3.40 2.60 2.76 2.94 1.62
Return on average equity (b) 301.6% 123.2% 111.0% 212.3% 52.0%
Dividends per share 2.16 2.12 2.03 1.91 1.88
Sales 6,246 6,033 5,609 5,416 5,027
Costs and expenses:
Cost of sales 2,593 2,538 2,475 2,396 2,285
Selling, general and administrative 2,635 2,545 2,275 2,160 2,038
Interest, net 119 117 101 101 101
Unusual expenses (income) 52 166 48 - 183
Total costs and expenses 5,399 5,366 4,899 4,657 4,607
Earnings from continuing
operations before taxes and
earnings (losses) of joint ventures 847 667 710 759 420
Income taxes 304 242 259 280 153
Earnings (losses) of joint ventures (8) (3) (6) (3) (7)
Earnings from continuing operations 535 422 445 476 260
Discontinued operations after taxes(b) - - - - 107
Accounting changes - - - - -
Net earnings (b) 535 422 445 476 367
Earnings from continuing
operations as a percent of sales 8.6% 7.0% 7.9% 8.8% 5.2%
Average common shares outstanding:
Basic 153 158 158 159 158
Diluted 157 162 162 162 160
- ----------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total assets 4,141 3,861 3,902 3,295 3,358
Land, buildings and equipment, net 1,295 1,186 1,279 1,312 1,457
Working capital at year end (598) (408) (281) (197) (324)
Long-term debt, excluding
current portion 1,702 1,640 1,530 1,221 1,401
Stockholders' equity 164 190 495 308 141
Stockholders' equity per share 1.08 1.23 3.09 1.94 .89
- ----------------------------------------------------------------------------------------------------------
OTHER STATISTICS
Total dividends 331 336 321 304 297
Gross capital expenditures 281 184 163 129 157
Research and development 70 66 61 60 60
Advertising media expenditures 348 366 306 320 324
Wages, salaries and employee
benefits 636 608 564 541 538
Number of employees (actual) 10,664 10,228 10,200 9,790 9,882
Common stock price range (a):
High 84 11/16 78 1/4 68 3/4 60 1/2 63 3/4
Low 59 3/16 60 52 50 49 3/8
Close 80 3/8 68 1/4 64 1/4 58 1/4 60 5/8
==========================================================================================================
<FN>
Amounts presented in this summary have been restated to include continuing
operations only.
(a) Prices shown prior to 1996, indicated in the box above, are before the
spin-off of our former restaurant operations. The closing prices on
May 26, 1995 of the two common stocks on a when-issued basis were $49 7/8
for General Mills and $10 7/8 for Darden Restaurants.
(b) Years prior to 1996 include discontinued operations.
</FN>
</TABLE>
EXHIBIT 21
GENERAL MILLS, INC. SUBSIDIARIES
(as of August 1, 1999)
<TABLE>
<CAPTION>
Percentage
Country or of Voting
State in Which Securities
Each Subsidiary Owned
Was Organized (Note 1)
<S> <C> <C>
COLOMBO, 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 (BVI) LTD. British Virgin Islands 100
CPW SINGAPORE (PTE.) LTD. Singapore 50
GENERAL MILLS CONTINENTAL, INC. (Note 11) Delaware 100
CEREALES PARTNERS L.L.C. Delaware 50
GENERAL MILLS DIRECT MARKETING, INC. 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
Snack Ventures S.A. Spain 100
Matutano, S.A. Portugal 100
Snack Ventures Inversions, S.L. Spain 100
Smiths Food Group B.V. The Netherlands 100
SVE Italia S.r.L. 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
GENERAL MILLS NETHERLANDS B.V. (Note 15) The Netherlands 70
General Mills Snacks Holding B.V. The Netherlands 100
GENERAL MILLS INTERNATIONAL LIMITED (Note 11) Delaware 100
Bimaler S.A. Uruguay 50
Cereal Partners Czech Republic, s.r.o. Czech Republic 50
Cereal Partners Hungaria Ltd. Hungary 50
Cereales Partners L.L.C. Delaware 50
Cereal Partners Slovak Republic, s.r.o. Slovak Republic 50
CPW do Brasil Ltda. Brazil 50
CPW Trinidad & Tobago, Ltd. Trinidad 50
General Mills Asia Pte. Ltd. Singapore 100
CPW Philippines, Inc. Philippines 50
General Mills do Brasil Ltda. (Note 16) Brazil 99
International Dessert Partners SRLtda. Peru 50
