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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2003
[ ] 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 55426
MINNEAPOLIS, MN (Mail: 55440)
(Mail: P.O. Box 1113) (Zip Code)
(Address of principal executive offices)
(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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of March 21, 2003, General Mills had 369,563,558 shares of its $.10 par
value common stock outstanding (excluding 132,743,106 shares held in treasury).
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
------------------- -------------------
FEB. 23, FEB. 24, FEB. 23, FEB. 24,
2003 2002 2003 2002
-------- -------- -------- --------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Net Sales.................................................. $2,645 $2,379 $7,960 $5,625
Costs and Expenses:
Cost of sales............................................ 1,567 1,467 4,627 3,198
Selling, general and administrative...................... 592 654 1,861 1,457
Interest, net............................................ 135 146 417 264
Restructuring and other exit costs....................... 1 -- 58 108
------ ------ ------ ------
Total Costs and Expenses............................ 2,295 2,267 6,963 5,027
------ ------ ------ ------
Earnings before Taxes and Earnings from Joint Ventures..... 350 112 997 598
Income Taxes............................................... 123 38 349 214
Earnings from Joint Ventures............................... 13 8 44 20
------ ------ ------ ------
Earnings before cumulative effect of change in accounting
principle................................................ 240 82 692 404
Cumulative effect of change in accounting principle........ -- -- -- (3)
------ ------ ------ ------
Net Earnings............................................... $ 240 $ 82 $ 692 $ 401
====== ====== ====== ======
Earnings per Share -- Basic
Earnings before cumulative effect of change in accounting
principle............................................. $ .65 $ .23 $ 1.88 $ 1.27
Cumulative effect of change in accounting principle...... -- -- -- (.01)
------ ------ ------ ------
Earnings per Share -- Basic.............................. $ .65 $ .23 $ 1.88 $ 1.26
====== ====== ====== ======
Average Number of Common Shares............................ 369 366 368 319
====== ====== ====== ======
Earnings per Share -- Diluted
Earnings before cumulative effect of change in accounting
principle............................................. $ .63 $ .22 $ 1.84 $ 1.23
Cumulative effect of change in accounting principle...... -- -- -- (.01)
------ ------ ------ ------
Earnings per Share -- Diluted............................ $ .63 $ .22 $ 1.84 $ 1.22
====== ====== ====== ======
Average Number of Common Shares -- Assuming Dilution....... 379 378 377 330
====== ====== ====== ======
Dividends per Share........................................ $ .275 $ .275 $ .825 $ .825
====== ====== ====== ======
See accompanying notes to consolidated condensed financial statements.
1
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
FEBRUARY 23, FEBRUARY 24, MAY 26,
2003 2002 2002
------------ ------------ -------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS)
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 1,202 $ 1,323 $ 975
Receivables............................................... 1,111 1,141 1,010
Inventories:
Valued primarily at FIFO............................... 365 398 335
Valued at LIFO (FIFO value exceeds LIFO by $36, $30 and
$31, respectively)................................... 721 645 720
Prepaid expenses and other current assets................. 161 195 156
Deferred income taxes..................................... 280 62 241
------- ------- -------
Total Current Assets................................. 3,840 3,764 3,437
------- ------- -------
Land, Buildings and Equipment, at Cost...................... 4,749 4,511 4,618
Less accumulated depreciation............................. (1,940) (1,830) (1,854)
------- ------- -------
Net Land, Buildings and Equipment.................... 2,809 2,681 2,764
Goodwill.................................................... 6,372 8,572 8,473
Other Intangible Assets..................................... 3,612 86 90
Other Assets................................................ 1,929 1,735 1,776
------- ------- -------
Total Assets................................................ $18,562 $16,838 $16,540
======= ======= =======
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable.......................................... $ 1,286 $ 1,202 $ 1,217
Current portion of long-term debt......................... 120 611 248
Notes payable............................................. 1,746 3,648 3,600
Other current liabilities................................. 804 781 682
------- ------- -------
Total Current Liabilities............................ 3,956 6,242 5,747
Long-term Debt.............................................. 7,473 5,591 5,591
Deferred Income Taxes....................................... 1,648 310 336
Deferred Income Taxes -- Tax Leases......................... 69 72 71
Other Liabilities........................................... 1,104 1,076 1,066
------- ------- -------
Total Liabilities.................................... 14,250 13,291 12,811
------- ------- -------
Minority Interest........................................... 300 5 153
Stockholders' Equity:
Cumulative preference stock, none issued.................. -- -- --
Common stock, 502 shares issued........................... 5,676 5,727 5,733
Retained earnings......................................... 2,956 2,612 2,568
Less common stock in treasury, at cost, shares of 133, 137
and 135, respectively.................................. (4,232) (4,322) (4,292)
Unearned compensation..................................... (49) (66) (57)
Accumulated other comprehensive income.................... (339) (409) (376)
------- ------- -------
Total Stockholders' Equity........................... 4,012 3,542 3,576
------- ------- -------
Total Liabilities and Equity................................ $18,562 $16,838 $16,540
======= ======= =======
See accompanying notes to consolidated condensed financial statements.
