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8-K - FORM 8-K - GENERAL MILLS INC | c55135e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
December 17, 2009
Contacts: (Analysts) Kris Wenker (763) 764-2607
(Media) Kirstie Foster (763) 764-6364
(Media) Kirstie Foster (763) 764-6364
GENERAL MILLS REPORTS STRONG RESULTS FOR FISCAL 2010 SECOND QUARTER
Company Raises Full-year EPS Guidance
MINNEAPOLIS, MINN.General Mills (NYSE: GIS) today reported record results for the second quarter
of fiscal 2010.
Fiscal 2010 Second-quarter Financial Highlights
| Net sales increased to $4.08 billion, led by 4 percent growth in U.S. Retail sales | ||
| Segment operating profit increased 13 percent to $880 million | ||
| Diluted earnings per share grew at a strong double-digit rate to $1.66 | ||
| Excluding certain items affecting comparability, earnings per share grew 13 percent to $1.54, exceeding the consensus of analyst estimates. |
Net sales for the 13 weeks ended November 29, 2009, grew 2 percent to $4.08 billion, led by 4
percent growth in U.S. Retail net sales. The comparison was difficultin last years second
quarter, total company net sales grew 8 percent and U.S. Retail net sales grew 10 percent. Foreign
currency translation contributed 1 point of net sales growth. The contribution from pound volume
was flat, including the loss of 2 points of growth from divested products. U.S. Retail pound
volume grew 2 percent above last years second-quarter level, which was up 5 percent.
Chairman and Chief Executive Officer Ken Powell said, Consumers around the world continue to
focus on nutritious, convenient food choices that help them make breakfast, lunch and dinner for
their families at good value. Demand for our leading brands remains strong. These good sales
levels, combined with the accumulating benefits of our holistic margin management (HMM) efforts,
are continuing to drive terrific operating performance in our manufacturing plants. This strong,
fundamental business momentum has enabled us to raise our EPS targets for the full year.
Second-quarter gross margin increased at a double-digit rate, reflecting strong operating
performance and commodity costs that were below year-ago levels for the period. General Mills
increased its consumer marketing investment during the quarter, including a 37 percent increase in
advertising and media expense. Segment operating profit grew 13 percent to $880 million.
Second-quarter net earnings totaled $566 million, including a net gain related to mark-to-market
valuation of certain commodity positions (this non-cash item is discussed below in the section
titled Corporate Items). Diluted earnings per share (EPS) totaled $1.66, up from $1.09 in last
years second quarter, which included a net reduction in mark-to-market valuation and a gain on the
sale of a business. Excluding the divestiture gain last year and mark-to-market impacts in both
years, second-quarter earnings would total $1.54 in fiscal 2010, up 13 percent from comparable
earnings of $1.36 per share in fiscal 2009.
Six-month Financial Results Summary
Through the first six months of fiscal 2010, General Mills net sales grew 1 percent to $7.60
billion. Net sales in last years first half grew 11 percent. Foreign currency translation
reduced 2010 first-half sales growth by 1 percentage point. The contribution from pound volume was
flat despite the loss of 2 points of growth from divested products. Segment operating profits
increased 16 percent to $1.65 billion,
including a 27 percent increase in advertising and media investment. Six-month net earnings
totaled $986 million. Diluted earnings per share totaled $2.91 compared to $1.88 in last years
first half. Excluding last years divestiture gain and mark-to-market valuation effects in both
years, earnings per share would total $2.82 for the first half of fiscal 2010, up 22 percent from
comparable earnings of $2.32 a year ago.
U.S. Retail Segment Results
Second-quarter net sales for General Mills U.S. Retail segment rose 4 percent to $2.89 billion.
Pound volume contributed 2 points of the growth. This was solid performance, given that last
years second-quarter net sales grew 10 percent and pound volume contributed 5 points of that
increase. Operating profits for the second quarter grew 13 percent to reach $718 million,
including a 29 percent increase in advertising and media expense for the period.
Net sales for Big G cereals grew 10 percent in the quarter, led by Chex cereal varieties, the
Cheerios franchise and Fiber One cereals. Snacks division net sales grew 6 percent with strong
contributions by Fiber One and Nature Valley grain snack bars and several fruit snack varieties.
Net sales for the Baking Products division increased 5 percent led by Betty Crocker dessert mixes.
