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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(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 28, 2000
/ / 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
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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)
(763) 764-2311
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.10 par value New York Stock Exchange
Chicago Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by Reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Common Stock held by non-affiliates of the
Registrant, based on the closing price of $34.75 per share as reported on the
New York Stock Exchange on July 27, 2000: $9,856.0 million.
Number of shares of Common Stock outstanding as of July 27, 2000:
283,626,015 (including 26,964 shares set aside for the exchange of shares of
Ralcorp Holdings, Inc. and excluding 124,680,649 shares held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement dated August 18, 2000 are incorporated
by reference into Part III, and portions of Registrant's 2000 Annual Report
to Stockholders are incorporated by reference into Parts I, II and IV.
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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. The Company also markets its products to foodservice operators,
convenience stores and vending operators. 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.
In July 2000, the Company and Diageo plc (Diageo) entered into a merger
agreement, under which the Company expects to acquire Diageo's worldwide
Pillsbury operations. Under the terms of the agreement, the Company will acquire
Pillsbury in a stock-for-stock exchange. The consideration to Diageo will
include 141 million shares of the Company's common stock and the assumption of
$5.14 billion of Pillsbury debt. Up to $642 million of the total transaction
value may be repaid to the Company at the first anniversary of the closing
depending on the Company's stock price at that time. The total consideration of
the transaction (exclusive of direct acquisition costs) is estimated at
approximately $10.5 billion. The transaction has been approved by the boards of
directors of both companies, and is subject to regulatory review and approval by
both companies' shareholders. The transaction is expected to close late in
calendar 2000. See Note Two to Consolidated Financial Statements appearing on
page 27 of the Company's 2000 Annual Report to Stockholders, incorporated herein
by reference.
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, CRISPY
WHEATIES 'N RAISINS, FROSTED WHEATIES, LUCKY CHARMS, TOTAL CORN FLAKES, WHOLE
GRAIN TOTAL, TOTAL RAISIN BRAN, TRIX, GOLDEN GRAHAMS, WHEAT CHEX, CORN CHEX,
RICE CHEX, MULTI-BRAN CHEX, HONEY NUT CHEX, KIX, BERRY BERRY KIX, FIBER ONE,
REESE'S PEANUT BUTTER PUFFS, COCOA PUFFS, NESQUIK, COOKIE CRISP, CINNAMON TOAST
CRUNCH, FRENCH TOAST CRUNCH, CLUSTERS, RAISIN NUT BRAN, OATMEAL CRISP, SUNRISE
and BASIC 4. In fiscal 2000 the Company introduced BROWN SUGAR AND OAT TOTAL, a
line extension of the TOTAL franchise.
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.
ORGANIC FOODS. General Mills markets organic foods under its CASCADIAN
FARM, MUIR GLEN and SMALL PLANET FOODS trademarks. The Company also markets
organic frozen fruits and vegetables, meals and entrees, a wide variety of
canned tomato products including tomatoes and spaghetti sauce, frozen juice
concentrates, fruit spreads, and frozen desserts.
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SNACK PRODUCTS AND BEVERAGES. General Mills markets POP*SECRET microwave
popcorn; a line of grain snacks including NATURE VALLEY granola bars; a line of
fruit snacks including FRUIT ROLL-UPS, FRUIT BY THE FOOT, GUSHERS, LUCKY CHARMS
and TRIX shapes; a line of snack mix products including CHEX mix and GARDETTO'S
Snack 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.
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 expanded nationally in fiscal 2000. 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 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. During fiscal 2000, General Mills established wholly-owned subsidiaries
in China and Mexico. General Mills de Mexico sells dessert and baking mixes and
General Mills Foods (Nanjing) manufactures and sells salty snacks. General Mills
Canada sells BIG G ready-to-eat cereals, BETTY CROCKER side dishes, baking and
packaged dinner mixes and fruit, grain and salty snacks.
The Company currently participates in two international joint ventures. See
Note Five to Consolidated Financial Statements appearing on pages 28 and 29 of
the Company's 2000 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 75 countries and republics. The following
cereal products were marketed under the umbrella NESTLE trademark in fiscal
2000: TRIO, CLUSTERS, NESQUIK, MULTI-CHEERIOS, HONEY NUT CHEERIOS, GOLDEN
GRAHAMS, CINI MINIS, CHOCAPIC, TRIX, ESTRELITAS, GOLD, KIX, MILO, FIBRE 1,
KANGUS, FITNESS, SHREDDED WHEAT, SHREDDIES, COUNTRY CORN FLAKES, HONEY STARS,
KOKO KRUNCH, SNOW FLAKES, ZUCOSOS, FRUTINA, APPLE MINIS, CRUNCH, FITNESS &
FRUIT, LA LECHERA AND MOCA. 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.