2
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
THIRTY-NINE WEEKS ENDED
---------------------------
FEBRUARY 23, FEBRUARY 24,
2003 2002
------------ ------------
(UNAUDITED)
(IN MILLIONS)
Cash Flows -- Operating Activities:
Net earnings.............................................. $ 692 $ 401
Adjustments to reconcile net earnings to cash flow:
Depreciation and amortization.......................... 270 204
Deferred income taxes.................................. 14 17
Changes in current assets and liabilities excluding
effects from businesses acquired...................... 82 (89)
Tax benefit on exercised options....................... 15 35
Cumulative effect of change in accounting principle.... -- 3
Pension and other postretirement activity.............. (63) (70)
Restructuring and other exit costs..................... 58 108
Other, net............................................. (34) (3)
------- -------
Cash provided by continuing operations.................... 1,034 606
Cash used by discontinued operations...................... (2) (2)
------- -------
Net Cash Provided by Operating Activities.............. 1,032 604
------- -------
Cash Flows -- Investment Activities:
Purchases of land, buildings and equipment................ (387) (296)
Investments in businesses, intangibles and affiliates, net
of investment returns and dividends.................... (71) (3,639)
Purchases of marketable securities........................ (61) (37)
Proceeds from sale of marketable securities............... 57 50
Proceeds from disposal of land, buildings & equipment..... 1 19
Proceeds from disposition of businesses................... -- 939
Other, net................................................ (47) (30)
------- -------
Net Cash Used by Investment Activities................. (508) (2,994)
------- -------
Cash Flows -- Financing Activities:
Change in notes payable................................... (1,857) 2,791
Issuance of long-term debt................................ 2,039 3,491
Payment of long-term debt................................. (294) (86)
Proceeds from minority investors, net..................... 147 --
Common stock issued....................................... 75 108
Purchases of common stock for treasury.................... (25) (2,425)
Dividends paid............................................ (304) (257)
Other, net................................................ (78) 27
------- -------
Net Cash (Used) Provided by Financing Activities....... (297) 3,649
------- -------
Increase in Cash and Cash Equivalents....................... $ 227 $ 1,259
======= =======
Cash Flows from Changes in Current Assets and Liabilities,
Excluding Effects from Businesses Acquired:
Receivables............................................ (108) 140
Inventories............................................ (26) (12)
Prepaid expenses and other current assets.............. (5) 22
Accounts payable....................................... 59 (157)
Other current liabilities.............................. 162 (82)
------- -------
Changes in Current Assets and Liabilities................... $ 82 $ (89)
======= =======
See accompanying notes to consolidated condensed financial statements.
3
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BACKGROUND
The accompanying consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States for interim financial information and with the rules and
regulations for reporting on Form 10-Q. Accordingly, they do not include certain
information and disclosures required for comprehensive financial statements. 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 thirty-nine weeks ended February 23, 2003 are not necessarily
indicative of the results that may be expected for the fiscal year ending May
25, 2003.
These statements should be read in conjunction with the consolidated
financial statements and footnotes included in our annual report for the year
ended May 26, 2002. The accounting policies used in preparing these consolidated
condensed financial statements are the same as those described in Note One of
our annual report, except as described in Note 10, "Accounting Rules Adopted."
Certain amounts in prior-period consolidated condensed financial statements
have been reclassified to conform with current period classifications. Cost of
sales has been decreased and selling, general and administrative expense has
been increased by $37 million, $57 million, $14 million, $19 million, $31
million and $45 million for quarters one and two of fiscal year 2003 and
quarters one, two, three and four of fiscal year 2002, respectively. This
reclassification was made to more appropriately categorize various expenses that
are not clearly associated with production activity.
(2) ACQUISITION
On October 31, 2001, we acquired the worldwide Pillsbury operations from
Diageo plc (Diageo). The total acquisition consideration (exclusive of direct
acquisition costs) was approximately $9,724 million. Under terms of the
agreement, Diageo holds contingent value rights that may require payment to
Diageo on April 30, 2003, of up to $395 million, depending on the General Mills
stock price and the number of General Mills shares that Diageo continues to hold
on that date. If the General Mills stock price averages less than $49 per share
for the 20 trading days prior to that date, Diageo will receive an amount per
share equal to the difference between $49 and the General Mills stock trading
price, up to a maximum of $5 per share.
The allocation of the purchase price was completed in the second quarter of
fiscal 2003. Intangible assets included in the final allocation of the purchase
price were acquired brands totaling $3.5 billion and goodwill of $5.6 billion.
Deferred income taxes of $1.3 billion, associated with the brand intangibles,
also were recorded.
4
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Presented below is a condensed balance sheet disclosing the final purchase
price allocation with the amounts assigned to major asset and liability captions
of the acquired Pillsbury business at the date of acquisition (in millions):
Current Assets.............................................. $ 1,245
Land, Buildings and Equipment............................... 1,002
Investments and Assets to be sold........................... 1,006
Other Non-current Assets.................................... 263
Brand Intangibles........................................... 3,516
Goodwill.................................................... 5,565
-------
Total Assets........................................... 12,597
-------
Current Liabilities......................................... (1,294)
Deferred Income Taxes....................................... (1,123)
Other Non-current Liabilities............................... (456)
-------
Total Liabilities...................................... (2,873)
-------
Purchase Consideration...................................... $ 9,724
=======
In the course of completing the purchase price allocation during the first
six months of fiscal 2003, adjustments were made as management finalized plans
to exit certain Pillsbury facilities as part of consolidating manufacturing,
warehouse and distribution activities into fewer locations. In the first
quarter, we announced that we would close the Hillsdale, Michigan plant which
produced dry mix products and flour for our Bakeries and Foodservice business.
The production capacity for the dry mix product lines will be absorbed within
other facilities throughout the General Mills supply chain, while the flour mill
business will be sold. A total of 119 employees were affected by the closure. In
the second quarter, we announced plans to close plants in Eden Prairie,
Minnesota; St. Louis, Missouri; Lithonia, Georgia; and Denison, Texas. The Eden
Prairie plant, which is planned to close in the fall of 2003, employs 323 people
and produces frozen breakfast products for the Company's Bakeries and
Foodservice segment. The St. Louis plant, which is planned to close in the fall
of 2003, employs 421 people and produces frozen bakery goods for the Company's
Bakeries and Foodservice segment. The Lithonia plant, which is planned to close
in the spring of 2003, employs 215 people and produces refrigerated dough
products for the Company's U.S. Retail segment. The Denison plant, which is
planned to close in the spring of 2003, employs 243 people and produces
refrigerated dough products for the Company's U.S. Retail segment. Our exit
costs connected to these plant closures amount to $44 million and have been
included in the purchase price allocation of Pillsbury, along with $72 million
of fair value adjustments to fixed assets.
