SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 26,
2000
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____ TO _____
Commission file number: 1-1185
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-0274440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
Number One General Mills Boulevard
Minneapolis, MN 55426
(Mail: P.O. Box 1113) (Mail: 55440)
(Address of principal executive offices) (Zip Code)
(763) 764-7600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
As of December 19, 2000, General Mills had 283,950,021 shares of its $.10 par
value common stock outstanding (excluding 124,356,643 shares held in treasury).
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------ ------------------------
November 26, November 28, November 26, November 28,
2000 1999 2000 1999
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sales $ 1,895.2 $1,817.2 $ 3,570.1 $3,390.8
Costs and Expenses:
Cost of sales 753.1 728.2 1,406.4 1,349.6
Selling, general and administrative 785.7 760.0 1,511.2 1,437.2
Interest, net 52.4 34.1 107.2 66.8
Total Costs and Expenses 1,591.2 1,522.3 3,024.8 2,853.6
--------- -------- --------- --------
Earnings before Taxes and Earnings
from Joint Ventures 304.0 294.9 545.3 537.2
Income Taxes 107.2 104.3 192.6 191.6
Earnings from Joint Ventures 5.9 3.1 8.9 6.6
--------- -------- --------- --------
Net Earnings $ 202.7 $ 193.7 $ 361.6 $ 352.2
========= ======== ========= ========
Earnings per Share - Basic $ .72 $ .64 $ 1.28 $ 1.16
========= ======== ========= ========
Average Number of Common Shares 282.9 303.5 283.3 303.9
========= ======== ========= ========
Earnings per Share - Diluted $ .70 $ .62 $ 1.25 $ 1.12
========= ======== ========= ========
Average Number of Common Shares -
Assuming Dilution 290.2 313.1 290.3 313.7
========= ======== ========= ========
Dividends per Share $ .275 $ .275 $ .550 $ .550
========= ======== ========= ========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)
(Unaudited) (Unaudited)
----------- -----------
November 26, November 28, May 28,
2000 1999 2000
----------- ----------- -------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 66.9 $ 70.4 $ 25.6
Receivables 588.9 562.5 500.6
Inventories:
Valued primarily at FIFO 251.1 200.5 211.8
Valued at LIFO (FIFO value exceeds LIFO by
$30.4, $32.0 and $32.4, respectively) 311.1 296.8 298.7
Prepaid expenses and other current assets 83.8 80.4 87.7
Deferred income taxes 65.9 94.8 65.9
--------- -------- ---------
Total Current Assets 1,367.7 1,305.4 1,190.3
--------- -------- ---------
Land, Buildings and Equipment, at Cost 3,060.0 2,843.4 2,949.2
Less accumulated depreciation (1,608.8) (1,469.5) (1,544.3)
--------- -------- ---------
Net Land, Buildings and Equipment 1,451.2 1,373.9 1,404.9
Intangibles 870.3 830.3 870.3
Other Assets 1,210.2 1,084.7 1,108.2
--------- -------- ---------
Total Assets $ 4,899.4 $4,594.3 $ 4,573.7
========= ======== =========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 568.9 $ 672.4 $ 641.5
Current portion of long-term debt 347.8 98.7 413.5
Notes payable 1,117.1 893.7 1,085.8
Accrued taxes 160.6 167.2 104.9
Other current liabilities 256.2 259.7 283.4
--------- -------- ---------
Total Current Liabilities 2,450.6 2,091.7 2,529.1
Long-term Debt 2,026.4 1,664.7 1,760.3
Deferred Income Taxes 307.2 296.2 297.2
Deferred Income Taxes - Tax Leases 82.2 100.5 89.8
Other Liabilities 193.9 184.5 186.1
--------- -------- ---------
Total Liabilities 5,060.3 4,337.6 4,862.5
--------- -------- --------
Stockholders' Equity:
Cumulative preference stock, none issued - - -
Common stock, 408.3 shares issued 695.2 679.9 680.6
Retained earnings 2,320.2 2,013.1 2,113.9
Less common stock in treasury, at cost, shares
of 124.5, 105.8 and 122.9, respectively (3,026.2) (2,307.3) (2,934.9)
Unearned compensation (60.7) (66.5) (62.7)
Accumulated other comprehensive income (89.4) (62.5) (85.7)
--------- -------- ---------
Total Stockholders' Equity (160.9) 256.7 (288.8)
---------- -------- ----------
Total Liabilities and Equity $ 4,899.4 $4,594.3 $ 4,573.7
========= ======== =========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) (In Millions)
Twenty-Six Weeks Ended
-------------------------