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
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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 these hedging tools to
mitigate the risks associated with adverse price movements and not to speculate
in the marketplace. See also Note Eight to Consolidated Financial Statements
appearing on pages 30 through 31 of the Company's 2000 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 2000 Annual Report to Stockholders, incorporated herein by
reference.
CAPITAL EXPENDITURES. During the three fiscal years ended May 28, 2000,
General Mills invested $732 million for capital expenditures, not including the
cost of acquired companies. The Company expects to spend approximately $300
million for such purposes in fiscal 2001, exclusive of any capital expenditures
associated with the Pillsbury business, which the Company expects to acquire
during fiscal 2001.
RESEARCH AND DEVELOPMENT. The main research and development facilities are
located at the James Ford Bell Technical Center in Golden Valley (suburban
Minneapolis), Minnesota. With a staff of approximately 930, 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 $77.1 million in fiscal 2000, $70.0 million in
fiscal 1999 and $66.3 million in fiscal 1998. General Mills' research and
development resources are focused on new product development, product
improvement, process design and improvement, packaging and exploratory research
in new business areas.
EMPLOYEES. At May 28, 2000, General Mills had 11,077 employees.
ENVIRONMENTAL MATTERS. As of June 28, 2000, the Company has received
notices advising that there have been releases or threatened releases of
hazardous substances or wastes at nine 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 Nineteen to Consolidated Financial Statements
appearing on page 38 of the Company's 2000 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 41, 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 43, is Senior 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
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Company in 1996, named Marketing Director, Cheerios business unit in 1996 and
named to his present position in 1997.
Randy G. Darcy, age 49, is Senior Vice President, Supply Chain. 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.
Mr. Darcy was employed by Procter & Gamble from 1973 to 1987 serving in a
variety of management positions.
Stephen R. Demeritt, age 56, is Vice Chairman of the Company, with
responsibility for our worldwide cereal businesses, General Mills Canada,
Consumer Insights and Advertising. Mr. Demeritt joined General Mills in 1969 and
served in a variety of consumer food marketing positions. He was President of
International Foods from 1991 to 1993 and from 1993 to 1999 was Chief Executive
Officer of Cereal Partners Worldwide, the Company's global cereal joint venture
with Nestle.
Jon L. Finley, age 46, 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 39, is Senior 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.
David P. Homer, age 39, is Vice President; President, Baking Products
Division. Mr. Homer joined the Company in 1987 and has served in a variety of
domestic and international marketing management positions. He was named to his
present position in February, 2000.
James A. Lawrence, age 47, 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 its operations in Asia, the Middle East and Africa.
John T. Machuzick, age 43, 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 52, is Senior Vice President, Corporate Affairs,
General Counsel and Secretary. 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 41, is Senior Vice President; President, Betty
Crocker Meals. 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 50, 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 46, is Senior Vice President of General Mills and
Chief Executive Officer of Cereal Partners Worldwide. Mr. Powell joined the
Company in 1979 and was appointed a Vice President of General Mills
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and named Marketing Director of Cereal Partners U.K. in 1990. He was named
President, Yoplait USA in 1995, elected Senior Vice President, President, Big G
in 1998 and named to his present position in September, 1999.
Jeffrey J. Rotsch, age 50, 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 54, has been Chairman and Chief Executive Officer of
General Mills since 1995. Mr. Sanger joined the Company in 1974 and served as
the head 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 47, 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.
Christianne L. Strauss, age 38, is Vice President; President, General Mills
Canada, Inc. Ms. Strauss joined the Company in 1986 and advanced through a
variety of domestic and international food marketing management positions,
becoming President of General Mills Canada in 1996.
Robert L. Stretmater, age 56, 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 51, 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 60, 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 52, 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 56, is Vice Chairman of the Company with
responsibility for the Global Convenience Foods businesses (includes
International Foods, Snacks, Yoplait-Colombo Yogurt and Refrigerated Products),
the Betty Crocker Meals, General Mills Baking Products and New Ventures
divisions, and Snack Ventures Europe. He is also responsible for leading the
integration of the Pillsbury businesses following completion of the acquisition.