5
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Actual results of acquired business operations are included in the
consolidated statement of earnings for the period from November 1, 2001. The
following unaudited pro forma information for the prior year's first nine months
summarizes our consolidated results of operations and the acquired Pillsbury
operations as if the acquisition had occurred at the beginning of fiscal 2002.
39 WEEKS ENDED
FEB. 24, 2002
--------------
(IN MILLIONS,
EXCEPT
PER SHARE DATA)
Net Sales................................................... $7,613
Earnings before cumulative effect of change in accounting
principle................................................. 438
Net earnings................................................ 435
Earnings per Share -- Basic
EPS before cumulative effect of change in accounting
principle.............................................. 1.20
Net EPS -- Basic.......................................... 1.19
Earnings Per Share -- Diluted
EPS before cumulative effect of change in accounting
principle.............................................. 1.17
Net EPS -- Diluted........................................ 1.16
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as increased interest
expense on acquisition debt. They do not reflect the effect of synergies that
would have been expected to result from the integration of the Pillsbury
businesses. The pro forma information does not purport to be indicative of the
results of operations that actually would have resulted had the combination
occurred at the beginning of fiscal 2002, or of future results of the
consolidated entities.
(3) RESTRUCTURING AND OTHER EXIT COSTS
In the third quarter of fiscal 2003, we recorded restructuring and
other exit costs of $1 million pretax, $1 million after tax, representing
expenses related to exiting certain grain elevator facilities.
For the nine months ended February 23, 2003, restructuring and other
exit costs totaled $58 million pretax, $38 million after tax, representing
$41 million pretax charges associated with the closure of our St. Charles,
Illinois, plant, and $17 million of expenses primarily related to exiting
production at former Pillsbury facilities being closed. These costs were
incurred pursuant to integration plans established in the first year
following the acquisition date.
For the nine months ended last fiscal year, restructuring and other
exit costs totaled $108 million pretax expenses, $68 million after tax,
representing $87 million pretax of charges related to the reconfiguration
of cereal production to obtain regulatory clearance for the Pillsbury
acquisition, $17 million pretax of severance costs related to sales
organization and headquarter department realignment and $4 million pretax
of Squeezit beverage business exit charges.
6
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(4) GOODWILL AND INTANGIBLE ASSETS
The components of goodwill and intangible assets are as follows:
FEB. 23, MAY 26,
2003 2002
-------- --------
(IN MILLIONS)
Total goodwill.............................................. $6,458 $8,559
Less accumulated amortization............................... (86) (86)
------ ------
Goodwill.................................................. $6,372 $8,473
====== ======
Intangible Assets:
Subject to amortization, primarily capitalized software..... $ 147 $ 129
Less accumulated amortization............................... (51) (39)
------ ------
$ 96 $ 90
====== ======
Not subject to amortization, brands......................... $3,516 $ --
====== ======
The changes in the carrying amount of goodwill for the nine months ended
February 23, 2003, are as follows:
PILLSBURY
UNALLOCATED
EXCESS
U.S. BAKERIES & PURCHASE
RETAIL FOOD-SERVICE INTERNATIONAL CORPORATE PRICE TOTAL
------ ------------ ------------- --------- ----------- -------
(IN MILLIONS)
Balance at May 26, 2002....... $ 745 $ 59 $ -- $ -- $ 7,669 $ 8,473
Activity including
translation.............. -- -- 3 -- (2,104) (2,101)
Allocation to segments...... 4,088 1,097 380 -- (5,565) --
------ ------ ---- ----- ------- -------
Balance at Feb. 23, 2003...... $4,833 $1,156 $383 $ -- $ -- $ 6,372
====== ====== ==== ===== ======= =======
The Pillsbury acquisition valuation and purchase price allocation was
completed in the second quarter of fiscal 2003. The activity in the first nine
months of fiscal 2003 primarily reflects the allocation of the purchase price to
brand intangibles, net of tax (see Note 2, "Acquisition").
(5) DEBT
On September 18, 2002, we began a new medium-term note program under our
existing shelf registration statement for the sale to individual investors of up
to $750 million of fixed-rate notes with maturities of nine months or more
("Core Notes"). As of February 23, 2003, we had issued approximately $67 million
of notes under the Core Notes program.
On November 20, 2002, we sold $350 million of 3 7/8% fixed-rate notes due
November 30, 2007. Concurrent with that offering, we sold $135 million of 3.901%
fixed-rate notes due November 30, 2007. Interest for both the 3 7/8% notes and
the 3.901% notes is payable semiannually on May 30 and November 30, beginning
May 30, 2003. After giving effect to the issuance of these notes and the sale of
notes under the Core Notes program, approximately $4.0 billion remains available
under our existing shelf registration statement for future use, which includes
the unused portion of the Core Notes program.
On October 28, 2002, we completed a private placement of zero coupon
convertible debentures with a face value of approximately $2.23 billion for
gross proceeds of approximately $1.50 billion. The issue price of the debentures
was $671.65 for each $1,000 in face value, which represents a yield to maturity
of 2.00%.
