General Mills Reports Fiscal 2005 Results; Earnings per Share Up 18 Percent Including Gain from Business Divestitures; Dividend Increased 6 Percent to New Annual Rate of $1.32 per Share; Company Provides Fiscal 2006 Outlook.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- General Mills  This article or section may contain a proseline.Please help [ convert this timeline] into prose or, if necessary, a . (NYSE NYSE See: New York Stock Exchange :GIS (1) (Geographic Information System) An information system that deals with spatial information. Often called "mapping software," it links attributes and characteristics of an area to its geographic location. ) today reported results for the fourth quarter and full 2005 fiscal year. In 2005, the fourth quarter and full year contained the usual 13 and 52 weeks, respectively. Last year, General Mills' fourth quarter and annual results each included an extra week. Fiscal 2005 Financial Highlights For the fiscal year ended May 29, 2005, General Mills' net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight grew 2 percent to $11.24 billion. Earnings after tax grew 18 percent to reach $1,240 million. This included a gain of $284 million after tax from businesses divested during 2005, partially offset by $87 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. expense associated with the redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of $760 million principal amount of General Mills' notes due in 2012. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of grew to $3.08, up 18 percent from $2.60 in fiscal 2004. These earnings per share results reflect the company's adoption of accounting standard EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 04-8 pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to contingently con·tin·gent adj. 1. Liable to occur but not with certainty; possible: "All salaries are reckoned on contingent as well as on actual services" Ralph Waldo Emerson. convertible debt, which reduced reported earnings per share in both years. Net results for both years also include certain identified costs (described in detail below) which primarily relate to restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions taken subsequent to the company's fiscal 2002 acquisition of Pillsbury Pills·bur·y , Charles Alfred 1842-1899. American manufacturer who founded (1869) C.A. Pillsbury and Company, one of the largest flour-milling enterprises of the 19th century. , and other merger-related costs. These expenses totaled $65 million after tax in 2005 and $39 million after tax in 2004. Excluding these identified costs, the impact of the adoption of EITF 04-8, and the net gain from divestitures and debt repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. expense, diluted earnings per share in 2005 would have totaled $2.92 compared to $2.85 in 2004. Chairman and Chief Executive Officer Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Sanger Sanger, city (1990 pop. 16,839), Fresno co., S central Calif., in the San Joaquin Valley; inc. 1911. It is a shipping and processing center for a variety of agricultural products. Manufactures include sheet metal products, wine, machinery, and corrugated boxes. said 2005 was a successful year for the company. "On a comparable 52-week basis, our net sales grew 3 percent, outpacing 2 percent growth in unit volume. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. results in total reflected the significant input cost inflation we experienced in 2005; however, the Bakeries and Foodservice The foodservice (or food service) industry (US English; catering industry in British English) encompasses those places, institutions, and companies responsible for any meal eaten away from home. division met its goal of matching last year's profits and our International division posted strong profit growth. In addition, after-tax earnings from joint ventures grew 20 percent to reach $89 million. And the strong cash flows that we generated enabled us to pay increased shareholder dividends and invest $430 million in capital to support future growth, while we paid down $2 billion of our debt balance." Fourth Quarter Results Net sales for the fourth quarter of 2005 totaled $2.72 billion, 3 percent below prior-year results that included the extra week. Earnings after tax totaled $460 million, up 65 percent. This included the gain recorded from dispositions of the company's 40.5 percent interest in Snack Ventures Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the Lloyd's Lloyd's, London insurance underwriting corporation of many separate syndicates; often called Lloyd's of London. Founded in the late 17th cent. by a group of merchants, shipowners, and insurance brokers at the coffeehouse of Edward Lloyd, the association is now barbeque entrees business,