Yoplait division net sales also grew 5 percent, reflecting continued gains by Yoplait Light and
strong introductory sales of Yoplait Delights yogurt parfaits. Net sales for the Pillsbury
division rose 1 percent with good performance by Pillsbury refrigerated dough products, Totinos
pizza and Pizza Rolls snacks, and Pillsbury Savorings appetizers. Meals division net sales
essentially matched strong year-ago levels, with Green Giant frozen vegetables, Progresso
ready-to-serve soups and Old El Paso Mexican foods recording good gains. Net sales for the Small
Planet Foods natural and organic business were 2 percent below prior-year levels reflecting soft
organic food industry trends, however Cascadian Farm cereals and the Larabar line recorded market
share gains.
Through six months, U.S. Retail segment net sales rose 5 percent to $5.31 billion. Pound
volume growth accounted for 2 points of the sales increase. Segment operating profits grew 16
percent to $1.36 billion.
International Segment Results
Second-quarter net sales for General Mills consolidated international businesses grew 7 percent to
$724 million. Foreign currency translation contributed 4 points of sales growth, and net price
realization and
mix contributed 3 points of growth. Pound volume matched year ago levels, including the loss of 2
points of growth from divested products. International segment operating profits declined 3
percent, reflecting transactional foreign currency effects on cost of sales and a strong
double-digit increase in advertising and media expense.
Through six months, International segment net sales increased 1 percent to $1.39 billion. Net
price realization and mix contributed 5 points of net sales growth. Foreign currency translation
reduced the growth rate by 3 points. Pound volume subtracted 1 point of net sales growth,
including the loss of 2 points of growth from divestitures. First-half segment operating profits
of $147 million were 8 percent below last years first half due to negative foreign currency
effects and increased advertising investment.
Bakeries & Foodservice Segment Results
Second-quarter net sales for the Bakeries & Foodservice segment declined 16 percent to $464
million, reflecting the absence of divested products and the impact of indexed prices on certain
product lines. Pound volume reduced net sales growth by 10 percentage points, including the loss
of 8 points of growth from divested products. Segment operating profits grew 32 percent to $85
million, reflecting strong plant operating performance and lower input costs.
Through the first half, Bakeries & Foodservice segment net sales declined 16 percent to $897
million, reflecting the impact of divestitures and indexed prices on certain product lines.
However, segment operating profits through the first six months grew at a strong double-digit rate
to $146 million.
Joint Venture Summary
After-tax earnings from joint ventures grew 15 percent in the second quarter to $38 million.
Excluding foreign currency effects, net sales for Cereal Partners Worldwide (CPW) rose 4 percent
and net sales for the Häagen-Dazs Japan joint venture grew 1 percent. Foreign exchange contributed
to reported joint-venture results. Through the first six months, joint venture earnings totaled
$62 million after-tax in fiscal 2010 compared to $64 million in the prior year.
Corporate Items
Corporate unallocated items totaled $24 million of income in the second quarter of fiscal 2010
compared to $292 million of expense in last years second quarter. This primarily reflects
differences in the mark-to-market valuation of certain commodity positions, which represented a net
gain of $67 million this year compared to a net reduction of $269 million a year ago. Excluding
mark-to-market effects, corporate unallocated items totaled $43 million expense this year, up from
$23 million expense a year ago.
Restructuring, impairment and other exit costs totaled $25 million in the second quarter of
2010, compared to $2 million a year ago.
Net interest expense for the quarter declined 8 percent to $88 million, primarily reflecting
lower debt levels. The effective tax rate for the quarter was 33.1 percent, essentially unchanged
from year-ago levels.
Cash Flow Items
General Mills operating activities generated $987 million of cash in the first half of fiscal 2010,
up sharply from $364 million in last years first half driven by strong net earnings growth.
Capital expenditures during the first six months totaled $258 million compared to $241 million a
year ago. Dividends grew 6 percent in the first half to $313 million. On Monday, December 14,
2009, General Mills announced an increase in the quarterly dividend rate, effective with the
February 1, 2010, payment. Estimated dividends per share in fiscal 2010 of $1.92 represent a 12
percent increase over the $1.72 per share paid in fiscal 2009. During the first half, General
Mills repurchased 4 million of the companys common shares at an average price of $54.91 per share.
Fiscal 2010 Outlook
Our businesses are growing, and General Mills people in our plants, sales teams and offices
worldwide are delivering great performance, said Powell. As we move into the second half of
fiscal 2010, we plan to make additional reinvestments in marketing and merchandising programs to
fuel continued growth for our brands this year and into fiscal 2011.