7
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
The debentures cannot be called by General Mills for three years after issuance
and will mature in 20 years. Holders of the debentures can require the Company
to repurchase the notes on the third, fifth, tenth and fifteenth anniversaries
of the issuance. We have the option to pay the repurchase price in cash or in
stock. The debentures are convertible into General Mills common stock at a rate
of 13.0259 shares for each $1,000 debenture. This results in an initial
conversion price of approximately $51.56 per share and represents a premium of
25% over the closing sale price of $41.25 per share on October 22, 2002. The
conversion price will increase with the accretion of the original issue discount
on the debentures. Generally, except upon the occurrence of specified events,
holders of the debentures are not entitled to exercise their conversion rights
until the Company's stock price is greater than a specified percentage
(beginning at 125% and declining by 0.25% each six months) of the accreted
conversion price per share.
In order to offset any dilution to General Mills' shareholders from future
conversion of the debentures, the Company has purchased call options from Diageo
plc on approximately 29 million shares that Diageo currently owns. The premiums
paid for the call options totaled approximately $89 million. The options are
exercisable in whole or in part from time to time, subject to certain
limitations, during a three-year period from the date of the sale of the
debentures.
A summary of our short and long-term debt is as follows (in millions):
FEB. 23, MAY 26,
2003 2002
-------- -------
Short-term Notes Payable.................................... $ 2,796 $ 4,650
Portion reclassified to long-term debt...................... (1,050) (1,050)
------- -------
Total Notes Payable.................................... $ 1,746 $ 3,600
======= =======
Long-term Debt:
6% notes due 2012......................................... $ 2,000 $ 2,000
5 1/8% notes due 2007..................................... 1,500 1,500
Zero coupon convertible debentures, yield 2.0%, $2,233 due
2022................................................... 1,510 --
3 7/8% notes due 2007..................................... 350 --
3.901% notes due 2007..................................... 135 --
Medium-term notes, 4.8% to 9.1% due 2003 to 2078.......... 630 922
Core Notes................................................ 67 --
7.0% notes due 2004....................................... 150 150
Zero coupon notes, yield 11.1%, $261 due 2013............. 85 78
Zero coupon notes, yield 11.7%, $54 due 2004.............. 46 42
8.2% ESOP loan guarantee, due through 2007................ 17 21
Notes payable, reclassified............................... 1,050 1,050
Other..................................................... 53 76
------- -------
7,593 5,839
Less amounts due within one year.......................... (120) (248)
------- -------
Total Long-term Debt................................... $ 7,473 $ 5,591
======= =======
(6) MINORITY INTEREST
In the first quarter of 2003, General Mills Capital, Inc. (GM Capital), a
wholly owned subsidiary, sold $150 million of its Series A preferred stock to an
unrelated third-party investor. GM Capital regularly enters into transactions
with the Company to purchase receivables of the Company. These receivables are
8
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
included in the consolidated balance sheet of the Company and the $150 million
purchase price for the Series A preferred stock is included in minority interest
on the balance sheet. The proceeds from the issuance of the preferred stock were
used to reduce short-term debt.
(7) COMPREHENSIVE INCOME
The following table summarizes total comprehensive income for the periods
presented:
THIRTEEN WEEKS ENDED THIRTEEN WEEKS ENDED
FEBRUARY 23, 2003 FEBRUARY 24, 2002
---------------------- --------------------
PRETAX TAX NET PRETAX TAX NET
------- ---- ----- ------ ---- ----
(IN MILLIONS)
Net Earnings............................... $ $ $240 $ $ $ 82
Other Comprehensive Income (Loss):
Foreign currency translation
adjustments........................... 32 -- 32 (20) 1 (19)
Other Fair Value Changes:
Securities............................ 6 (2) 4 1 (1) --
Hedge derivatives..................... (8) 2 (6) (92) 34 (58)
Reclassification to earnings:
Securities............................ (7) 3 (4) (9) 3 (6)
Hedge derivatives..................... 16 (5) 11 70 (26) 44
--- --- ---- ---- ---- ----
$39 $(2) $ 37 $(50) $ 11 $(39)
--- --- ---- ---- ---- ----
Comprehensive Income................ $277 $ 43
==== ====
THIRTY-NINE WEEKS ENDED THIRTY-NINE WEEKS ENDED
FEBRUARY 23, 2003 FEBRUARY 24, 2002
----------------------- ------------------------
PRETAX TAX NET PRETAX TAX NET
------- ----- ----- ------- ----- ------
(IN MILLIONS)
Net Earnings............................ $ $ $692 $ $ $ 401
Other Comprehensive Income (Loss):
Foreign currency translation
adjustments........................ 54 -- 54 (15) 1 (14)
Other Fair Value Changes:
Securities......................... 13 (5) 8 3 (1) 2
Hedge derivatives.................. (157) 58 (99) (324) 120 (204)
Reclassification to earnings:
Securities......................... (13) 5 (8) (9) 3 (6)
Hedge derivatives.................. 129 (47) 82 102 (38) 64
Cumulative effect of adopting SFAS No.
133................................ -- -- -- (251) 93 (158)
----- ---- ---- ----- ---- -----
$ 26 $ 11 $ 37 $(494) $178 $(316)
----- ---- ---- ----- ---- -----
Comprehensive Income............. $729 $ 85
==== =====
9
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Accumulated other comprehensive income (loss) balances were as follows (in
millions):
FEB. 23, FEB. 24, MAY 26,
2003 2002 2002
-------- -------- -------
Foreign currency translation adjustments................... $ (59) $(123) $(113)
Unrealized gain (loss) from:
Securities............................................... 16 23 16
Hedge derivatives........................................ (289) (298) (272)
Pension plan minimum liability............................. (7) (11) (7)
----- ----- -----
Accumulated other comprehensive income..................... $(339) $(409) $(376)
===== ===== =====
The changes in other comprehensive income are primarily non-cash items.