as well as the debt repurchase expenses described above. Fourth-quarter
diluted earnings per share totaled $1.14 compared to 68 cents a year
earlier.Identified items expenses totaled $25 million after tax in the fourth quarter of 2005 and $8 million after tax in the fourth quarter of 2004. Excluding these identified costs, the accounting rule change, and the net gain from business dispositions and debt repurchases, fourth quarter diluted earnings per share would have totaled 64 cents in 2005 and 74 cents in 2004. Accounting Standard EITF 04-8 During 2005, General Mills adopted EITF 04-8, which requires contingently convertible debt to be treated as if it had already been converted to common shares when calculating EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. . For General Mills, this results in the addition of 29 million shares to the total diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding until the contingently convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. issued in October October: see month. 2002 are redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. . General Mills has restated diluted shares outstanding and diluted EPS beginning with the second quarter of fiscal 2003. Identified Items Expense General Mills recorded certain costs in 2005 and 2004. These costs include: the restructuring and other exit costs segregated on the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of earnings; associated costs (primarily accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. ) included in cost of sales; and merger-related costs included in selling, general and administrative expense. We have separately identified these costs because they represent expenses associated with infrequently in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. occurring events, and we believe identifying them improves the comparability of year-to-year results of operations. We also have separately discussed the gain from divestitures, the debt repurchase expenses and the effect of the accounting rule change because we believe doing so improves the comparability of year-to-year results of operations. A reconciliation of earnings and EPS with and without these factors appears in the table below. Earnings and EPS excluding these items are measures of performance that are not defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and should be viewed in addition to, and not in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. , net earnings and diluted EPS as reported on a GAAP basis. Please refer to the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. footnotes for additional information regarding these items, and for presentation of results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP.
FOURTH QUARTER / FISCAL YEAR EARNINGS SUMMARY
(in millions, except per share data)
Fourth Quarter Fiscal Year
-------------- --------------
2005 2004 2005 2004
-----------------------------
Earnings After Tax (EAT)
Before identified items, divestitures
gain and debt repurchases $ 243 $ 286 $1,108 $1,094
Restructuring and other exit costs, and
associated costs (25) (8) (65) (17)
Merger-related costs -- -- -- (22)
Divestitures - gain 329 -- 284 --
Debt repurchases (87) -- (87) --
-----------------------------
Net Earnings $ 460 $ 278 $1,240 $1,055
Avg. Diluted Shares Outstanding
Diluted shares outstanding, excluding
shares on contingently convertible debt 378 386 380 384
Shares on contingently convertible debt 29 29 29 29
-----------------------------
Diluted Shares Outstanding 407 415 409 413
Diluted Earnings per Share
Before identified items, divestitures
gain, debt repurchases and EITF 04-8
calculation $ .64 $ .74 $ 2.92 $ 2.85
Restructuring and other exit costs, and
associated costs (.07) (.02) (.17) (.04)
Merger-related costs -- -- -- (.06)
Divestitures - gain .87 -- .75 --
Debt repurchases (.23) -- (.23) --
Adjustment for EITF 04-8 accounting
treatment(a) (.07) (.04) (.19) (.15)
-----------------------------
Diluted EPS $ 1.14 $ .68 $ 3.08 $ 2.60
(a) Adjustment for EITF 04-8 includes add-back of after-tax interest
expense and increase in shares outstanding.