Mr. Viault joined the Company in 1996 from Philip Morris, where he had been
based in Zurich, Switzerland, serving since 1990 as President of Kraft Jacobs
Suchard. Mr. Viault was 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 (the "1934 Act"), 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).
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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 the Company's 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.
In particular, the Company's predictions about the Pillsbury acquisition
could be affected by regulatory and stockholder approvals, integration problems,
failure to achieve synergies, unanticipated liabilities, inexperience in new
business lines, and changes in the competitive environment. In addition, the
Company's future results also 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 competitors; the impact of competitive
products and pricing; product development; actions of competitors other than as
described above; acquisitions or dispositions of businesses or assets; changes
in capital structure; 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;
economic conditions, including changes in inflation rates or interest rates;
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 undertakes no obligation to publicly revise any forward-looking
statements to reflect future events or circumstances.
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 nineteen food manufacturing facilities 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; Carlisle, Pennsylvania; Carson, California; Cedar Rapids, Iowa; Chicago,
Illinois area (2); Cincinnati, Ohio; Covington, Georgia; Iowa City, Iowa; Lodi,
California; Methuen, Massachusetts; Milwaukee Wisconsin; Minneapolis/St. Paul,
Minnesota area (3); Reed City, Michigan; Tulare, California; and Toledo, Ohio.
The Company owns seven wheat 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 eight terminal
grain elevators and has country grain elevators in 31 locations, primarily in
Idaho and Montana.
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General Mills also owns or leases warehouse space aggregating approximately
8,600,000 square feet, of which approximately 6,100,000 square feet are leased.
A number of sales and administrative offices are maintained in the United States
and Canada, totaling 2,000,000 square feet.
ITEM 3. LEGAL PROCEEDINGS.
In management's opinion, there were no claims or litigation pending at May
28, 2000, 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.
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 Twenty to Consolidated Financial
Statements and in the Eleven-Year Financial Summary appearing on pages 38 and 39
of Registrant's 2000 Annual Report to Stockholders is incorporated herein by
reference. As of July 27, 2000, the number of record holders of common stock was
39,712. 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 1996 through 2000 contained in the
Eleven-Year Financial Summary on page 39 of Registrant's 2000 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 in the section entitled "Management's Discussion and
Analysis" on pages 16 through 20 of Registrant's 2000 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information in the "Market Risk Management" subsection of the section
entitled "Management's Discussion and Analysis" on page 19 of Registrant's 2000
Annual Report to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information on pages 22 through 38 of Registrant's 2000 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 18, 2000 is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained on pages 25 through 28 of Registrant's definitive
proxy materials dated August 18, 2000 is incorporated herein by reference. The
information appearing under the heading "Report of Compensation Committee on
Executive Compensation" is not incorporated herein.
-7-
<PAGE>
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 18, 2000 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.-- Not applicable.
--------------------
The Company's Annual Report on Form 10-K for the fiscal year ended May 28, 2000,
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.
-8-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and the Board of Directors
General Mills, Inc.:
Under date of June 26, 2000, except as to Note Two, which is as of July 17,
2000, we reported on the consolidated balance sheets of General Mills, Inc. and
subsidiaries as of May 28, 2000 and May 30, 1999 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 28, 2000, as contained in the
2000 Annual Report to Stockholders. These consolidated financial statements and
our report thereon are incorporated by reference in the annual report on Form
10-K for the fiscal year ended May 28, 2000. 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.
/s/ KPMG LLP
Minneapolis, Minnesota
June 26, 2000
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 report dated June 26, 2000, except as to Note
Two, which is as of July 17, 2000, relating to the consolidated balance sheets
of General Mills, Inc. and subsidiaries as of May 28, 2000 and May 30, 1999 and
the related consolidated statements of earnings, stockholders' equity, cash
flows and our report dated June 26, 2000 on the related financial statement
schedule for each of the fiscal years in the three-year period ended May 28,
2000, which reports are included or incorporated by reference in the May 28,
2000 annual report on Form 10-K of General Mills, Inc.
/s/ KPMG LLP
Minneapolis, Minnesota
August 18, 2000
-9-
<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 28,
2000, May 30, 1999 and May 31, 1998 (incorporated herein by reference
to page 22 of the Registrant's 2000 Annual Report to Stockholders).
Consolidated Balance Sheets at May 28, 2000 and May 30, 1999
(incorporated herein by reference to page 23 of the Registrant's 2000
Annual Report to Stockholders).