General Mills said that, based on strong first-half operating performance and business
momentum, the company is raising its guidance for fiscal 2010 earnings to a range of $4.52 to $4.57
per share, excluding any impact from mark-to-market effects. Previously, the companys 2010 EPS
guidance had been a range of $4.40 to $4.45 excluding any mark-to-market impact.
The new fiscal 2010 EPS guidance represents growth of 14 to 15 percent from 2009 earnings per
share of $3.98 excluding items affecting comparability. The double-digit growth is anticipated
despite the absence of divested businesses, one less week in this fiscal year, and the expectation
that foreign currency exchange will reduce 2010 reported results.
General Mills will hold a briefing for investors today, December 17, 2009, beginning at 8:30 a.m.
Eastern Time. You may access the web cast from General Mills internet home page:
www.generalmills.com.
Earnings per share excluding items, total company segment operating profit, earnings excluding
items expressed as a percent of sales, and international sales excluding foreign currency
translation effects are each non-GAAP measures. Reconciliations of these measures to their
relevant GAAP measures appear in Note 6 to the attached consolidated financial statements.
This press release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that are based on our current expectations and assumptions. These
forward-looking statements, including the statements under the caption Fiscal 2010 Outlook and
statements made by Mr. Powell, 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 net sales 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; economic conditions, including changes in
inflation rates, interest rates, tax rates, or the availability of capital; 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 labeling and
advertising regulations; impairments in the carrying value of goodwill, other intangible assets, or
other long-lived assets, or changes in the useful lives of other intangible assets; changes in
accounting standards and the impact of significant accounting estimates; product quality and safety
issues, including recalls and product liability; changes in consumer 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; consolidation in the retail environment; 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; disruptions or inefficiencies in
the supply chain; volatility in the market value of derivatives used to manage price risk for
certain commodities; benefit plan expenses due to changes in plan asset values and discount rates
used to determine plan liabilities; failure of our information technology systems; resolution of
uncertain income tax matters; foreign economic conditions, including currency rate fluctuations;
and political unrest in foreign markets and economic uncertainty due to terrorism or war. The
company undertakes no obligation to publicly revise any forward-looking statement to reflect any
future events or circumstances.
GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS AND SUPPLEMENTARY INFORMATION
(Unaudited) (In Millions, Except per Share Data)
CONSOLIDATED STATEMENTS OF EARNINGS AND SUPPLEMENTARY INFORMATION
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended | Six-Month Period Ended | |||||||||||||||||||||||
Nov. 29, | Nov. 23, | Nov. 29, | Nov. 23, | |||||||||||||||||||||
2009 | 2008 | % Change | 2009 | 2008 | % Change | |||||||||||||||||||
Net sales |
$ | 4,078.2 | $ | 4,010.8 | 1.7 | % | $ | 7,597.0 | $ | 7,508.2 | 1.2 | % | ||||||||||||
Cost of sales |
2,332.1 | 2,791.2 | (16.4 | %) | 4,392.2 | 5,096.8 | (13.8 | %) | ||||||||||||||||
Selling, general, and administrative
expenses |
842.5 | 729.6 | 15.5 | % | 1,609.1 | 1,447.5 | 11.2 | % | ||||||||||||||||
Divestiture (gain) |
| (128.8 | ) | NM | | (128.8 | ) | NM | ||||||||||||||||