U.S. Retail Segment Results Net sales for General Mills' U.S. Retail operations totaled $7.78 billion in 2005, essentially matching last year's 53-week sales results. Unit volume grew 1 percent, with five of the company's six major product divisions recording gains. Segment operating profits totaled $1.72 billion, 5 percent below prior-year results as volume growth and productivity savings did not offset the impact of unfavorable sales mix sales mix See product mix. , higher promotional expense Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade and higher input costs. Yoplait Yoplait (pronounced yo-play) is a company owned by two French holdings, SODIAAL and PAI Management, and is the second best selling brand in dairy products. History yogurt yogurt: see fermented milk. yogurt Semisolid, fermented, often flavoured milk food. Yogurt is known and consumed in almost all parts of the world. volume grew 11 percent in 2005, led by Yoplait Light and other six-ounce cup varieties. Unit volume increases for Nature Valley snack bars and Pop Secret microwave microwave, electromagnetic wave having a frequency range from 1,000 megahertz (MHz) to 300,000 MHz, corresponding to a wavelength range from 300 mm (about 12 in.) to 1 mm (about 0.04 in.). Like light waves, microwaves travel essentially in straight lines. popcorn fueled 2 percent overall volume growth for Snacks. Pillsbury USA, Baking baking: see cooking. baking Process of cooking by dry heat, especially in an oven. Baked products include bread, cookies, pies, and pastries. Products and the Meals Division each posted unit volume gains of 1 percent. Big G cereal cereal or grain Any grass yielding starchy seeds suitable for food. The most commonly cultivated cereals are wheat, rice, rye, oats, barley, corn, and sorghum. As human food, cereals are usually marketed in raw grain form or as ingredients of food products. shipments declined 5 percent, as pricing and promotional shifts underway in the U.S. ready-to-eat Adj. 1. ready-to-eat - food products that are prepared in advance and can be eaten as sold ready-made - made for purchase and immediate use cereal category impacted merchandised volume levels in the second half of the year. Excluding the extra week from prior-year results, total U.S. Retail unit volume would have increased 3 percent in 2005. Consumer purchases of the company's products grew essentially in line with shipments. Fourth quarter net sales for U.S. Retail totaled $1.81 billion and operating profits totaled $377 million. Both figures represent declines from 2004 results that included 14 weeks. Similarly, unit volume was down 4 percent. However, excluding the extra week in 2004, fourth-quarter unit volume represented a 3 percent increase. Consumer purchases of the company's products outpaced unit volume growth in the final quarter, as composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate retail sales grew 4 percent. Bakeries & Foodservice Segment Results Bakeries & Foodservice net sales totaled $1.74 billion in 2005 compared to $1.76 billion in 2004. Operating profits totaled $134 million, essentially matching prior-year results. Unit volume declined 5 percent overall. While shipments to convenience store and vending customers rose 17 percent, that strong growth was more than offset by volume declines with foodservice distributors A foodservice distributor is a company that provides food and non-food products to restaurants, cafeterias, industrial caterers, and hospitals and nursing homes. A foodservice distributor functions as an intermediary between food manufacturers and the foodservice operator , restaurants and bakery accounts. Excluding last year's extra week, total Bakeries and Foodservice unit volume would have been down 3 percent in 2005. For the fourth quarter, net sales totaled $450 million and operating profits totaled $40 million. Unit volume was 7 percent below last year's fourth-quarter results. On a comparable 13-week basis, however, unit volume was up 1 percent for the period. International Segment Results International net sales grew 11 percent in 2005 to reach $1.72 billion. Unit volume increased 5 percent, and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency exchange contributed 6 points of the net sales increase. Operating profits grew to $171 million compared to $119 million in 2004, fueled by volume growth, favorable currency and productivity gains. All four geographic regions--Canada, Europe, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Asia/Pacific--posted unit volume gains for the year. On a comparable 52-week basis, International unit volume grew 6 percent in 2005. Fourth-quarter International net sales totaled $456 million and operating profits were $54 million. Fourth quarter unit volume was up 3 percent. On a comparable 13-week basis, unit volume was up 5 percent for the period. Joint Venture Summary Earnings after tax from joint ventures totaled $89 million in 2005, up 20 percent from $74 million in 2004. The 2005 results include just nine months of contribution from Snack Ventures Europe, as General Mills' 40.5 percent share of this joint venture was redeemed for $750 million in February February: see month. 