November 26, November 28,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows - Operating Activities:
Net earnings $ 361.6 $ 352.2
Adjustments to reconcile earnings to cash flow:
Depreciation and amortization 104.0 97.7
Deferred income taxes 6.4 12.1
Change in current assets and liabilities (138.7) (113.4)
Tax benefit on exercised options 13.0 22.6
Other, net (37.0) (24.8)
------ ------
Cash provided by continuing operations 309.3 346.4
Cash used by discontinued operations (.9) (1.4)
------ ------
Net Cash Provided by Operating Activities 308.4 345.0
------ ------
Cash Flows - Investment Activities:
Purchases of land, buildings and equipment (137.8) (132.7)
Investments in businesses, intangibles and affiliates,
net of investment returns and dividends (57.6) (201.9)
Purchases of marketable investments (14.2) (5.5)
Proceeds from sale of marketable investments .8 5.9
Other, net (10.8) 9.7
------- ------
Net Cash Used by Investment Activities (219.6) (324.5)
------ ------
Cash Flows - Financing Activities:
Change in notes payable 37.5 369.7
Issuance of long-term debt 289.8 54.2
Payment of long-term debt (82.6) (78.0)
Common stock issued 41.4 37.9
Purchases of common stock for treasury (173.4) (162.9)
Dividends paid (155.9) (167.2)
Other, net (4.3) (7.7)
------ ------
Net Cash (Used) Provided by Financing Activities (47.5) 46.0
------- ------
Increase in Cash and Cash Equivalents $ 41.3 $ 66.5
====== ======
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) Background
These financial statements do not include certain information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, all adjustments considered
necessary for a fair presentation have been included and are of a normal
recurring nature. Operating results for the twenty-six weeks ended November 26,
2000 are not necessarily indicative of the results that may be expected for the
fiscal year ending May 27, 2001.
These statements should be read in conjunction with the financial statements and
footnotes included in our annual report for the year ended May 28, 2000. The
accounting policies used in preparing these financial statements are the same as
those described in our annual report.
Certain amounts in the prior year financial statements have been reclassified to
conform to the current year presentation.
(2) Statements of Cash Flows
During the first six months, we made interest payments of $110.4 million (net of
amount capitalized), up from $65.6 million last year. Through six months, we
paid $111.0 million in income taxes, compared to $132.0 million during the same
period one year ago.
(3) Comprehensive Income
The following table summarizes total comprehensive income for the periods
presented (in millions):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------- ----------------------
Nov. 26, Nov. 28, Nov. 26, Nov. 28,
2000 1999 2000 1999
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Net Earnings $202.7 $193.7 $361.6 $352.2
Other comprehensive income (loss):
Unrealized gain (loss)
on securities .3 (2.0) 5.7 (4.2)
Foreign currency
translation adjustments (11.2) .9 (9.4) (1.4)
------- ------- ------ -------
(10.9) (1.1) (3.7) (5.6)
------- ------- ------ -------
Total comprehensive income $191.8 $192.6 $357.9 $346.6
======= ======= ======= =======
</TABLE>
<PAGE>
(4) Pending Acquisition
The proposed acquisition of the worldwide Pillsbury operations from Diageo plc
(Diageo) was approved by Diageo shareholders on October 2, 2000, and approved by
General Mills shareholders on December 8, 2000. We received clearance from the
European Commission on October 13, 2000. The Federal Trade Commission is
continuing its review, and General Mills expects this transaction to close early
in calendar 2001. The transaction will be accounted for as a purchase. The
Company will acquire Pillsbury in a stock-for-stock exchange. The consideration
to Diageo includes 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 cost of
the acquisition (exclusive of direct acquisition costs) is estimated at
approximately $10.2 billion. Goodwill associated with the Pillsbury acquisition
will be amortized on a straight-line basis over 40 years. The Company's results
of operations will include Pillsbury's operations beginning with the acquisition
date.