Restructuring, impairment, and other
exit costs |
24.9 | 2.5 | NM | 24.1 | 5.2 | NM | ||||||||||||||||||
Operating profit |
878.7 | 616.3 | 42.6 | % | 1,571.6 | 1,087.5 | 44.5 | % | ||||||||||||||||
Interest, net |
88.5 | 96.3 | (8.1 | %) | 180.4 | 183.0 | (1.4 | %) | ||||||||||||||||
Earnings before income taxes and after-tax
earnings from joint ventures |
790.2 | 520.0 | 52.0 | % | 1,391.2 | 904.5 | 53.8 | % | ||||||||||||||||
Income taxes |
261.6 | 173.1 | 51.1 | % | 464.8 | 306.3 | 51.7 | % | ||||||||||||||||
After-tax earnings from joint ventures |
38.2 | 33.3 | 14.7 | % | 62.4 | 64.0 | (2.5 | %) | ||||||||||||||||
Net earnings, including earnings
attributable
to noncontrolling interests |
566.8 | 380.2 | 49.1 | % | 988.8 | 662.2 | 49.3 | % | ||||||||||||||||
Net earnings attributable to
noncontrolling
interests |
1.3 | 2.0 | (35.0 | %) | 2.7 | 5.5 | (50.9 | %) | ||||||||||||||||
Net earnings |
$ | 565.5 | $ | 378.2 | 49.5 | % | $ | 986.1 | $ | 656.7 | 50.2 | % | ||||||||||||
Earnings per share basic |
$ | 1.72 | $ | 1.14 | 50.9 | % | $ | 3.01 | $ | 1.96 | 53.6 | % | ||||||||||||
Earnings per share diluted |
$ | 1.66 | $ | 1.09 | 52.3 | % | $ | 2.91 | $ | 1.88 | 54.8 | % | ||||||||||||
Dividends per share |
$ | 0.47 | $ | 0.43 | 9.3 | % | $ | 0.94 | $ | 0.86 | 9.3 | % | ||||||||||||
Quarter Ended | Six-Month Period Ended | |||||||||||||||||||||||
Nov. 29, | Nov. 23, | Basis Pt | Nov. 29, | Nov. 23, | Basis Pt | |||||||||||||||||||
2009 | 2008 | Change | 2009 | 2008 | Change | |||||||||||||||||||
Comparisons as a % of net sales: |
||||||||||||||||||||||||
Gross margin |
42.8 | % | 30.4 | % | 1,240 | 42.2 | % | 32.1 | % | 1,010 | ||||||||||||||
Selling, general, and administrative
expenses |
20.7 | % | 18.2 | % | 250 | 21.2 | % | 19.3 | % | 190 | ||||||||||||||
Operating profit |
21.5 | % | 15.4 | % | 610 | 20.7 | % | 14.5 | % | 620 | ||||||||||||||
Net earnings |
13.9 | % | 9.4 | % | 450 | 13.0 | % | 8.8 | % | 420 |
Quarter Ended | Six-Month Period Ended | |||||||||||||||||||||||
Nov. 29, | Nov. 23, | Basis Pt | Nov. 29, | Nov. 23, | Basis Pt | |||||||||||||||||||
2009 | 2008 | Change | 2009 | 2008 | Change | |||||||||||||||||||
Comparisons as a % of net sales excluding
mark-to-market effects (a): |
||||||||||||||||||||||||
Gross margin |
41.2 | % | 37.1 | % | 410 | 41.5 | % | 36.9 | % | 460 | ||||||||||||||
Operating profit |
19.9 | % | 18.9 | % | 100 | 20.0 | % | 17.6 | % | 240 | ||||||||||||||
Net earnings |
12.8 | % | 11.8 | % | 100 | 12.5 | % | 10.8 | % | 170 |
(a) | See Note 6 for a reconciliation of these measures not defined by generally accepted accounting principles (GAAP). |
See accompanying notes to consolidated financial statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
OPERATING SEGMENT RESULTS AND SUPPLEMENTARY INFORMATION
(Unaudited) (In Millions)
OPERATING SEGMENT RESULTS AND SUPPLEMENTARY INFORMATION
(Unaudited) (In Millions)
Quarter Ended | Six-Month Period Ended | |||||||||||||||||||||||
Nov. 29, | Nov. 23, | Nov. 29, | Nov. 23, | |||||||||||||||||||||
2009 | 2008 | % Change | 2009 | 2008 | % Change | |||||||||||||||||||
Net sales: |
||||||||||||||||||||||||
U.S. Retail |
$ | 2,890.6 | $ | 2,785.1 | 3.8 | % | $ | 5,314.4 | $ | 5,075.4 | 4.7 | % | ||||||||||||
International |
723.9 | 676.2 | 7.1 | % | 1,385.6 | 1,366.4 | 1.4 | % | ||||||||||||||||
Bakeries and Foodservice |
463.7 | 549.5 | (15.6 | %) | 897.0 | 1,066.4 | (15.9 | %) | ||||||||||||||||
Total |
$ | 4,078.2 | $ | 4,010.8 | 1.7 | % | $ | 7,597.0 | $ | 7,508.2 | 1.2 | % | ||||||||||||
Operating profit: |
||||||||||||||||||||||||
U.S. Retail |
$ | 718.4 | $ | 638.3 | 12.6 | % | $ | 1,355.1 | $ | 1,164.6 | 16.4 | % | ||||||||||||
International |
77.1 | 79.5 | (3.0 | %) | 146.8 | 159.5 | (8.0 | %) | ||||||||||||||||
Bakeries and Foodservice |
84.6 | 63.9 | 32.4 | % | 145.8 | 90.6 | 60.9 | % | ||||||||||||||||