Consolidated Statements of Cash Flows for the Fiscal Years Ended May
28, 2000, May 30, 1999 and May 31, 1998 (incorporated herein by
reference to page 24 of the Registrant's 2000 Annual Report to
Stockholders).
Consolidated Statements of Stockholders' Equity for the Fiscal Years
Ended May 28, 2000, May 30, 1999 and May 31, 1998 (incorporated herein
by reference to page 25 of the Registrant's 2000 Annual Report to
Stockholders).
Notes to Consolidated Financial Statements (incorporated herein by
reference to pages 26 through 38 of the Registrant's 2000 Annual Report
to Stockholders).
2. FINANCIAL STATEMENT SCHEDULES:
For the Fiscal Years Ended May 28, 2000, May 30, 1999 and May 31, 1998:
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 (incorporated herein
by reference to Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the fiscal year ended May 30, 1999).
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 Wells Fargo Bank Minnesota, N.A. (f.k.a.
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).
-10-
<PAGE>
Exhibit No. Description
----------- -----------
*10.1 Stock Option and Long-Term Incentive Plan of 1988, as amended
to date (incorporated herein by reference to Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 30, 1999).
10.2 Addendum No. 3 effective as of March 15, 1993 to Protocol of
Cereal Partners Worldwide.
*10.3 1998 Employee Stock Plan, as amended to date.
*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
(incorporated herein by reference to Exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 30, 1999).
*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 (incorporated herein by reference to Exhibit 10.10 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 30, 1999).
*10.11 General Mills, Inc. 1995 Salary Replacement Stock Option Plan,
as amended to date.
*10.12 General Mills, Inc. Deferred Compensation Plan, as amended to
date.
*10.13 Supplemental Benefits Trust Agreement dated February 9, 1987,
as amended and restated as of September 26, 1988 (incorporated
herein by reference to Exhibit 10.13 to Registrant's Annual
Report on Form 10-K for the fiscal year ended May 30, 1999).
*10.14 Supplemental Benefits Trust Agreement dated September 26, 1988
(incorporated herein by reference to Exhibit 10.14 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 30, 1999).
10.15 Agreements dated November 29, 1989 by and between General
Mills, Inc. and Nestle, S.A.
10.16 Protocol and Addendum No. 1 to Protocol of Cereal Partners
Worldwide dated November 21, 1989 (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
(incorporated herein by reference to Exhibit 10.17 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended May 30, 1999).
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.
10.21 Standstill Agreement with CPC International, Inc. dated
October 17, 1994.
*10.22 1998 Senior Management Stock Plan, as amended to date.
10.23 Agreement and Plan of Merger, dated as of July 16, 2000 by and
among the Registrant, General Mills North American Businesses,
Inc., Diageo plc and The Pillsbury Company (incorporated
herein by reference to Exhibit 10.1 to Registrant's Report on
Form 8-K filed July 20, 2000).
10.26 Amendment No. 1 dated as of July 16, 2000, to the Rights
Agreement dated as of December 11, 1995 between Registrant and
Wells Fargo Bank Minnesota, N.A. (f.k.a. Norwest Bank
Minnesota, N.A.) (incorporated by reference to Exhibit 1 to
Registrant's Report on Form 8-A/A dated July 25, 2000).
* 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.
-11-
<PAGE>
Exhibit No. Description
----------- -----------
12 Statement of Ratio of Earnings to Fixed Charges (contained on
page 16 of this Report).
13 2000 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 9 of this Report).
(b) REPORTS ON FORM 8-K.--
(i) FORM 8-K, FILED ON JULY 17, 2000, WITH RESPECT TO THE
ANNOUNCEMENT BY THE REGISTRANT THAT IT HAD ENTERED INTO AN
AGREEMENT WITH DIAGEO PLC TO ACQUIRE THE WORLDWIDE OPERATIONS
OF THE PILLSBURY COMPANY.
(ii) FORM 8-K, FILED ON JULY 20, 2000, FILING AS EXHIBITS THE
AGREEMENT AND PLAN OF MERGER DATED AS OF JULY 16, 2000, BY AND
AMONG THE REGISTRANT, GENERAL MILLS NORTH AMERICAN BUSINESSES,
INC., DIAGEO PLC AND THE PILLSBURY COMPANY, AND THE FORM OF
STOCKHOLDERS AGREEMENT.