(5) New Accounting Rules
During 1999, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 requires all derivatives to be recorded at fair value on the balance sheet
and establishes new accounting rules for hedging. It will be effective for us in
fiscal 2002. Since the impact of SFAS No. 133 is dependent on the fair values of
our derivatives and related hedged items and our outstanding derivatives
position at the date of adoption (May 28, 2001), we can not yet determine its
impact on our consolidated financial statements.
In May 2000, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on Issue 00-14, "Accounting for Certain Sales Incentives". The issue
addresses recognition and income statement classification of certain sales
incentives. The consensus is effective June 30, 2001. Since adoption of the
consensus will only result in the reclassification of certain expenses from
selling, general and administrative expense to a reduction of net sales, it will
not affect our financial position or net earnings.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Continuing operations generated $37.1 million less cash in the first half of
fiscal 2001 than in the same prior-year period. The decrease in cash provided by
operations as compared to last year was primarily caused by a $25.3 million
increase in the working capital change.
During the first six months, capital expenditures totaled $137.8 million. Fiscal
2001 capital expenditures are estimated to be approximately $300 million,
exclusive of any capital expenditures associated with the Pillsbury business,
which we expect to acquire in early calendar 2001.
Our short-term outside financing is obtained through private placement of
commercial paper and bank notes. Our level of notes payable fluctuates based on
cash flow needs.
Our long-term outside financing is obtained primarily through our medium-term
note program. Activity through six months under this program consisted of the
issuance of $284.6 million in notes and debt payments of $81.5 million. As a
result we have utilized our available capacity under our domestic shelf
registration statement. However, we do not believe our liquidity is constrained
due to the availability of short-term financing as well as our intention to file
another shelf registration in early calendar 2001.
In anticipation of our proposed acquisition of the Pillsbury business and other
financing requirements, we have entered into additional interest rate swap
contracts to attempt to lock in our interest rate on associated debt. For the
six months ending November 26, 2000, these contracts totaled $5.35 billion
notional amount and convert floating rate to an average fixed rate of
approximately 6.7 percent with maturities averaging 4.5 years.
RESULTS OF OPERATIONS
Basic earnings per share of 72 cents for the second quarter ended November 26,
2000 were up 13 percent from 64 cents. Diluted earnings per share of 70 cents
for the second quarter of fiscal 2001 were up 13 percent from 62 cents per share
earned in the same period last year. Results for the current quarter included
income of $4.8 million after tax, or approximately 2 cents per basic and diluted
share, representing General Mills' portion of a class-action settlement of
alleged price-fixing charges brought against several vitamin manufacturers in
1999. Excluding this income, diluted EPS grew 10 percent in the quarter. Sales
for the second quarter totaled $1,895 million, up 4 percent from the prior year,
in line with domestic unit volume growth.
For the 13 weeks ended November 26, 2000, earnings before interest and taxes
increased 8 percent to $356.4 million. Interest expense for the quarter was
higher, as anticipated, due to increased debt levels associated with prior year
acquisitions and share repurchase activity. As a result, earnings after tax grew
5 percent to $202.7 million.
First-Half Results
Through six months, General Mills' basic earnings per share of $1.28 were up 10
percent from $1.16. Diluted earnings per share for the first half of the fiscal
year totaled $1.25, up 12 percent from $1.12 in fiscal 2000. First-half earnings
before interest and taxes grew 8 percent to $652.5 million, and earnings after
tax grew 3 percent to $361.6 million. First half sales of $3,570 million were up
5 percent from the first six months one year ago.
U.S. Operations
General Mills' domestic unit volume grew 4 percent in the second quarter and 5
percent through the first half. Excluding incremental volume from the Gardetto's
baked snacks business (acquired August 1999) and Small Planet organic foods
(acquired January 2000), first-half domestic volume was up 4 percent.
