General Mills today reported record results for its fiscal 2001 first quarter. Diluted earnings per share were 55 cents, up 10 percent from the 50 cents per share earned in the same period last year. Diluted earnings per share excluding goodwill amortization also grew 10 percent to 57 cents. For the 13-week period ended Aug. 27, 2000, earnings before interest and taxes increased 8 percent to $296 million. Interest expense in the quarter was higher, due to increased debt levels associated with prior year acquisitions and share repurchase activity. As a result, earnings after tax were essentially even with last year’s at $159 million. First-quarter sales grew 6 percent to $1.67 billion.
Chairman and Chief Executive Officer Steve Sanger said the first-quarter results represented a good start to the year. “General Mills’ current businesses are continuing to deliver excellent topline and bottomline growth. These first-quarter results put us on track to meet our full-year financial objectives,” Sanger said.
First-quarter domestic unit volume grew more than 7 percent. That gain included 5 percent volume growth from the company’s established businesses, and 2 percentage points of incremental volume growth from the Gardetto’s and Small Planet Foods businesses acquired in fiscal 2000.
Domestic noncereal volume grew 12 percent in the quarter, 8 percent excluding acquisitions. The company’s convenience foods business (snacks and yogurt) led this growth with a 20 percent unit volume increase. In yogurt, strong growth for core YOPLAIT and Yoplait Go-Gurt brands drove double-digit gains in both shipments and retail volume. Yoplait and Colombo increased their leadership dollar share 2 points to 35 percent for the quarter. Snacks volume also grew at a double-digit pace, on the strength of good growth for Chex Mix, Nature Valley granola bars and fruit snacks. Combined unit volume for Betty Crocker baking products, side dish and dinner mixes was down 1 percent. Volumes for family flour and baking mixes were lower, and Betty Crocker dessert mix shipments were down slightly, but first-quarter consumer movement for desserts was up 3 percent. Unit volume for Helper dinner mixes increased 8 percent, led by 7 percent growth from the core Hamburger Helper line. Foodservice unit volume was up 14 percent, with continued good growth for cereals, refrigerated yogurt and snacks, including the incremental contribution from Gardettos. Strong growth for General Mills brands in convenience stores also contributed to that foodservice volume gain.
Big G’s first quarter comparison was particularly difficult. Last year’s first quarter included introductory marketing activity for three new products, which fueled a 3 percent increase in shipments and a 7 percent consumer volume gain. In the current year’s first quarter, Big G shipments were up slightly and retail pound volume was down 5 percent. As a result, Big G’s pound market share for the quarter decreased 1 point to 25 percent. These declines reflect a lower contribution from new products. However, market share for Big G’s top 10 established brands grew slightly, led by Cheerios, Cinnamon Toast Crunch and Lucky Charms. At the end of the quarter, two new Big G products began shipping regionally: Milk n’ Cereal Bars and Harmony, a cereal designed to meet the unique nutritional needs of women. These new products will contribute to Big G’s volume and market share for the remainder of fiscal 2001.
Combined unit volume for the company’s international operations grew 11 percent in the first quarter. Snack Ventures Europe (SVE), the company’s joint venture with PepsiCo, posted a first-quarter volume gain of 13 percent. That gain was driven by good performance in SVE’s core markets and the venture’s continued recovery in Russia. Cereal Partners Worldwide (CPW), the company’s joint venture with Nestle, posted a 3 percent volume increase. CPW recorded good volume gains in a number of its key markets across Europe, Latin America and Asia. In the U.K., CPW’s volume was down slightly due to lower private label shipments, but volume for its U.K. branded business was up 8 percent. Earnings after tax from the company’s joint ventures were $3.0 million, compared to $3.5 million last year. For the company’s wholly-owned food business in Canada, first-quarter volume increased 15 percent. That growth was led by a 7 percent increase in cereal shipments and strong growth for snacks.
As a result of the company’s ongoing share repurchase program, average basic shares outstanding for the quarter totaled 283.7 million this year, 7 percent lower than the 304.2 million average a year earlier. Average diluted shares outstanding declined 8 percent to 290.5 million. During the quarter, General Mills repurchased approximately 3.6 million shares of common stock. Interest expense for the quarter totaled $54.8 million, up $22.1 million versus the prior year, reflecting the impact of higher debt levels associated with prior year acquisitions and the repurchase of 23.2 million shares of General Mills common stock last year.