(8) STATEMENTS OF CASH FLOWS
During the first nine months of fiscal 2003, we made interest payments of
$420 million (net of amounts capitalized), versus $217 million last year. In the
first nine months of fiscal 2003, we made tax payments of $91 million and
received a $109 million refund of fiscal 2002 tax overpayments. In the
corresponding period of fiscal 2002, we made tax payments of $192 million.
In addition, we had a large non-cash transaction in the second quarter of
last year, when we issued 134 million common shares of General Mills to Diageo
plc for the acquisition of Pillsbury.
(9) OPERATING SEGMENTS
We operate exclusively in the consumer foods industry, with multiple
operating segments organized generally by product categories.
We have aggregated our operating segments into three reportable segments:
1) U.S. Retail; 2) Bakeries and Foodservice; and 3) International. U.S. Retail
consists of cereals, meals, refrigerated and frozen dough products, baking
products, snacks, yogurt and other. Our Bakeries and Foodservice segment
consists of products marketed to bakeries and offered to the commercial and
non-commercial foodservice sectors throughout the United States and Canada. The
International segment is comprised of retail markets outside the United States
and foodservice markets outside of the United States and Canada. At the
beginning of fiscal 2003, the Lloyd's foodservice and the bakery flour
businesses were realigned from the U.S. Retail segment to the Bakeries and
Foodservice segment. All prior year amounts are restated.
Management reviews operating results to evaluate segment performance.
Operating profit for the reportable segments excludes general corporate items,
and restructuring and other exit costs. Interest expense and income taxes are
centrally managed at the corporate level and, therefore, are not allocated to
segments since they are excluded from the measure of segment profitability
reviewed by the Company's management. Under our supply chain organization, our
manufacturing, warehouse, distribution and sales activities are substantially
integrated across our operations in order to maximize efficiency and
productivity. As a result, fixed assets, capital expenditures, and depreciation
and amortization expenses are not maintained nor available by operating
segments.
The measurement of operating segment results is consistent with the
presentation of the Consolidated Statements of Earnings. Intercompany
transactions between reportable operating segments were not material in the
periods presented.
10
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
OPERATING SEGMENTS
THIRTEEN WEEKS THIRTY-NINE WEEKS
ENDED ENDED
------------------- -------------------
FEB. 23, FEB. 24, FEB. 23, FEB. 24,
2003 2002 2003 2002
-------- -------- -------- --------
(IN MILLIONS)
Net Sales:
U.S. Retail...................................... $1,910 $1,679 $5,665 $4,371
Bakeries and Foodservice......................... 419 398 1,340 793
International.................................... 316 302 955 461
------ ------ ------ ------
Total....................................... $2,645 $2,379 $7,960 $5,625
====== ====== ====== ======
Operating Profit:
U.S. Retail...................................... $ 450 $ 234 $1,305 $ 887
Bakeries and Foodservice......................... 28 38 132 102
International.................................... 22 12 65 21
------ ------ ------ ------
Total....................................... 500 284 1,502 1,010
Unallocated corporate income (expense)............. (14) (26) (30) (40)
Restructuring and other exit costs................. (1) -- (58) (108)
Interest, net...................................... (135) (146) (417) (264)
------ ------ ------ ------
Earnings before taxes and earnings from
Joint Ventures........................... 350 112 997 598
Income Taxes....................................... 123 38 349 214
Earnings from Joint Ventures....................... 13 8 44 20
------ ------ ------ ------
Earnings before cumulative effect of change in
accounting principle............................. 240 82 692 404
Cumulative effect of change in accounting
principle........................................ -- -- -- (3)
------ ------ ------ ------
Net Earnings....................................... $ 240 $ 82 $ 692 $ 401
====== ====== ====== ======
(10) ACCOUNTING RULES ADOPTED
Effective the first quarter of fiscal 2003, we adopted Statement of
Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The adoption of SFAS No. 144 did not have a
material impact on the Company's financial statements.
In November 2002, the Financial Accounting Standard Board (FASB) issued
FASB Interpretation Number 45 (FIN 45), "Guarantor's Accounting and Disclosure
Requirements for Guarantees of Indebtedness of Others." FIN 45 elaborates on the
disclosure requirements of guarantees, as well as requiring the recording of
certain guarantees issued after December 31, 2002. We do not believe that the
adoption of FIN 45 requires any material change in our guarantee disclosures.
(See Note Seventeen in our annual report for fiscal year ended May 26, 2002.) We
have not entered into any recordable guarantees since December 31, 2002.
11
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Effective the first quarter of fiscal 2002, we adopted Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which requires all derivatives to be
recorded at fair value on the balance sheet and establishes new accounting rules
for hedging. At May 28, 2001, we recorded the cumulative effect of adopting this
accounting change, as follows:
INCLUDED IN
ACCUMULATED OTHER
INCLUDED IN COMPREHENSIVE
EARNINGS INCOME
----------- -----------------
(IN MILLIONS,
EXCEPT PER SHARE DATA)
Pretax.................................................... $ (5) $(251)
Income tax effects........................................ 2 93
----- -----
Total................................................ $ (3) $(158)
===== =====
Effect on diluted earnings per share...................... $(.01)
=====
The cumulative effect on earnings and on Accumulated Other Comprehensive
Income was primarily associated with the impact of lower interest rates on the
fair-value calculation for the forward-starting interest rate swaps we entered
into in anticipation of our Pillsbury acquisition and other financing
requirements.
Effective the fourth quarter of fiscal 2002, we adopted the Financial
Accounting Standard Board's (FASB's) Emerging Issues Task Force (EITF) Issue
01-09, "Accounting for Consideration Given by a Vendor to a Customer or a
Reseller of the Vendor's Products", which requires recording certain coupon and
trade promotion expenses as reductions of revenues. Since adopting this
requirement resulted only in the reclassification of certain expenses from
selling, general and administrative expense to a reduction of net sales, it did
not affect our financial position or net earnings. The impact was a reduction of
net sales, and a corresponding reduction in selling, general and administrative
expense, of $726 million in the third quarter of 2002, and $1,593 million for
the first nine months of fiscal 2002.