In the second quarter, retail noncereal businesses led volume growth with a
combined increase of 8 percent. Convenience Foods (snacks and yogurt) posted a
12 percent unit volume gain. Yogurt shipments and retail volume both grew at a
double-digit pace on continued strong performance by established YOPLAIT
products and new GO-GURT. YOPLAIT EXPRESSE---the new yogurt in a tube for adult
consumers---performed well in its initial markets, and expanded distribution is
planned early in calendar 2001. Snacks volume growth included gains of 12
percent for fruit snacks, 16 percent for salty snacks (CHEX MIX, GARDETTO'S
snack mix and BUGLES) and 23 percent for NATURE VALLEY granola bars. Combined
unit volume for baking products, dinner and side dish mixes grew 1 percent, as
declines in family flour and BISQUICK baking mix shipments were offset by gains
of 3 percent for total dessert mix products and 3 percent for HELPER dinner
mixes. Through the first half of fiscal 2001, combined volume for the company's
retail noncereal businesses was up 9 percent.
Big G cereal shipments declined 2 percent in the second quarter and 1 percent
for the first half, reflecting a significantly lower level of new-product
activity compared with the same period a year earlier. Second-quarter consumer
volume for Big G also was down slightly, but the company's market share was
essentially unchanged at 28 percent for the quarter. Big G's top established
brands continued to perform well, recording combined volume and market share
growth. This established brand strength and effective merchandising strategies
benefited first-half profit results. New BIG G MILK `N CEREAL Bars and HARMONY
cereal for women performed well in the 25 percent of the country where they were
introduced in August 2000. Distribution of these products will be expanded to
the remaining 75 percent of the U.S. beginning January, 2001.
Foodservice unit volume grew 8 percent in the second quarter and 11 percent
through the first half, led by higher convenience store volumes, and
double-digit growth for snacks and yogurt in other foodservice channels.
<PAGE>
International Operations
Combined unit volume for the company's international operations grew 11 percent
in the second quarter. Snack Ventures Europe (SVE), the company's joint venture
with PepsiCo, reported a 16 percent volume gain for the period, with good
performance in western European markets and continuing recovery in Russia.
Volume for Cereal Partners Worldwide (CPW), the company's joint venture with
Nestle, grew 5 percent in the quarter. In the U.K., CPW volume declined slightly
due to lower private label cereal shipments, but branded cereal volume grew.
CPW's overall volume gain for the quarter reflected good category growth and
market share increases in Latin America, Southeast Asia, and several European
markets including Spain and Portugal. General Mills' joint venture earnings
totaled $8.9 million through the first half, up 35 percent from the prior year.
For General Mills' wholly owned business in Canada, second-quarter volume grew
modestly following 15 percent growth in the first quarter. Through six months,
General Mills' combined international unit volume grew 11 percent, boosting the
company's worldwide unit volume growth rate to 6 percent for the year-to-date.
Shares Outstanding
As a result of the company's share repurchase program, average basic shares
outstanding for the second quarter totaled 282.9 million, 7 percent lower than
the 303.5 million average a year earlier. Average diluted shares also were down
7 percent, to 290.2 million. In the first half of fiscal 2001, the company
repurchased approximately 4 million shares of common stock at an average price
of $35 per share.
Interest expense for the quarter totaled $52.4 million, up from the prior year's
level due to higher debt levels associated with acquisitions and General Mills'
repurchase of 23.2 million shares of common stock in fiscal 2000. The company's
effective tax rate for the quarter was 35.3 percent, in line with last year's
second quarter and the full-year fiscal 2000 rate.
Outlook
Looking ahead to the second half of fiscal 2001, our current businesses remain
on track to deliver double-digit earnings per share growth for the year. Our
plans for integrating General Mills and Pillsbury are essentially complete, and
we are ready to implement our integration plans as soon as we receive the
remaining regulatory approval. The Federal Trade Commission is well along in its
review, and we expect the transaction to close early in calendar 2001. Our work
in planning the integration of the two companies has further increased our
confidence that the combination will create enhanced value for General Mills
shareholders.
<PAGE>
PART II
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on September 25, 2000.
(b) All directors nominated were elected at the Annual Meeting.