Total segment operating profit |
880.1 | 781.7 | 12.6 | % | 1,647.7 | 1,414.7 | 16.5 | % | ||||||||||||||||
Unallocated corporate items |
(23.5 | ) | 291.7 | (108.1 | %) | 52.0 | 450.8 | (88.5 | %) | |||||||||||||||
Divestiture (gain) |
| (128.8 | ) | NM | | (128.8 | ) | NM | ||||||||||||||||
Restructuring, impairment, and
other exit costs |
24.9 | 2.5 | NM | 24.1 | 5.2 | NM | ||||||||||||||||||
Operating profit |
$ | 878.7 | $ | 616.3 | 42.6 | % | $ | 1,571.6 | $ | 1,087.5 | 44.5 | % | ||||||||||||
Quarter Ended | Six-Month Period Ended | |||||||||||||||||||||||
Nov. 29, | Nov. 23, | Basis Pt | Nov. 29, | Nov. 23, | Basis Pt | |||||||||||||||||||
2009 | 2008 | Change | 2009 | 2008 | Change | |||||||||||||||||||
Segment operating profit as a
% of net sales: |
||||||||||||||||||||||||
U.S. Retail |
24.9 | % | 22.9 | % | 200 | 25.5 | % | 22.9 | % | 260 | ||||||||||||||
International |
10.7 | % | 11.8 | % | (110 | ) | 10.6 | % | 11.7 | % | (110 | ) | ||||||||||||
Bakeries and Foodservice |
18.2 | % | 11.6 | % | 660 | 16.3 | % | 8.5 | % | 780 | ||||||||||||||
Total segment operating profit |
21.6 | % | 19.5 | % | 210 | 21.7 | % | 18.8 | % | 290 | ||||||||||||||
See accompanying notes to consolidated financial statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Par Value)
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Par Value)
Nov. 29, | Nov. 23, | May 31, | ||||||||||
2009 | 2008 | 2009 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 858.4 | $ | 639.6 | $ | 749.8 | ||||||
Receivables |
1,211.6 | 1,234.2 | 953.4 | |||||||||
Inventories |
1,628.7 | 1,583.3 | 1,346.8 | |||||||||
Deferred income taxes |
| 33.6 | 15.6 | |||||||||
Prepaid expenses and other current assets |
429.1 | 527.3 | 469.3 | |||||||||
Total current assets |
4,127.8 | 4,018.0 | 3,534.9 | |||||||||
Land, buildings, and equipment |
2,987.5 | 2,958.2 | 3,034.9 | |||||||||
Goodwill |
6,697.9 | 6,598.4 | 6,663.0 | |||||||||
Other intangible assets |
3,766.4 | 3,678.2 | 3,747.0 | |||||||||
Other assets |
981.7 | 1,856.9 | 895.0 | |||||||||
Total assets |
$ | 18,561.3 | $ | 19,109.7 | $ | 17,874.8 | ||||||
LIABILITIES AND EQUITY |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | 717.6 | $ | 840.2 | $ | 803.4 | ||||||
Current portion of long-term debt |
607.3 | 113.6 | 508.5 | |||||||||
Notes payable |
444.4 | 2,698.9 | 812.2 | |||||||||
Deferred income taxes |
1.7 | | | |||||||||
Other current liabilities |
1,688.5 | 1,331.3 | 1,481.9 | |||||||||
Total current liabilities |
3,459.5 | 4,984.0 | 3,606.0 | |||||||||
Long-term debt |
5,648.0 | 5,105.5 | 5,754.8 | |||||||||
Deferred income taxes |
1,163.3 | 1,447.0 | 1,165.3 | |||||||||
Other liabilities |
1,956.8 | 2,036.6 | 1,932.2 | |||||||||
Total liabilities |
12,227.6 | 13,573.1 | 12,458.3 | |||||||||
Stockholders equity: |
||||||||||||
Common stock, 377.3 shares issued, $0.10 par value |
37.7 | 37.7 | 37.7 | |||||||||
Additional paid-in capital |
1,284.5 | 1,207.2 | 1,249.9 | |||||||||
Retained earnings |
7,908.8 | 6,873.5 | 7,235.6 | |||||||||
Common stock in treasury, at cost, shares of
47.9, 49.6 and 49.3 |
(2,419.3 | ) | (2,484.4 | ) | (2,473.1 | ) | ||||||
Accumulated other comprehensive loss |
(722.8 | ) | (342.3 | ) | (877.8 | ) | ||||||
Total stockholders equity |
6,088.9 | 5,291.7 | 5,172.3 | |||||||||
Noncontrolling interests |
244.8 | 244.9 | 244.2 | |||||||||
Total equity |
6,333.7 | 5,536.6 | 5,416.5 | |||||||||
Total liabilities and equity |
$ | 18,561.3 | $ | 19,109.7 | $ | 17,874.8 | ||||||
See accompanying notes to consolidated financial statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In Millions)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In Millions)
Six-Month Period Ended | ||||||||
Nov. 29, | Nov. 23, | |||||||
2009 | 2008 | |||||||
Cash Flows Operating Activities |
||||||||
Net earnings |
