General Mills today reported record financial results for its fourth quarter and full 2001 fiscal year. Diluted earnings per share for the year ended May 27, 2001, totaled $2.28, up 14 percent from $2.00 earned in fiscal 2000. Results for 2001 included an unusual gain of 8 cents per share. Excluding unusual items, diluted earnings per share grew 10 percent, to $2.20. Diluted earnings per share excluding unusual items and goodwill amortization (often referred to as cash EPS) also grew 10 percent to $2.28.

General Mills Chairman and Chief Executive Officer Steve Sanger said 2001 results met the company’s key financial goals. “We generated strong unit volume growth across our businesses and delivered double-digit growth in earnings per share,” he said. “These results are a continuation of our performance in recent years. Our 6 percent sales growth in 2001 matches the average annual topline growth we’ve posted since 1995, and on the bottom line this was our fourth straight year of double-digit EPS growth.”

Fiscal 2001 Highlights

  • Annual sales grew 6 percent to $7.08 billion. Including our share of joint venture revenues, sales exceeded $7.9 billion. Unit volume increased 6 percent worldwide.
  • Earnings before interest, taxes and unusual items rose 6 percent to $1.17 billion. The company’s operating margin increased 10 basis points to 16.5 percent.
  • Joint venture earnings increased more than fivefold to $16.7 million, contributing more than 2 points of 2001 earnings per share growth.
  • Reported earnings after taxes grew 8 percent to $665.1 million. Excluding the unusual gain, earnings after taxes increased 5 percent to $643.2 million.
  • Diluted cash EPS before unusual items increased 10 percent in 2001 to $2.28, and has grown at a 12 percent compound rate since 1995.

Fourth Quarter Highlights and Unusual Items

In the final quarter of fiscal 2001, diluted earnings per share grew 35 percent to 50 cents compared to 37 cents a year earlier. The fourth quarter of fiscal 2001 included an unusual gain of $38.5 million pre-tax, $24.0 million after tax, or 8 cents per share. This primarily reflects a gain of $54.9 million pre-tax, net of associated costs, from a partial insurance settlement related to a 1994 oats handling incident. This settlement was reached in late May, and the gross proceeds were recorded as a receivable on the balance sheet at year end. The company continues to reach agreements with additional reinsurers and expects to record additional income from insurance proceeds in fiscal 2002.

The insurance proceeds booked in the fourth quarter of 2001 were partially offset by non-capitalizable costs incurred to date for the pending Pillsbury acquisition, and expenses related to a decision to exit the Squeezit beverage business. The Pillsbury transaction-related costs totaled approximately 1 cent per share in the fourth quarter, and between 1 and 2 cents per share for the year. Fourth-quarter costs for exiting the Squeezit business totaled between 2 and 3 cents per share.

Excluding these unusual items, diluted earnings per share in the fourth quarter rose 14 percent to 42 cents. Fourth-quarter diluted cash EPS excluding unusual items was 43 cents, up from 39 cents a year earlier. Fourth-quarter sales grew 7 percent to $1.81 billion, fueled by higher levels of new product activity and associated marketing support.

U.S. Operating Highlights

General Mills’ domestic unit volume grew 5 percent in fiscal 2001, including 6 percent growth in the final quarter. Big G cereal unit volume grew 1 percent for the year, with growth from Big G’s largest established brands including Cheerios, Lucky Charms and Cinnamon Toast Crunch, and strong second-half contributions from new products. Fourth-quarter unit volume for Big G grew 6 percent, led by new Harmony cereal for women; Milk ‘n Cereal Bars, which reached national distribution in January; and Wheaties Energy Crunch, launched in April.

U.S. cereal category volume in all Nielsen-measured outlets held steady for the year. Big G consumer volume was down slightly for the year in total, but grew 7 percent in the fourth quarter. Big G sustained its market share leadership with a dollar share of 32 percent. For 2002, Big G has more new products planned, beginning with the first-quarter launch of Chex Morning Mix. This line combines Chex cereal, fruits and nuts in single-serve pouches for breakfast on-the-go.

Convenience foods unit volume grew 13 percent for the year, including 11 percent for the fourth quarter. Yogurt unit volume increased 16 percent for the year with double-digit growth from core Yoplait lines, and strong contributions from new Go-Gurt and Expresse yogurt in a tube. Combined dollar market share for Yoplait and Colombo grew 1 point to 36 percent. Snacks unit volume was up 8 percent for the fourth quarter and up 11 percent for 2001, led by double-digit gains for fruit snacks, Chex Mix and Nature Valley granola bars. Several new snack products, including Nature Valley Trail Mix Bars and Berry Lemonade Gushers, are being introduced in the first quarter of2002.