(c) For the election of directors, the results were as follows:
Stephen R. Demeritt For 235,092,170
Withheld 1,525,667
Livio D. DeSimone For 235,057,779
Withheld 1,560,058
William T. Esrey For 227,298,555
Withheld 9,319,282
Raymond V. Gilmartin For 235,036,436
Withheld 1,581,401
Judith R. Hope For 235,058,872
Withheld 1,558,965
Robert L. Johnson For 234,975,229
Withheld 1,642,608
Heidi G. Miller For 234,993,646
Withheld 1,624,191
Stephen W. Sanger For 235,097,168
Withheld 1,520,669
A. Michael Spence For 235,044,066
Withheld 1,573,771
Dorothy A. Terrell For 227,288,013
Withheld 9,329,824
Raymond G. Viault For 233,591,413
Withheld 3,026,424
The ratification of the appointment of KPMG LLP as auditors for fiscal
2001 was approved:
For: 235,201,229
Against: 612,012
Abstain: 804,596
The adoption of amended and restated General Mills, Inc. Executive
Incentive Plan was approved:
For: 222,767,986
Against: 11,894,744
Abstain: 1,955,107
<PAGE>
The Stockholder Proposal on Genetically Modified Organisms was
rejected:
For: 8,523,438
Against: 183,820,964
Abstain: 9,091,923
Broker Non-Vote: 35,181,512
The Stockholder Proposal on Global Workplace Standards was rejected:
For: 17,105,483
Against: 172,466,916
Abstain: 11,863,926
Broker Non-Vote: 35,181,512
Item 5. Other Information.
This report contains certain forward-looking statements which are based on
management's current views and assumptions regarding future events and financial
performance. These statements are qualified by reference to the section
"Cautionary Statement Relevant to Forward-Looking Information" in Item 1 of our
Annual Report on Form 10-K/A for the fiscal year ended May 28, 2000, which lists
important factors that could cause actual results to differ materially from
those discussed in this report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 11 Statement of Computation of Earnings per Share.
Exhibit 12 Statement of Ratio of Earnings to Fixed Charges.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
(1) On September 1, 2000, the Company filed Form 8-K, filing as
an exhibit the August 31, 2000 press release concerning the
Federal Trade Commission's request for additional information
in connection with its antitrust review of the Company's
proposed acquisition of the Pillsbury business from Diageo
plc.
(2) On October 26, 2000, the Company filed Form 8-K, filing as an
exhibit the consent of KPMG LLP for incorporation by
reference in the Company's registration statements on Forms
S-3 and S-8 of their report dated August 10, 2000 relating to
certain financial statements of The Pillsbury Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL MILLS, INC.
-------------------------------------
(Registrant)
Date January 5, 2001 /s/ S. S. Marshall
--------------- -------------------------------------
S. S. Marshall
Senior Vice President,
General Counsel
Date January 5, 2001 /s/ K. L. Thome
--------------- -------------------------------------
K. L. Thome
Senior Vice President,
Financial Operations
<PAGE>
Exhibit 11
<TABLE>
<CAPTION>
GENERAL MILLS, INC.
COMPUTATION OF EARNINGS PER SHARE
(In Millions, Except per Share Data)
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------ -----------------------
November 26, November 28, November 26, November 28,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Earnings $202.7 $ 193.7 $361.6 $352.2
====== ======= ====== ======
Average Number of Common Shares -
Basic EPS (a) 282.9 303.5 283.3 303.9
Incremental Share Effect from:
-Stock options (b) 6.7 9.5 6.4 9.7
-Restricted stock, stock rights
and puts .6 .1 .6 .1
------ ----- ------ ------
Average Number of Common Shares -
Diluted EPS 290.2 313.1 290.3 313.7
===== ===== ===== =====
Earnings per Share - Basic $ .72 $ .64 $1.28 $1.16
===== ===== ===== =====
Earnings per Share - Diluted $ .70 $ .62 $1.25 $1.12
===== ===== ===== =====
<FN>
Notes to Exhibit 11:
(a) Computed as the weighted average of net shares outstanding on
stock-exchange trading days.
(b) Incremental shares from stock options are computed by the "treasury stock"
method. This method first determines the number of shares issuable under
stock options that had an option price below the average market price for
the period, and then deducts the number of shares that could have been
repurchased with the proceeds of options exercised.
</FN>
</TABLE>
<PAGE>
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Twenty-six Weeks Ended Fiscal Year Ended
---------------------- --------------------------------------
Nov. 26, Nov. 28, May 28, May 30, May 31, May 25, May 26,
2000 1999 2000 1999 1998 1997 1996
---------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings
to Fixed Charges 5.59 7.77 6.25 6.67 5.63 6.54 6.94
</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.