2005. Cereal Partners Worldwide Cereal Partners Worldwide S.A. is a joint venture between General Mills and Nestlé, established in 1990 to produce breakfast cereals. The company is headquartered in Lausanne, Switzerland, and markets cereals in more than 130 countries (except for the U.S. and Canada). , the company's joint venture with Nestle, continued to generate good growth. General Mills' proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of CPW (1) (Commercial Processing Workload) An IBM metric for system performance. CPW is designed for business applications that have a significant amount of input/output. net sales increased to $666 million in 2005 and unit volume grew 4 percent. The company's Haagen-Dazs joint ventures in Asia posted 3 percent volume growth for the year. 8th Continent, the company's U.S. joint venture with DuPont Dupont, DuPont, Du Pont, or du Pont may refer to: Companies
adj. Being between 10 and 99 percent: double-digit inflation. volume growth and increased its dollar share of the refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. soymilk soy·milk n. A milk substitute made from soybeans, often supplemented with vitamins. Noun 1. soymilk - a milk substitute containing soybean flour and water; used in some infant formulas and in making tofu category to 16 percent. Fourth quarter earnings after tax from joint ventures declined to $16 million, reflecting the absence of contributions from Snack Ventures Europe in this year's final period. Corporate Items General Mills' total debt as of May 29, 2005, was $6,192 million, down $2,034 million from the end of fiscal 2004. Net interest expense in 2005 totaled $455 million, down 10 percent from the prior year due to the lower debt level, favorable rates, and $12 million of interest income recorded in the third quarter from the resolution of certain tax issues. The effective tax rate was 34.1 percent in the fourth quarter and 36.6 percent for the fiscal year, including the impact of taxes on the gain from business dispositions. Average diluted shares outstanding for the year decreased 1 percent to 409 million. For the fourth quarter, average diluted shares outstanding were 407 million, 2 percent below the year-ago period. Dividend Increased to $1.32 Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. Rate As previously announced on June June: see month. 27, 2005, the General Mills Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a 6 percent increase in the quarterly dividend payable August 1, 2005, to shareholders of record July July: see month. 11, 2005. The new annualized rate is $1.32 per share. General Mills and its predecessor predecessor - parent firm have paid dividends without interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. or reduction for 106 years. Outlook Sanger said that 2005 marked the end of a transitional period for General Mills that followed the $10 billion acquisition of Pillsbury in fiscal 2002. Earnings results during that transition period included significant restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and costs related to the merger, which General Mills separately identified in its earnings guidance and reported results. EPS results for the company also reflected the fact that General Mills suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. open-market share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. activity in recent years to focus on debt reduction. Beginning in fiscal 2006, General Mills will no longer forecast identified expenses separately in its earnings guidance. The company intends to renew share repurchase activity in 2006, and expects share repurchases to be a source of EPS growth in 2006 and beyond. "We think General Mills is well-positioned to deliver low single-digit growth in net sales, mid single-digit growth in operating profits, and high single-digit growth in earnings per share," Sanger said. "Over the next three to five years, our goal is to deliver good growth while improving our return on capital by an average of 50 basis points a year. We believe this financial performance, together with dividend yield, should result in consistent, double-digit returns to General Mills shareholders." For fiscal 2006, the company said it is targeting low single-digit growth in net sales, and mid single-digit growth in operating profits driven by margin recovery in the U.S. Retail segment. Guidance for diluted EPS is a decline of 8 to 10 percent from $3.08 in 2005, which included the large net gain from dispositions. 2005 diluted EPS excluding that net gain, the impact of EITF 04-8, and approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8 cents contributed by divested businesses would have totaled $2.67. From this adjusted base, the company said it expects diluted EPS growth of 7 to 8 percent in 2006.