(11) NEW ACCOUNTING RULES
In July 2002, the Financial Accounting Standards Board (FASB) issued
Statement No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" (SFAS No. 146). SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be
applied prospectively to exit or disposal activities initiated after December
31, 2002. The adoption of this Standard may affect the timing of the recognition
of future exit or disposal costs. However, we do not expect the impact to be
material.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
During the first nine months of fiscal 2003, cash flow from continuing
operations totaled $1,034 million, up $428 million from last year's first nine
months amount of $606 million. The increase was due largely to the $307 million
improvement in earnings before depreciation, amortization and restructuring and
other exit costs, and a $171 million decrease in use of working capital.
During the first nine months of fiscal 2003, capital investment totaled
$418 million. Fiscal 2003 capital investment is estimated to be approximately
$750 million, including construction costs to consolidate the Company's
headquarters and costs of integrating Pillsbury into the Company's information
systems.
At the end of the first nine months, we had adjusted debt plus minority
interests of approximately $9.0 billion, essentially the same as at the end of
fiscal 2002. Adjusted debt equals total debt (consisting of notes payable of
$1.746 billion and total long-term debt of $7.593 billion) plus the debt
equivalent of leases minus certain cash and cash equivalents and marketable
investments, at cost. Approximately 75 percent of our debt was long term, 18
percent was short term (excluding the impact of reclassification from our
long-term credit facility), and the balance was leases and tax-benefit leases.
This reflects refinancing of approximately $5.9 billion in commercial paper with
longer-term debt and minority interest since February 2002. Approximately $2.2
billion of this refinancing occurred during the first nine months of fiscal
2003.
During fiscal 2002, General Mills filed a shelf registration statement with
the Securities and Exchange Commission covering the sale of up to $8.0 billion
in debt securities. As of February 23, 2003, approximately $4 billion remained
available under the shelf registration statement for future debt issuance, which
includes the unused portion of the Core Notes program.
On September 18, 2002, we began a new medium-term note program for the sale
to individual investors of up to $750 million of notes with maturities of nine
months or more. As of February 23, 2003, we had issued approximately $67 million
of Core Notes under the program.
On October 28, 2002, we completed a private placement of zero coupon
convertible debentures with a face value of approximately $2.23 billion for
gross proceeds of approximately $1.50 billion.
On November 20, 2002, we sold $350 million of 3 7/8% fixed-rate notes due
November 30, 2007, and $135 million of 3.901% fixed-rate notes due November 30,
2007.
Commercial paper is a continuing source of short-term financing. We can
issue commercial paper in the United States and Canada, as well as in Europe.
Our commercial paper borrowings are supported by $2.1 billion in fee-paid
committed credit lines. As part of our core facilities we have $1.05 billion in
364-day facilities that expire in January 2004, and $1.05 billion in five-year
facilities that expire in January 2006. As of February 23, 2003, the Company had
no outstanding borrowings under these facilities. Additionally, we have $27
million in uncommitted credit lines available.
We believe that cash flows from operations together with available short-
and long-term debt financing will be adequate to meet our liquidity and capital
needs.
As of February 23, 2003, we have recorded approximately $300 million of
minority interest on our balance sheet. In May 2002, we sold a minority interest
in a subsidiary to an unrelated third-party investor for $150 million. This
subsidiary holds some of our manufacturing assets and trademarks. In the first
quarter of 2003, we sold a minority interest in another subsidiary for $150
million, as described in Note 6 "Minority Interest." We did not recognize any
gain or loss in connection with the issuance of the minority interests. All
assets, liabilities and results of operations of these subsidiaries are
reflected in our financial statements, and the third party's investment is
reflected as minority interest on our balance sheet.
13
RESULTS OF OPERATIONS
THREE-MONTH RESULTS
Net sales for the thirteen weeks ended February 23, 2003 grew 11 percent to
$2.645 billion. Cost of goods sold as a percent of sales improved from 61.7
percent to 59.2 percent as higher volumes increased our operating leverage.
Operating leverage is defined as increased absorption of fixed operating costs
as a result of higher volume levels. Selling, general and administrative expense
as a percent of sales in the quarter improved from 27.5 percent last year to
22.4 percent this year, driven by a 9 percent reduction in selling, general and
administrative expenses, and the benefit from the 11 percent increase in net
sales.
Reported earnings were $240 million in the third quarter of fiscal 2003 as
compared to $82 million last year. Basic earnings per share of 65 cents for the
third quarter ended February 23, 2003, were up 183 percent from 23 cents a year
earlier. Diluted earnings per share of 63 cents for the third quarter of fiscal
2003 were up 186 percent from 22 cents per share earned in the same period last
year.
Third quarter results for fiscal 2003 included restructuring and other exit
costs. We exclude these items from cost of goods sold or selling, general and
administrative expense as we believe their inclusion therein would
inappropriately affect the period-to-period comparability of those accounts. In
fiscal 2003, we recorded restructuring and other exit costs of $1 million
pretax, $1 million after tax, related to exiting certain grain elevator
facilities.
Third quarter selling, general and administrative expense for both fiscal
2003 and 2002 included items which are associated with infrequently occurring
events. In fiscal 2003, merger-related costs of $21 million pretax, $14 million
after tax, represent costs for the execution of the integration of Pillsbury,
including consulting, system conversions, and other expenses. In last year's
third quarter, we recorded merger-related costs totaling $9 million pretax
expense, $6 million after-tax, for costs associated with the execution of the
integration of Pillsbury. We also recorded $30 million expense for a special
contribution to the General Mills Foundation to increase its post-acquisition
net assets to a level consistent with the guidelines of the Foundation.