Looking ahead to the remainder of fiscal 2001, Sanger said, “We’re encouraged by this strong start, as our current businesses remain on track to deliver double-digit EPS growth for the year. We continue to expect that the previously announced Pillsbury acquisition will be completed before the end of the calendar year. We are making good progress on our plans for a rapid and smooth integration, and we continue to expect the addition of Pillsbury’s businesses to provide new platforms for innovation, to unlock supply chain and administrative synergies, and to accelerate our topline and bottomline growth.”
General Mills will hold a conference call and webcast to discuss first quarter results today at 9 AM EDT. To access the webcast, log on to General Mills corporate home page at www.generalmills.com.
This press release contains forward-looking statements based on management’s current expectations and assumptions. Such statements are subject to certain risks and uncertainties that could cause actual results to differ. In particular, our 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, our 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 disposals of business 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 currency rate fluctuations. The company undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances.
General Mills filed a preliminary proxy statement on Schedule 14A with the United States Securities and Exchange Commission (the “SEC“) on August 22, 2000 in connection with two proposals relating to General Mills’ proposed acquisition of Pillsbury to be submitted to General Mills stockholders for approval. Stockholders of General Mills are urged to read the definitive proxy statement when it becomes available because it will contain important information. Investors and stockholders may obtain a free copy of the definitive proxy statement when it becomes available at the SEC’s website at www.sec.gov . General Mills and its directors and executive officers may be deemed to be participants in the solicitation of proxies to approve the proposals relating to the proposed transaction. The preliminary proxy statement on Schedule 14A filed with the SEC contains information on General Mills directors’ and executive officers’ ownership of General Mills common stock.
GENERAL MILLS, INC
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)
13 Weeks Ended
Aug 27, Aug 29,
Sales $1,674.9 $1,573.6
Costs & Expenses:
Cost of sales 653.3 621.4
Selling, general and administrative 725.5 677.2
Interest, net 54.8 32.7
Total Costs and Expenses 1,433.6 1,331.3
Earnings before Taxes and
Earnings from Joint Ventures 241.3 242.3
Income Taxes 85.4 87.3
Earnings from Joint Ventures 3.0 3.5
Net Earnings $158.9 $158.5
Earnings per Share -- Basic $.56 $.52
Average Number of Shares 283.7 304.2
Earnings per Share -- Diluted $.55 $.50
Average Number of Shares --
Assuming Dilution 290.5 314.2
Note: All share and per share data have been adjusted for the two-for-one
stock split effective November 8, 1999.
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
Aug 27, Aug 29, May 28,
2000 1999 2000
Cash and cash equivalents $53.2 $46.0 $25.6
Receivables 555.5 522.0 500.6
Inventories 557.9 510.1 510.5
Prepaid expenses and other 78.4 77.4 87.7
Deferred income taxes 65.9 98.3 65.9
Total Current Assets 1,310.9 1,253.8 1,190.3
Land, Buildings and Equipment 2,992.6 2,810.1 2,949.2
Less accumulated depreciation (1,571.4) (1,459.2) (1,544.3)
Net Land, Building and
Equipment 1,421.2 1,350.9 1,404.9
Intangibles 870.4 838.6 870.3
Other Assets 1,166.7 1,061.0 1,108.2
Total Assets $4,769.2 $4,504.3 $4,573.7
LIABILITIES AND EQUITY
Accounts payable $616.7 $678.1 $641.5
Current portion of debt 367.7 129.6 413.5
Notes payable 1,153.3 751.1 1,085.8
Accrued taxes 177.7 184.7 104.9
Other current liabilities 264.9 274.8 283.4
Total Current Liabilities 2,580.3 2,018.3 2,529.1
Long-term Debt 1,917.9 1,687.3 1,760.3
Deferred Income Taxes 302.2 293.6 297.2
Deferred Income Taxes-Tax Leases 90.0 111.5 89.8
Other Liabilities 180.8 177.3 186.1
Total Liabilities 5,071.2 4,288.0 4,862.5
Common stock 696.2 666.2 680.6
Retained earnings 2,194.8 1,902.7 2,113.9
Less common stock in treasury (3,051.0) (2,222.1) (2,934.9)
Unearned compensation (63.5) (69.1) (62.7)
comprehensive income (78.5) (61.4) (85.7)
Total Stockholders' Equity (302.0) 216.3 (288.8)
Total Liabilities and Equity $4,769.2 $4,504.3 $4,573.7