ADJUSTED 2005 BASE FOR EPS
Fiscal 2005
--------------
Diluted EPS $ 3.08
Add Back EITF 04-8 Impact +.19
Subtract one-time Net Gain from Divestitures and Debt
Repurchases -.52
Subtract SVE & Lloyd's Earnings -.08
-------------
Adjusted EPS $ 2.67
General Mills will hold a briefing for investors today, June 29, 2005, beginning at 8:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . You may access the web cast from General Mills' corporate home page: www.generalmills.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 that are based on management's current expectations and assumptions. These forward-looking statements, including the statements under the caption "Outlook" and statements made by Mr. Sanger, are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predictions about future volume and earnings could be affected by a variety of factors, including: competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions and promotional activities of our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; actions of competitors other than as described above; economic conditions, including changes in inflation rates, interest rates or tax rates; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in laws and regulations, including changes in accounting standards and labeling and advertising regulations; changes in customer demand for our products; effectiveness of advertising, marketing and promotional programs; changes in consumer behavior, trends and preferences, including weight loss trends; consumer perception of health-related issues, including obesity obesity, condition resulting from excessive storage of fat in the body. Obesity has been defined as a weight more than 20% above what is considered normal according to standard age, height, and weight tables, or by a complex formula known as the body mass index. ; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging and energy; benefit plan expenses due to changes in plan asset values and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. discount rates used to determine plan liabilities; foreign economic conditions, including currency rate fluctuations; and political unrest Unrest is a sociological phenomenon, for instance:
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Fiscal 2005 Unaudited) (In Millions, Except per Share Data)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
May 29, May 30, May 25,
2005 2004 2003
-------- -------- --------
Net Sales $11,244 $11,070 $10,506
Costs and Expenses:
Cost of sales 6,834 6,584 6,109
Selling, general and administrative 2,418 2,443 2,472
Interest, net 455 508 547
Restructuring and other exit costs 84 26 62
Divestitures (gain) (499) -- --
Debt repurchase costs 137 -- --
-------- -------- --------
Total Costs and Expenses 9,429 9,561 9,190
-------- -------- --------
Earnings before Income Taxes and
Earnings from Joint Ventures 1,815 1,509 1,316
Income Taxes 664 528 460
Earnings from Joint Ventures 89 74 61
-------- -------- --------
Net Earnings $ 1,240 $ 1,055 $ 917
======== ======== ========
Earnings per Share - Basic $ 3.34 $ 2.82 $ 2.49
======== ======== ========
Earnings per Share - Diluted $ 3.08 $ 2.60 $ 2.35
======== ======== ========
See accompanying notes.
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)
13 Weeks 14 Weeks
Ended Ended
May 29, May 30,
2005 2004
------------ ------------
Net Sales $ 2,719 $ 2,789
Costs and Expenses:
Cost of sales 1,669 1,675
Selling, general and administrative 590 586
Interest, net 110 124
Restructuring and other exit costs 38 12
Divestitures (gain) (499) --
Debt repurchase costs 137 --
------------ ------------
Total Costs and Expenses 2,045 2,397
------------ ------------
Earnings before Income Taxes and
Earnings from Joint Ventures 674 392
Income Taxes 230 137
Earnings from Joint Ventures 16 23
------------ ------------
Net Earnings $ 460 $ 278
============ ============
Earnings per Share - Basic $ 1.25 $ .74
============ ============
Earnings per Share - Diluted $ 1.14 $ .68
============ ============
See accompanying notes.
GENERAL MILLS, INC.