Combined unit volume for Betty Crocker baking, side dish and dinner mix products matched the prior year. Unit volume grew for both Hamburger Helper and Chicken Helper, although combined dinner and side dish volume was flat due to the discontinuation of the Betty Crocker rice and pasta line. The Bowl Appetit! line of single-serve lunch entrees had a successful first year, and three new varieties are currently being added to the line. Baking products unit volume matched the previous year’s level. Betty Crocker dessert mixes recorded market share gains. Family flour volume declined, in line with the category, but that was offset by good growth in bakery flour shipments.

Foodservice volume increased 9 percent for the year and 7 percent for the fourth quarter. This strong growth reflects double-digit increases in sales to convenience stores, along with good volume gains for snacks, cereal and yogurt in traditional foodservice channels. Foodservice cereal volume grew 3 percent to a record level.

International Operations

Unit volume for General Mills’ international operations increased 13 percent in the fourth quarter and 12 percent for the full year. Total international earnings after tax for the full year grew to $25.1 million, up from $13.8 million in fiscal 2000. All of General Mills’ wholly owned international businesses performed well, led by Canada, where unit volume grew 5 percent and cereal market share increased to 19 percent. Cereal Partners Worldwide (CPW), the company’s joint venture with Nestle, achieved 6 percent volume growth and worldwide share of 21 percent. Particularly strong performance was achieved in key markets of the U.K., Poland and Mexico. Snack Ventures Europe (SVE), the company’s joint venture with PepsiCo, grew unit volume 20 percent in the fiscal year.

Financial Highlights

The company’s capital investment, including both fixed asset expenditures and development spending for joint ventures, increased from $303 million in 2000 to an estimated $335 million in 2001. The increase reflects investments in additional capacity for fast-growing businesses such as fruit snacks, granola bars and yogurt, as well as investments to increase productivity.

Dividends in 2001 totaled $1.10 per share, a payout of 50 percent of diluted earnings per share before unusual items. Cash used for share repurchases totaled approximately $225 million in 2001. During the year, the company repurchased 5.4 million shares at an average price of approximately $31, net of put and call option premiums. Average diluted shares outstanding totaled 292.0 million in 2001, down from 307.3 million in 2000. As of May 27, 2001, actual shares outstanding were 285.2 million, down slightly from May 28, 2000.

Interest expense for 2001 increased 36 percent to $206.1 million due to increased debt associated with prior-year acquisitions and share repurchases. Fourth-quarter interest expense was $43.5 million, lower than the previous three quarters, primarily due to lower interest rates.


Commenting on General Mills’ outlook for fiscal 2002, Sanger said, “Our worldwide food businesses finished 2001 on a strong note, so we’ve entered the new year with good momentum. We expect our current businesses to deliver good volume increases and double-digit growth in earnings per share again in 2002. The first quarter is our toughest volume comparison for the year. Last year, volume was up 7 percent in the period. As a result, we expect this year’s first-quarter unit volume growth to be in the low single-digit range and first-quarter EPS growth to be in the high single digits.

“In addition, we continue to anticipate closing our Pillsbury acquisition in the first quarter of fiscal 2002,” Sanger continued. “We remain confident that the combination of General Mills and Pillsbury will accelerate our future growth.”


Results Before and After Unusual Items
Dollars in millions, except per share data

Percent Percent
Fiscal change Fourth change
2001 from quarter from
year ago year ago
——– ——– ——– ——–

Reported EAT 665.1 +8% 146.0 +34%
Unusual gain after tax 21.9 24.0
—- —-
EAT excluding unusual gain 643.2 +5% 122.0 +12%

Reported diluted EPS 2.28 +14% 0.50 +35%
Unusual gain per share 0.08 0.08
—- —-
Diluted EPS excluding unusual gain 2.20 +10% 0.42 +14%

Diluted cash EPS 2.28 +10% 0.43 +10%
excluding unusual gain

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 statements regarding the anticipated closing of the Pillsbury acquisition are subject to uncertainty in the regulatory process. 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; and 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.
(In Millions, Except per Share Data)

Fiscal Year Ended
May 27, May 28, May 30,
2001 2000 1999
(52 Weeks) (52 Weeks) (52 Weeks)
———- ———- ———-