$ | 986.1 | $ | 656.7 | ||||
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
||||||||
Depreciation and amortization |
227.9 | 223.6 | ||||||
After-tax earnings from joint ventures |
(62.4 | ) | (64.0 | ) | ||||
Stock-based compensation |
60.4 | 85.0 | ||||||
Deferred income taxes |
25.3 | (1.4 | ) | |||||
Tax benefit on exercised options |
(46.6 | ) | (83.7 | ) | ||||
Distributions of earnings from joint ventures |
31.2 | 19.3 | ||||||
Pension and other postretirement benefit plan contributions |
(5.3 | ) | (7.9 | ) | ||||
Pension and other postretirement benefit plan income |
(4.4 | ) | (11.8 | ) | ||||
Divestiture (gain) |
| (128.8 | ) | |||||
Restructuring, impairment, and other exit costs (income) |
18.9 | (0.5 | ) | |||||
Changes in current assets and liabilities |
(269.1 | ) | (268.3 | ) | ||||
Other, net |
25.1 | (54.4 | ) | |||||
Net cash provided by operating activities |
987.1 | 363.8 | ||||||
Cash Flows Investing Activities |
||||||||
Purchases of land, buildings, and equipment |
(257.5 | ) | (241.4 | ) | ||||
Investments in affiliates, net |
| 9.9 | ||||||
Proceeds from disposal of land, buildings, and equipment |
6.6 | 0.5 | ||||||
Proceeds from divestiture of product line |
| 192.5 | ||||||
Other, net |
35.8 | (20.1 | ) | |||||
Net cash used by investing activities |
(215.1 | ) | (58.6 | ) | ||||
Cash Flows Financing Activities |
||||||||
Change in notes payable |
(375.3 | ) | 509.0 | |||||
Issuance of long-term debt |
| 700.0 | ||||||
Payment of long-term debt |
(3.2 | ) | (259.1 | ) | ||||
Proceeds from common stock issued on exercised options |
189.1 | 266.5 | ||||||
Tax benefit on exercised options |
46.6 | 83.7 | ||||||
Purchases of common stock for treasury |
(235.4 | ) | (1,205.8 | ) | ||||
Dividends paid |
(312.9 | ) | (293.9 | ) | ||||
Other, net |
| (4.6 | ) | |||||
Net cash used by financing activities |
(691.1 | ) | (204.2 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
27.7 | (122.4 | ) | |||||
Increase (decrease) in cash and cash equivalents |
108.6 | (21.4 | ) | |||||
Cash and cash equivalents beginning of year |
749.8 | 661.0 | ||||||
Cash and cash equivalents end of period |
$ | 858.4 | $ | 639.6 | ||||
Cash Flow from Changes in Current Assets and Liabilities: |
||||||||
Receivables |
$ | (241.6 | ) | $ | (228.3 | ) | ||
Inventories |
(270.2 | ) | (286.9 | ) | ||||
Prepaid expenses and other current assets |
19.8 | (40.7 | ) | |||||
Accounts payable |
(33.2 | ) | (1.1 | ) | ||||
Other current liabilities |
256.1 | 288.7 | ||||||
Changes in current assets and liabilities |
$ | (269.1 | ) | $ | (268.3 | ) | ||
See accompanying notes to consolidated financial statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) | The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States for annual and interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. |
(2) | At the beginning of fiscal 2010, we adopted new guidance on noncontrolling interests in financial statements. To conform to the current period presentation, we made the following reclassifications to net earnings attributable to noncontrolling interests in our Consolidated Statements of Earnings: |
Six-Month | ||||||||
Quarter Ended | Period Ended | |||||||
In Millions | Nov. 23, 2008 | Nov. 23, 2008 | ||||||
From interest, net |
$ | 2.2 | $ | 4.2 | ||||
From selling, general, and administrative expenses |
(0.2 | ) | 1.3 | |||||
Total net earnings attributable to noncontrolling interests |
$ | 2.0 | $ | 5.5 | ||||
Also, noncontrolling interests previously reported as minority interests have been reclassified to a separate section in equity on the Consolidated Balance Sheets, as a result of the adoption. In addition, certain other reclassifications to our previously reported financial information have been made to conform to the current period presentation. | ||