OPERATING SEGMENTS
(Fiscal 2005 and Quarterly Periods Unaudited) (In Millions)
13 Weeks 14 Weeks Fiscal Year Ended
Ended Ended ----------------------------
May 29, May 30, May 29, May 30, May 25,
2005 2004 2005 2004 2003
------- -------- -------- -------- --------
Net Sales:
U.S. Retail $ 1,813 $ 1,907 $ 7,779 $ 7,763 $ 7,407
Bakeries and
Foodservice 450 465 1,740 1,757 1,799
International 456 417 1,725 1,550 1,300
------- -------- -------- -------- --------
Total $ 2,719 $ 2,789 $ 11,244 $ 11,070 $ 10,506
======= ======== ======== ======== ========
Operating Profit:
U.S. Retail $ 377 $ 461 $ 1,719 $ 1,809 $ 1,754
Bakeries and
Foodservice 40 38 134 132 156
International 54 37 171 119 91
------- -------- -------- -------- --------
Total 471 536 2,024 2,060 2,001
Unallocated corporate
items (11) (8) (32) (17) (76)
Interest, net (110) (124) (455) (508) (547)
Restructuring and
other exit costs (38) (12) (84) (26) (62)
Divestitures - gain 499 -- 499 -- --
Debt repurchase costs (137) -- (137) -- --
------- -------- -------- -------- --------
Earnings before
income taxes and
earnings from
joint ventures $ 674 $ 392 $ 1,815 $ 1,509 $ 1,316
======= ======== ======== ======== ========
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Fiscal 2005 Unaudited)(In Millions)
May 29, May 30,
2005 2004
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 573 $ 751
Receivables 1,034 1,010
Inventories 1,037 1,063
Prepaid expenses and other current assets 203 222
Deferred income taxes 208 169
---------- ----------
Total Current Assets 3,055 3,215
---------- ----------
Land, Buildings and Equipment, at Cost 5,468 5,319
Less accumulated depreciation (2,461) (2,208)
---------- ----------
Net Land, Buildings and Equipment 3,007 3,111
Goodwill 6,684 6,684
Other Intangible Assets 3,636 3,641
Other Assets 1,684 1,797
---------- ----------
Total Assets $ 18,066 $ 18,448
========== ==========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 1,136 $ 1,110
Current portion of long-term debt 59 233
Notes payable 299 583
Other current liabilities 1,111 831
---------- ----------
Total Current Liabilities 2,605 2,757
Long-term Debt 5,834 7,410
Deferred Income Taxes 1,851 1,773
Other Liabilities 967 961
---------- ----------
Total Liabilities 11,257 12,901
---------- ----------
Minority Interests 1,133 299
Stockholders' Equity:
Common stock 5,741 5,680
Retained earnings 4,501 3,722
Less common stock in treasury (4,460) (3,921)
Unearned compensation (114) (89)
Accumulated other comprehensive income
(loss) 8 (144)
---------- ----------
Total Stockholders' Equity 5,676 5,248
---------- ----------
Total Liabilities and Equity $ 18,066 $ 18,448
========== ==========
Note: Certain prior period amounts have been reclassified to conform
with the current period presentation.
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The fiscal year ended May 30, 2004 consisted of 53 weeks; fiscal
2005 and 2003 each consisted of 52 weeks. The fourth quarter of
fiscal 2004 consisted of 14 weeks compared to 13 weeks in the
fourth quarter of fiscal 2005.
(2) In the fourth quarter of fiscal 2005, we recorded restructuring
and other exit costs of $38 million ($23 million after tax)
consisting of: $30 million primarily related to the write-down of
assets to net realizable value associated with the relocation of
our frozen baked goods line from our Boston plant in Chelsea,
Massachusetts; $5 million of charges associated with the decision
to close our dry mix production at Trenton, Ontario; and $3
million of charges primarily associated with Bakeries and
Foodservice severance costs resulting from fourth quarter fiscal
2004 actions.
In the fourth quarter of fiscal 2004, we recorded restructuring
and other exit costs of $12 million ($8 million after tax)
consisting of: $8 million for severance, primarily related to
actions in our Bakeries and Foodservice organization, and $4
million, primarily associated with previously announced closures
of manufacturing facilities.
In fiscal 2005, we recorded restructuring and other exit costs of
$84 million ($53 million after tax) consisting of: $44 million of
charges associated with fiscal 2005 supply chain initiatives to
further increase asset utilization and reduce manufacturing and
sourcing costs; $30 million of charges related to relocating our
frozen baked goods line from our Boston plant; $3 million of
charges primarily associated with Bakeries and Foodservice
severance; and $7 million of charges associated with restructuring
actions prior to fiscal 2005. The fiscal 2005 supply chain actions
included decisions to: close our flour milling plant in Vallejo,
California; close our par-baked bread plant in Medley, Florida;
relocate bread production from our Swedesboro, New Jersey plant;
relocate a portion of our cereal production from Cincinnati, Ohio;
close our snacks foods plant in Iowa City, Iowa; and close our dry
mix production at Trenton, Ontario.