Sales $ 7,077.7 $ 6,700.2 $ 6,246.1

Costs & Expenses:
Cost of sales 2,841.2 2,697.6 2,593.5
Selling, general and administrative 3,067.2 2,903.7 2,634.9
Interest, net 206.1 151.9 119.4
Unusual items – (income) expense (35.1) – 40.7
———- ———- ———-

Total Costs and Expenses 6,079.4 5,753.2 5,388.5
———- ———- ———-

Earnings before Taxes and Earnings
(Losses) from Joint Ventures 998.3 947.0 857.6

Income Taxes 349.9 335.9 307.8

Earnings (Losses) from
Joint Ventures 16.7 3.3 (15.3)
———- ———- ———-

Net Earnings $ 665.1 $ 614.4 $ 534.5
========== ========== ==========

Earnings per Share – Basic $ 2.34 $ 2.05 $ 1.74
========== ========== ==========

Average Number of Shares 283.9 299.1 306.5
========== ========== ==========

Earnings per Share – Diluted $ 2.28 $ 2.00 $ 1.70
========== ========== ==========

Average Number of Shares –
Assuming Dilution 292.0 307.3 314.7
========== ========== ==========

Note (1): Fiscal 2001 unusual items reflects proceeds from an
insurance settlement, partially offset by unusual expense items. The
net of these unusual items totaled $35.1 million pretax income, $21.9
million after tax ($.08 per diluted share).

Note (2): Fiscal 1999 included restructuring charges primarily related
to streamlining manufacturing and distribution activities. These
charges totaled $40.7 million pretax, $25.2 million after tax ($.08
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.

(Unaudited) (In Millions, Except per Share Data)

13 Weeks Ended
May 27, May 28,
2001 2000
————— —————

Sales $ 1,806.0 $ 1,689.8

Costs & Expenses:
Cost of sales 726.8 697.4
Selling, general and administrative 861.6 779.1
Interest, net 43.5 48.6
Unusual items – (income) expense (38.5) –
————— —————

Total Costs and Expenses 1,593.4 1,525.1
————— —————

Earnings before Taxes and Earnings
from Joint Ventures 212.6 164.7

Income Taxes 72.4 58.0

Earnings from Joint Ventures 5.8 2.2
————— —————

Net Earnings $ 146.0 $ 108.9
=============== ===============

Earnings per Share – Basic $ .51 $ .38
=============== ===============

Average Number of Shares 284.8 288.9
=============== ===============

Earnings per Share – Diluted $ .50 $ .37
=============== ===============

Average Number of Shares –
Assuming Dilution 293.6 295.8
=============== ===============

Note: Fourth quarter fiscal 2001 unusual items reflects proceeds from
an insurance settlement, partially offset by unusual expense items.
The net of these unusual items in the fourth quarter totaled $38.5
million pretax income, $24.0 million after tax ($.08 per diluted

(In Millions)

May 27, May 28,
2001 2000
————— —————
Current Assets:
Cash and cash equivalents $ 64.1 $ 25.6
Receivables 664.0 500.6
Inventories 518.9 510.5
Prepaid expenses and other 99.3 87.7
Deferred income taxes 61.9 65.9
————— —————
Total Current Assets 1,408.2 1,190.3
————— —————

Land, Buildings and Equipment 3,179.3 2,949.2
Less accumulated depreciation (1,678.1) (1,544.3)
————— —————
Net Land, Building and Equipment 1,501.2 1,404.9
Goodwill and Intangible Assets 870.0 870.3
Other Assets 1,311.8 1,108.2
————— —————

Total Assets $ 5,091.2 $ 4,573.7
=============== ===============

Current Liabilities:
Accounts payable $ 619.1 $ 641.5
Current portion of debt 349.4 413.5
Notes payable 857.9 1,085.8
Accrued taxes 111.1 104.9
Other current liabilities 271.3 283.4
————— —————
Total Current Liabilities 2,208.8 2,529.1
Long-term Debt 2,221.0 1,760.3
Deferred Income Taxes 349.5 297.2
Deferred Income Taxes-Tax Leases 73.7 89.8
Other Liabilities 186.0 186.1
————— —————
Total Liabilities 5,039.0 4,862.5
————— —————

Stockholders’ Equity:
Common stock 744.7 680.6
Retained earnings 2,467.6 2,113.9
Less common stock in treasury (3,013.9) (2,934.9)
Unearned compensation (53.4) (62.7)
Accumulated other comprehensive
income (92.8) (85.7)
————— —————
Total Stockholders’ Equity 52.2 (288.8)
————— —————

Total Liabilities and Equity $ 5,091.2 $ 4,573.7
=============== ===============