General Mills today reported record financial results for its fourth quarter and full 2000 fiscal year. Earnings for the fourth quarter ended May 28, 2000, totaled 37 cents per diluted share, up 12 percent from 33 cents a year earlier. Annual earnings totaled $2.00 per diluted share, up 11 percent from $1.80 earned before unusual items in fiscal 1999.

Chairman and Chief Executive Officer Steve Sanger said, “This marks General Mills’ third consecutive year of double-digit EPS growth. In 2000, our record results were driven by increased levels of consumer-focused innovation and superior topline growth.” Sanger said that operating highlights for the year included the following:

  • Worldwide unit volume grew 7 percent. The overall gain included incremental contributions from acquisitions, but even without that volume, shipments for General Mills’ established businesses grew 4 percent.
  • Big G cereals achieved record annual volume and earnings, and captured a market-leading 33 percent share of category sales.
  • YOPLAIT and Colombo yogurts posted their fourth consecutive year of double-digit unit volume growth, and Yoplait alone captured the number one market position on a dollar sales basis.
  • General Mills’ operating profit grew 8 percent to $1.1 billion, increasing the company’s EBIT margin to 16.4 percent.
  • The company’s international joint ventures reached profitability, contributing $3.3 million in after-tax earnings for the year.

Financial Highlights

Sales for the fourth quarter grew 6 percent to $1.69 billion. The Gardetto’s and Small Planet Foods businesses, which were acquired during fiscal 2000, together contributed approximately 2 percentage points of the final quarter’s sales increase. Operating profit for the quarter grew 10 percent to $213.3 million, and earnings after tax grew 4 percent to $108.9 million. Basic earnings per share totaled 38 cents, up 12 percent from 34 cents earned in last year’s fourth quarter.

For the year ended May 28, 2000, reported sales grew 7 percent to reach $6.70 billion. Including the company’s proportionate share of revenues from non-consolidated joint-venture operations, worldwide sales reached $7.52 billion. Earnings after tax grew 8 percent before unusual items to $614.4 million. Basic earnings per share totaled $2.05, up 11 percent from the $1.85 earned before unusual items in 1999.

Net after-tax earnings for fiscal 1999 included restructuring charges of 10 cents per diluted share, recorded in the second quarter, which primarily related to streamlining supply chain activities. Including those prior-year charges, both diluted and basic EPS grew 18 percent in fiscal 2000.

U.S. Operating Highlights

Annual domestic unit volume rose 7 percent in total, with each of the company’s U.S. operating divisions posting volume increases. Incremental volume from businesses acquired in fiscal 1999 and 2000 accounted for approximately 3 percentage points of the annual gain.

Big G cereal sales grew to $2.58 billion, and annual unit volume increased 2 percent, despite a fourth-quarter volume decline of 5 percent against a difficult comparison. The previous year’s fourth quarter included introductory shipments of three new cereals. Big G’s annual volume growth reflected strong performance from established brands — seven of its 10 largest brands posted volume gains in all ACNielsen-measured outlets. New Honey Nut Chex, Sunrise, Nesquik and Brown Sugar and Oat Total cereals also contributed to the volume gain. Big G’s growth in 2000 outpaced the cereal industry. As a result, Big G’s share of market pound volume increased by more than a full percentage point to a record 27 percent, and our dollar share grew to 33 percent. Fiscal 2001 plans include the regional launches of Harmony cereal, designed to meet the unique health needs of women, and a line of Big G Milk n’ Cereal Bars, a portable way for consumers to get all the nutrition of a bowl of cereal and milk.

Combined unit volume for domestic non-cereal operations grew 10 percent in 2000 and 12 percent for the fourth quarter. Convenience foods, which includes the company’s snack and yogurt lines, posted a 13 percent annual volume gain, 10 percent excluding acquisitions. Yogurt volume increased at a double-digit pace for the fourth consecutive year, led by 10 percent growth for established Yoplait product lines and the national expansion of Go-Gurt. Combined dollar market share for the Yoplait and Colombo brands grew 4 points to a record 35 percent of category sales. Snacks volume growth included double-digit gains for both fruit snacks and Chex Mix. Combined unit volume for Betty Crocker baking, side dish and dinner mix products grew 2 percent for the year and 5 percent in the fourth quarter. These gains reflected second-half growth for Helper dinner mixes, strong side dish volume, and continued good performance by smaller-size pouch dessert mixes. Fiscal 2001 plans for Betty Crocker include the launch of Bowl Appetit rice and pasta-based, single-serve meals, Chicken Helper Oven Favorites and a line of baked cheesecake mixes. Foodservice volume increased 13 percent in 2000, reflecting strong growth for bowl-pack cereals and General Mills products in vending and convenience store channels. The addition of the Gardetto’s brand, which has strong distribution in those alternative channels, contributed to that growth.

International Operations

Unit volume for General Mills’ international operations increased 11 percent in the fourth quarter and 6 percent for the full year. International earnings after tax grew to $13.8 million in 2000 from $2.8 million a year earlier. In Canada, cereal unit volume expanded 5 percent and pound market share grew nearly 1 percentage point to a record 18 percent. Total volume for Snack Ventures Europe, the company’s joint venture with PepsiCo, was up 5 percent. Cereal Partners Worldwide (CPW), the company’s joint venture with Nestle, recorded 9 percent volume growth for the 12 months included in fiscal 2000 results. That growth was driven by volume and share progress in Western European markets, particularly the U.K. and France; Latin America; and the Asean countries. Annual sales for CPW reached $895 million.