These supply chain actions are also resulting in certain
associated expenses, primarily adjustments to the depreciable life
of the assets necessary to reflect the shortened asset lives which
now coincide with the final production dates at the Cincinnati and
Iowa City plants. These associated expenses are being recorded as
cost of sales. The fiscal 2005 expense recorded in cost of sales
was $2 million and $18 million in the fourth quarter and fiscal
year, respectively.
In fiscal 2004, we recorded restructuring and other exit costs of
$26 million ($17 million after tax) consisting of: approximately
$11 million was related to plant closures in the Netherlands,
Brazil and Atwater, California. We recorded an additional $7
million, primarily related to adjustments of costs associated with
previously announced closures of manufacturing facilities. In
addition, we recorded $8 million for severance, primarily related
to realignment actions in our Bakeries and Foodservice
organization.
(3) In March 2005, we commenced a cash tender offer for up to $500
million in aggregate principal amount of our outstanding 6% Notes
due in 2012. We purchased $760 million principal amount of the 6%
Notes in the tender offer and subsequent open market purchases,
resulting in debt repurchase costs of $137 million ($87 million
after tax) consisting of $73 million of non-cash interest rate
swap losses reclassified from accumulated other comprehensive
income and $64 million of purchase premium and other costs.
(4) On February 28, 2005, Snack Ventures Europe, our snacks joint
venture with PepsiCo, Inc., was terminated and our 40.5 percent
interest was redeemed. On April 4, 2005, we sold our Lloyd's
barbecue business to Hormel Foods Corporation. We recorded $499
million in pretax gains ($284 million after tax) on these
dispositions in fiscal 2005. We recorded an after tax gain of $329
million in the fourth quarter and incurred $45 million of
associated taxes in the third quarter.
(5) In the third quarter of fiscal 2005, we adopted the Emerging
Issues Task Force (EITF) of the Financial Accounting Standards
Board Issue No. 04-8, "The Effect of Contingently Convertible Debt
on Diluted Earnings per Share" (EITF 04-8). The effect of EITF
04-8 has reduced diluted earnings per share by $0.07 and $0.04 for
fourth quarter fiscal 2005 and 2004, respectively, and has reduced
annual diluted earnings per share by $0.19, $0.15 and $0.08 for
fiscal 2005, 2004 and 2003, respectively, related to our
contingently convertible debt issued in 2002.
We have a call option on 29 million shares held by Diageo which
could offset the EPS impact of this debt.
Basic and diluted earnings per share (EPS) were calculated as
follows:
In Millions, Except Per Share
Data Quarter Ended Fiscal Year Ended
----------------------------------------------------------------------
May 29, May 30, May 29, May 30, May 25,
2005 2004 2005 2004 2003
---------------------------------------
Net earnings - as reported $ 460 $ 278 $ 1,240 $1,055 $ 917
Interest on convertible
debentures, after tax 5 5 20 20 11
---------------- ----------------------
Net earnings for diluted EPS
calculation $ 465 $ 283 $ 1,260 $1,075 $ 928
---------------- ----------------------
Average number of common shares
-- basic EPS 369 378 371 375 369
Incremental share effect from:
Stock options 7 8 8 8 9
Restricted stock, stock rights
and other 2 -- 1 1 0
Contingently convertible
debentures 29 29 29 29 17
---------------- ----------------------
Average number of common shares
-- diluted EPS 407 415 409 413 395
---------------- ----------------------
Earnings per Share - Basic $ 1.25 $ .74 $ 3.34 $ 2.82 $ 2.49
Earnings per Share - Diluted $ 1.14 $ .68 $ 3.08 $ 2.60 $ 2.35
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