-12-
<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 18, 2000
By: /s/ S. S. MARSHALL
----------------------------------------
S. S. Marshall
SENIOR VICE PRESIDENT, CORPORATE AFFAIRS,
GENERAL COUNSEL AND SECRETARY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEPHEN R. DEMERITT Director 7/28/00
-------------------------------- Vice Chairman ------------
(Stephen R. Demeritt)
/s/ L. DE SIMONE Director 7/28/00
-------------------------------- ------------
(Livio D. DeSimone)
/s/ W.T. ESREY Director 7/27/00
-------------------------------- ------------
(William T. Esrey)
/s/ R.V. GILMARTIN Director 7/31/00
-------------------------------- ------------
(Raymond V. Gilmartin)
/s/ JUDITH RICHARDS HOPE Director 7/28/00
-------------------------------- ------------
(Judith R. Hope)
/s/ ROBERT L. JOHNSON Director 8/01/00
-------------------------------- ------------
(Robert L. Johnson)
/s/ HEIDI G. MILLER Director 7/29/00
-------------------------------- ------------
(Heidi G. Miller)
/s/ M.D. ROSE Director 7/29/00
-------------------------------- ------------
(Michael D. Rose)
/s/ S.W. SANGER Chairman of the Board and 7/31/00
-------------------------------- Chief Executive Officer ------------
(Stephen W. Sanger)
-13-
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ A. MICHAEL SPENCE Director 7/27/00
-------------------------------- ------------
(A. Michael Spence)
/s/ DOROTHY A. TERRELL Director 7/31/00
-------------------------------- ------------
(Dorothy A. Terrell)
/s/ R.G. VIAULT Director 8/06/00
-------------------------------- Vice Chairman ------------
(Raymond G. Viault)
/s/ C. ANGUS WURTELE Director 7/27/00
-------------------------------- ------------
(C. Angus Wurtele)
/s/ KENNETH L. THOME Senior Vice President, 7/27/00
-------------------------------- Financial Operations ------------
(Kenneth L. Thome) (Principal Accounting Officer)
-14-
<PAGE>
GENERAL MILLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN MILLIONS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------------------------------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM AT END OF
DESCRIPTION OF PERIOD EXPENSES RESERVES PERIOD
----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR POSSIBLE LOSSES
ON ACCOUNTS RECEIVABLE:
Year ended May 28, 2000.... $4.7 $3.4 $3.7 (a) $5.8
(1.4)(b)
---- ---- ---- ----
Total.................. $4.7 $3.4 $2.3 $5.8
==== ==== ==== ====
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
==== ==== ==== ====
VALUATION ALLOWANCE FOR
DEFERRED TAX ASSETS:
Year ended May 28, 2000 5.0 .1 - 5.1
Year ended May 30, 1999 10.3 - 5.3 5.0
Year ended May 31, 1998 11.2 - .9 10.3
RESTRUCTURING CHARGES:
Year ended May 28, 2000 44.6 - 34.2 (c) 10.4
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
</TABLE>
Notes:
(a) Bad debt write-offs.
(b) Other adjustments and reclassifications.
(c) Net Amounts utilized for restructuring activities.
-15-
<PAGE>
EXHIBIT 12
GENERAL MILLS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended
----------------------------------------------
May 28, May 30, May 31, May 25, May 26,
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges 6.25 6.67 5.63 6.54 6.94
For purposes of computing the ratio of earnings to fixed charges, earnings
represent pretax income from operations, plus pretax earnings or losses of joint
ventures, plus fixed charges, less adjustment for capitalized interest. Fixed
charges represent gross interest expense plus one-third (the proportion deemed
representative of the interest factor) of rents of continuing operations.
<PAGE>
EXHIBIT INDEX
10.2 Addendum No. 3 effective as of March 15, 1993 to Protocol of
Cereal Partners Worldwide.
10.3 1998 Employee Stock Plan, as amended to date.
10.6 Supplemental Retirement Plan, as amended to date.
10.9 Supplemental Savings Plan, as amended to date.
10.11 General Mills, Inc. 1995 Salary Replacement Stock Option Plan,
as amended to date.
10.12 General Mills, Inc. Deferred Compensation Plan, as amended to
date.
10.15 Agreements dated November 29, 1989 by and between General
Mills, Inc. and Nestle, S.A.
10.20 Stock Option and Long-Term Incentive Plan of 1993, as amended
to date.
10.21 Standstill Agreement with CPC International, Inc. dated
October 17, 1994.
10.22 1998 Senior Management Stock Plan, as amended to date.
12 Statement of Ratio of Earnings to Fixed Charges (contained on
page 16 of this Report).
13 2000 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 9 of this Report).
27 Financial Data Schedule.