NINE-MONTH RESULTS
Total worldwide volume in the first nine months grew 3 percent on a
comparable basis, as if General Mills had owned the Pillsbury businesses in the
previous year. Reported net sales for the thirty-nine weeks ended February 23,
2003 grew 42 percent to $7.96 billion, including the incremental contribution of
Pillsbury businesses acquired October 31, 2001. Cost of goods sold for nine
months increased from 56.9 percent of sales last year to 58.1 percent this year
due primarily to the Company's new business structure. This new business
structure reflects the fact that certain Pillsbury businesses have lower gross
margins than General Mills' historical gross margins, and last year's results
included only 16 weeks of Pillsbury's operations. Selling, general and
administrative expense as a percent of sales in the period was lower this year
compared to last year primarily because certain Pillsbury businesses, which were
included in the business results for only 16 weeks last year, generally have
lower marketing spending.
Reported earnings were $692 million in the first nine months of fiscal 2003
as compared to $401 million earnings last year. Basic earnings per share of
$1.88 for the nine months ended February 23, 2003, were up 49 percent from $1.26
a year earlier. Diluted earnings per share of $1.84 for the first nine months of
fiscal 2003 were up 51 percent from $1.22 per share earned in the same period
last year.
Nine-month results for both fiscal 2003 and 2002 included restructuring and
other exit costs. We exclude these items from cost of goods sold or selling,
general and administrative expense as we believe their inclusion therein would
inappropriately affect the period-to-period comparability of those accounts.
In fiscal 2003, we recorded restructuring and other exit costs of $58
million pretax, $38 million after tax, consisting of $41 million pretax charges
associated with the closure of our St. Charles, Illinois, plant, and $17 million
pretax charges primarily related to costs associated with exiting production at
former Pillsbury facilities being closed. These costs were incurred pursuant to
our approved Pillsbury integration plans and have been segregated because of the
magnitude of the Pillsbury acquisition and the related
14
integration. In fiscal 2002, we recorded restructuring and other exit costs of
$108 million pretax, $68 million after tax. These costs were primarily related
to reconfiguring our North American cereal manufacturing necessitated by the
sale of our Toledo, Ohio, plant as required to obtain regulatory clearance for
the acquisition of Pillsbury.
Nine months selling, general and administrative expense for both fiscal
2003 and 2002 included items which are associated with infrequently occurring
events. In fiscal 2003, we recorded merger-related costs of $43 million pretax,
$28 million after tax, consisting of costs for the execution of the integration
of Pillsbury, including consulting, system conversions, and other expenses. In
fiscal 2002 we recorded merger-related costs totaling $22 million pretax
expense, $14 million after-tax, for the planning and execution of the
integration of Pillsbury. We also recorded $30 million expense for a special
contribution to the General Mills Foundation to increase its post-acquisition
net assets to a level consistent with the guidelines of the Foundation. We also
received $30 million in insurance settlement income related to a 1994 oats
handling incident.
U.S. RETAIL SEGMENT RESULTS
Third-quarter net sales for General Mills' domestic retail operations grew
14 percent to $1.91 billion, and operating profit nearly doubled to $450
million. Unit volume was up 7 percent from prior-year levels, which had declined
3 percent as companywide focus on integrating the Pillsbury businesses disrupted
last year's operating momentum.
Big G cereals led the third-quarter growth with unit volume up 16 percent
versus a 6 percent decline last year. The strong increase reflected good
performance by established brands including Honey Nut Cheerios, Cheerios,
Cinnamon Toast Crunch and Total, coupled with introductory shipments for new
Berry Burst Cheerios. Volume for Yoplait yogurt also grew 16 percent, matching
16 percent growth in the same period last year with strong performance by
established lines and continued good results for Yoplait Whips! The Yoplait
Nouriche yogurt beverage line is currently expanding to national distribution.
Baking products volume for the third quarter grew 9 percent. Meals volume grew 2
percent led by dinner mixes and Progresso soup. Snacks volume grew 7 percent led
by Nature Valley granola bars and Pop Secret microwave popcorn. Pillsbury USA
volume was down 1 percent for the quarter, as good gains by frozen baked goods
and Totino's frozen snacks were offset by lower refrigerated dough volume.
Through nine months, net sales for the U.S. Retail segment grew 30 percent
to $5.67 billion and operating profits increased 47 percent to $1.30 billion.
BAKERIES AND FOODSERVICE SEGMENT RESULTS
Third quarter net sales for the Bakeries and Foodservice segment grew 5
percent to $419 million, as pricing offset a 2 percent decline in unit volume.
Shipments to foodservice distributors, restaurants, and retail and wholesale
bakeries were down in the quarter, reflecting weak foodservice industry trends,
and these declines more than offset double-digit growth in convenience store
volume. Operating profit of $28 million was lower in the quarter, due to the
volume decline and higher supply chain costs caused by the foodservice plant
restructuring that is currently underway. Through the first nine months,
Bakeries and Foodservice net sales increased 69 percent to $1.34 billion and
operating profits increased 29 percent to $132 million.
INTERNATIONAL SEGMENT RESULTS
Net sales for the company's consolidated international businesses grew 5
percent in the third quarter to $316 million, and operating profits increased
sharply to $22 million from $12 million a year earlier. Unit volume was up in
every geographic region except Latin America, where macroeconomic conditions
remain difficult. Through nine months, net sales more than doubled to $955
million, and operating profits totaled $65 million.