SVE (Hungary) Trading and Manufacturing Limited Hungary 40.5
General Mills Maarssen B.V. The Netherlands 100
GENERAL MILLS MAURITIUS, INC. Mauritius 100
Nanjing General Mills Want Want Ltd. People's Republic of 50
China
GENERAL MILLS MISSOURI, INC. Missouri 100
CHEX INC. Delaware 100
GENERAL MILLS OPERATIONS, INC. (Note 14) Delaware 97.8
GENERAL MILLS PRODUCTS CORP. Delaware 100
INMOBILIARIA SELENE, S.A. DE C.V. Mexico 100
GENERAL MILLS CANADA, INC. (Note 8) Canada 100
GENERAL MILLS SALES, INC. Delaware 100
INTERNATIONAL DESSERT PARTNERS L.L.C. Delaware 50
GENERAL MILLS SERVICES, INC. Delaware 100
GOLD MEDAL INSURANCE CO. (Note 9) Minnesota 100
LLOYD'S FOOD PRODUCTS, INC. Maryland 100
Lloyd's Barbeque Company Minnesota 100
MILLS MEDIA, INC. Minnesota 100
NESTLE ASEAN PHILIPPINES, INC. (Note 12) The Philippines 30
POPCORN DISTRIBUTORS, INC. Delaware 100
TONG WANT Taiwan 50
TORUN-PACIFIC SP. Z O.O. Poland 50
YOPLAIT USA, INC. Delaware 100
</TABLE>
<PAGE>
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; as well as
a 100% interest in a Mexican variable capital general partnership known as
General Mills International y Compania S. en N.C. de C.V.
12. The 30% ownership interest of General Mills, Inc. in Nestle Asea 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.
14. Chex Inc. owns the other 2.20% ownership interest in General Mills
Operations, Inc. General Mills Operations, Inc. also owns a 50% ownership
interest in a partnership organized under the laws of the state of Montana;
and a 50% ownership interest in a limited liability company organized under
the laws of the state of North Dakota.
15. General Mills Holland B.V. owns a 30% ownership interest in General Mills
Netherlands B.V.
16. General Mills Continental, Inc. owns a 1% ownership interest in General
Mills do Brasil Ltda.
EXHIBIT 23
CONSENT OF KPMG LLP
The Board of Directors
General Mills, Inc.:
We consent to incorporation by reference in the Registration Statements
(Nos. 2-49637 and 333-76741) on Form S-3 and Registration Statements (Nos.
2-13460, 2-53523, 2-95574, 33-24504, 33-27628, 33-32059, 33-36892, 33-36893,
33-50337, 33-62729, 333-13089 and 333-32509, 333-65311 and 333-65313) on Form
S-8 of General Mills, Inc. of our reports dated June 28, 1999, relating to the
consolidated balance sheets of General Mills, Inc. and subsidiaries as of May
30, 1999 and May 31, 1998 and the related consolidated statements of earnings,
stockholders' equity, cash flows and related financial statement schedule for
each of the fiscal years in the three-year period ended May 30, 1999, which
reports are included or incorporated by reference in the May 30, 1999 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 in fiscal 1997 for impairment of long-lived
assets and for long-lived assets to be disposed of.
/s/ KPMG LLP
Minneapolis, Minnesota
August 23, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from our
Form 10-K for the fiscal year ended May 30, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-30-1999
<PERIOD-START> JUN-1-1998
<PERIOD-END> MAY-30-1999
<CASH> 3,900,000
<SECURITIES> 0
<RECEIVABLES> 495,346,000
<ALLOWANCES> (4,746,000)
<INVENTORY> 426,700,000
<CURRENT-ASSETS> 1,102,500,000
<PP&E> 2,718,900,000
<DEPRECIATION> (1,424,200,000)
<TOTAL-ASSETS> 4,140,700,000
<CURRENT-LIABILITIES> 1,700,300,000
<BONDS> 1,702,400,000
0
0
<COMMON> 657,900,000
<OTHER-SE> (493,700,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,140,700,000
<SALES> 6,246,100,000
<TOTAL-REVENUES> 6,246,100,000
<CGS> 2,593,500,000
<TOTAL-COSTS> 2,593,500,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 631,000
<INTEREST-EXPENSE> 119,400,000
<INCOME-PRETAX> 846,700,000
<INCOME-TAX> 304,000,000
<INCOME-CONTINUING> 534,500,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 534,500,000
<EPS-BASIC> 3.49
<EPS-DILUTED> 3.40
</TABLE>