Cash Flow Highlights

The company’s capital investment, including both domestic fixed asset expenditures and investments in joint ventures, increased modestly from $299 million in 1999 to approximately $305 million in 2000. The increase reflected capacity additions associated with strong volume growth in several businesses, including yogurt, fruit snacks, and Chex cereal and snack mixes.

Shareholder dividends grew 2 percent in 2000 to $1.10 per share, a payout of 54 percent of earnings. Cash returned to shareholders through share repurchases totaled $820 million in 2000, representing 23.2 million shares purchased at an average price of approximately $36. As a result of this share repurchase activity, General Mills’ book equity was a negative $289 million as of May 28, 2000. However, the market value of General Mills’ equity as of May 28, 2000 was $11.7 billion, and adjusted debt as a percentage of total market capitalization was 23 percent.

Interest expense for 2000 increased 27 percent to $151.9 million due to increased debt related to share repurchases and acquisitions. Average basic shares outstanding were 299.1 million in 2000, down 2.4 percent from 306.5 million in 1999. Average diluted shares outstanding were 307.3 million in 2000 and 314.7 million in 1999. As of May 28, 2000, actual shares outstanding were 285.4 million, down 6 percent from last May’s balance.

Outlook

“We’re pleased with the topline growth and bottomline results we delivered in 2000,” Sanger said. “For 2001, we see excellent prospects for continued innovation-driven unit volume growth, productivity gains, and increased earnings contributions from our international joint ventures. As a result, our business plan projects another year of double-digit EPS growth next year.”

To hear an audio webcast of Chairman and CEO Steve Sanger’s commentary on fiscal 2000 results, log on to http://www.generalmills.com after 10 AM EST on June 27.

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. 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 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 undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances.

                             GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In Millions, Except per Share Data)

Fiscal Year Ended
May 28, May 30, May 31,
2000 1999 1998
(52 Weeks) (52 Weeks) (53 Weeks)

Sales $6,700.2 $6,246.1 $6,033.0

Costs & Expenses:
Cost of sales 2,697.6 2,593.5 2,537.9
Selling, general
and administrative 2,903.7 2,634.9 2,544.9
Interest, net 151.9 119.4 117.2
Unusual items — 51.6 166.4

Total Costs and Expenses 5,753.2 5,399.4 5,366.4

Earnings before Taxes and
Earnings (Losses) from
Joint Ventures 947.0 846.7 666.6

Income Taxes 335.9 304.0 241.9

Earnings (Losses) from
Joint Ventures 3.3 (8.2) (2.9)

Net Earnings $614.4 $534.5 $421.8

Earnings per Share – Basic $2.05 $1.74 $1.33

Average Number of Shares 299.1 306.5 316.3

Earnings per Share – Diluted $2.00 $1.70 $1.30

Average Number of Shares –
Assuming Dilution 307.3 314.7 324.6

Note (1): In fiscal 2000, we acquired Gardetto’s Bakery, Small Planet Foods and certain grain elevator assets. In the last half of fiscal 1999, we acquired Lloyd’s Barbeque and Farmhouse Foods.

Note (2): Fiscal 1999 included restructuring charges primarily related to streamlining manufacturing and distribution activities. These charges totaled $51.6 million, $32.3 million after tax ($.10 per diluted share). Fiscal 1998 included unusual charges primarily related to improving our cost structure of North American cereal operations. These charges totaled $166.4 million, $100.2 million after tax ($.31 per diluted share).

Note (3): All share and per share data have been adjusted for the two-for-one stock split effective November 8, 1999.

                             GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)

13 Weeks Ended
May 28, May 30,
2000 1999

Sales $1,689.8 $1,600.5

Costs & Expenses:
Cost of sales 697.4 692.0
Selling, general and administrative 779.1 714.2
Interest, net 48.6 28.8

Total Costs and Expenses 1,525.1 1,435.0

Earnings before Taxes and
Earnings (Losses) from
Joint Ventures 164.7 165.5

Income Taxes 58.0 57.7

Earnings (Losses) from
Joint Ventures 2.2 (3.0)

Net Earnings $108.9 $104.8

Earnings per Share – Basic $.38 $.34

Average Number of Shares 288.9 305.0

Earnings per Share – Diluted $.37 $.33

Average Number of Shares –
Assuming Dilution 295.8 313.7

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
(In Millions)

(Unaudited)
May 28, May 30,
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $25.6 $3.9
Receivables 500.6 490.6
Inventories 510.5 426.7
Prepaid expenses and other 87.7 83.7
Deferred income taxes 65.9 97.6
Total Current Assets 1,190.3 1,102.5

Land, Buildings and Equipment 2,949.2 2,718.9
Less accumulated depreciation (1,544.3) (1,424.2)
Net Land, Building and Equipment 1,404.9 1,294.7
Intangibles 870.3 722.0
Other Assets 1,108.2 1,021.5

Total Assets $4,573.7 $4,140.7

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $641.5 $647.4
Current portion of debt 413.5 90.5
Notes payable 1,085.8 524.4
Accrued taxes 104.9 135.0
Other current liabilities 283.4 303.0
Total Current Liabilities 2,529.1 1,700.3
Long-term Debt 1,760.3 1,702.4
Deferred Income Taxes 297.2 288.9
Deferred Income Taxes-Tax Leases 89.8 111.3
Other Liabilities 186.1 173.6
Total Liabilities 4,862.5 3,976.5

Stockholders’ Equity:
Common stock 680.6 657.9
Retained earnings 2,113.9 1,827.4
Less common stock in treasury (2,934.9) (2,195.3)
Unearned compensation (62.7) (68.9)
Accumulated other
comprehensive income (85.7) (56.9)
Total Stockholders’ Equity (288.8) 164.2

Total Liabilities and Equity $4,573.7 $4,140.7