15
JOINT VENTURE SUMMARY
Third-quarter net earnings from joint ventures totaled $13 million compared
to $8 million last year. Cereal Partners Worldwide (CPW), the company's joint
venture with Nestle, posted 6 percent unit volume growth in the period. Unit
volume for the Snack Ventures Europe (SVE) joint venture with PepsiCo grew 10
percent. Combined earnings after tax for CPW and SVE totaled $10 million in the
quarter. After tax earnings from the Haagen-Dazs joint ventures in Asia grew
slightly in the quarter and more than offset development spending by the 8th
Continent soy foods joint venture. Distribution of 8th Continent soymilk is
expected to expand to the remaining 45 percent of the U.S. in June 2003.
Through the first nine months of fiscal 2003, net earnings from joint
ventures totaled $44 million compared to $20 million for the same period last
year.
CORPORATE ITEMS
Interest expense totaled $135 million in the third quarter, down from $146
million a year earlier due to favorable rates and lower debt levels. Unallocated
corporate expense (including merger-related costs) totaled $14 million pretax,
compared to $26 million in last year's third quarter. The effective tax rate for
the quarter was 35 percent, slightly higher than last year's third quarter rate.
Average diluted shares outstanding for the quarter totaled 379 million compared
to 378 million a year earlier.
SUBSEQUENT EVENT
Subsequent to the close of the quarter, Fleming Companies, Inc. filed for
bankruptcy protection under Chapter 11. As of the date of Fleming's bankruptcy
filing, we believe that we have adequate reserves for doubtful accounts to cover
losses, if any, arising from Fleming's inability to pay amounts due to us.
CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are described in Note One to the
Consolidated Financial Statements included in our annual report for the year
ended May 26, 2002. The accounting policies used in preparing our interim fiscal
2003 consolidated condensed financial statements are the same as those described
in our annual report, except as described in Note 10, "Accounting Rules
Adopted."
Our critical accounting policies are those that have meaningful impact on
the reporting of our financial condition and results, and that require
significant management judgment and estimates. These policies include our
accounting for (a) trade and consumer promotion activities; (b) asset
impairments; and (c) income taxes.
The amount and timing of recognition of trade and consumer promotion
expense involves management judgment related to the estimated utilization of the
promotion activities. The vast majority of balance sheet liabilities associated
with these activities are resolved within the following twelve-month period, and
therefore do not require highly uncertain long-term estimates.
Evaluating the impairment of long-lived assets, including goodwill and
other intangible assets, involves management judgment in estimating the fair
values and future cash flows related to these assets. Although the
predictability of long-term cash flows may be somewhat uncertain, our
evaluations indicate fair values of assets significantly in excess of stated
book values. Therefore, we believe the risk of unrecognized impairment is low.
Income tax expense involves management judgment as to the ultimate
resolution of any tax issues. Historically, our assessments of the ultimate
resolution of tax issues have been reasonably accurate. The current open issues
are not dissimilar from historical items.
16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in the Company's market risk during the
thirteen weeks and thirty-nine weeks ended February 23, 2003. For additional
information, see "Market Risk Management" on page 20 of the Company's 2002
Annual Report to Shareholders.
ITEM 4. CONTROLS AND PROCEDURES.
Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect the disclosure controls,
since the date of their evaluation.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
This report contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995 that are based on management's
current expectations and assumptions. 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. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from the potential results discussed in such
statements. In particular, our predictions about future volume and earnings
could be affected by difficulties resulting from the Pillsbury acquisition, such
as integration problems; failure to achieve synergies; unanticipated
liabilities; inexperience in new business lines; and changes in the competitive
environment. Our future results also could be affected by a variety of
additional 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
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; fluctuation in the cost and availability of
supply chain resources; foreign economic conditions, including currency rate
fluctuations; political unrest and economic uncertainty due to terrorism or war.
The Company undertakes no obligations to revise publicly any forward-looking
statements to reflect future events or circumstances.
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 99.1 Certificate of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350.
Exhibit 99.2 Certificate of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350.
17
(b) Reports on Form 8-K:
On December 20, 2002, the Company filed a Report on Form 8-K to report
the filing of a press release dated December 16, 2002 and dated December
18, 2002, relating to the election of Hilda Ochoa-Brillembourg, CFA to the
General Mills' Board of Directors, and the announcement reporting financial
results for the second quarter ended November 24, 2002.
On January 6, 2003, the Company filed a Report on Form 8-K to report
the filing of the certification of the Chief Executive Officer and the
certification of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
On January 24, 2003, the Company filed a Report on Form 8-K to report
that the Registrant entered into Amendment No. 4 (the "Amendment") to a
364-Day Credit Agreement, dated January 24, 2001, (the "Credit Agreement")
among the Registrant, JPMorgan Chase Bank, as Administrative Agent, and the
other financial institutions party thereto.
On February 18, 2003, the Company filed a Report on Form 8-K to report
the filing of a press release describing information provided in the
Registrant's presentation at the Consumer Analyst Group of New York's
investor conference.
18
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 July 30, 2003 /s/ S. S. MARSHALL
---------------------------------------------
S. S. Marshall
Senior Vice President,
General Counsel
Date July 30, 2003 /s/ K. L. THOME
---------------------------------------------
K. L. Thome
Senior Vice President,
Financial Operations
19
I, Stephen W. Sanger, Chairman of the Board and Chief Executive Officer of
General Mills, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of General
Mills, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: July 30, 2003
/s/ STEPHEN W. SANGER
--------------------------------------
Stephen W. Sanger
Chairman of the Board and
Chief Executive Officer
20
I, James A. Lawrence, Chief Financial Officer of General Mills, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of General
Mills, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: July 30, 2003
/s/ JAMES A. LAWRENCE
--------------------------------------
James A. Lawrence
Chief Financial Officer
21