(3) | For the second quarter of fiscal 2010, unallocated corporate items totaled $24 million of income compared to $292 million of expense in the same period last year. We recorded a $67 million net increase in income related to mark-to-market valuations of certain commodity positions and grain inventories in the second quarter of fiscal 2010, compared to a $269 million net increase in expense in the second quarter of fiscal 2009. | |
For the six-month period ended November 29, 2009, unallocated corporate expense was $52 million compared to $451 million in the same period last year. We recorded a $53 million net decrease in expense related to mark-to-market valuations of certain commodity positions and grain inventories in the six-month period ended November 29, 2009, compared to a $361 million net increase in expense in the six-month period ended November 23, 2008. | ||
(4) | In late November 2009, we decided to exit certain underperforming products in our U.S. Retail segment to rationalize capacity for more profitable items. Our decisions resulted in a $24 million non-cash restructuring, impairment, and other exit charge against the related long-lived assets in the second quarter of fiscal 2010. In addition, we recorded $1 million of costs related to previously announced restructuring actions. During the six-month period ended November 29, 2009, we also recorded a net gain of $1 million related to the closure and sale of our Contagem, Brazil bread and pasta plant. |
(5) | Basic and diluted earnings per share (EPS) were calculated as follows: |
Six-Month | ||||||||||||||||
Quarter Ended | Period Ended | |||||||||||||||
Nov. 29, | Nov. 23, | Nov. 29, | Nov. 23, | |||||||||||||
In Millions, Except per Share Data | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Net earnings |
$ | 565.5 | $ | 378.2 | $ | 986.1 | $ | 656.7 | ||||||||
Average number of common shares basic EPS |
328.7 | 333.2 | 327.6 | 334.8 | ||||||||||||
Incremental share effect from: |
||||||||||||||||
Stock options |
9.0 | 10.7 | 8.1 | 10.9 | ||||||||||||
Restricted stock, restricted stock units,
and other |
2.9 | 3.1 | 2.8 | 3.0 | ||||||||||||
Average number of common shares diluted
EPS |
340.6 | 347.0 | 338.5 | 348.7 | ||||||||||||
Earnings per share basic |
$ | 1.72 | $ | 1.14 | $ | 3.01 | $ | 1.96 | ||||||||
Earnings per share diluted |
$ | 1.66 | $ | 1.09 | $ | 2.91 | $ | 1.88 | ||||||||
(6) | We have included four measures in this release that are not defined by generally accepted accounting principles (GAAP): (1) diluted earnings per share excluding mark-to-market valuation of certain commodity positions and grain inventories (mark-to-market effects), the net gain on divestitures of certain product lines (divestitures gain, net), the gain from our insurance settlement in Argentina (gain from insurance settlement), and effect of a Federal court decision on an uncertain tax item (uncertain tax item) (collectively, these four items are referred to as items affecting comparability in this footnote), (2) earnings comparisons as a percent of net sales excluding mark-to-market effects, (3) total segment operating profit, and (4) sales growth rates for our International segment in total and by region excluding the impact of changes in foreign currency exchange. We believe that these measures provide useful supplemental information to assess our operating performance. These measures are reconciled below to the measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our diluted earnings per share and operating performance measures as calculated in accordance with GAAP. | |
Diluted EPS excluding items affecting comparability follows: |
Six-Month | ||||||||||||||||||||
Quarter Ended | Period Ended | Year Ended | ||||||||||||||||||
Nov. 29, | Nov. 23, | Nov. 29, | Nov. 23, | May 31, | ||||||||||||||||
Per Share Data | 2009 | 2008 | 2009 | 2008 | 2009 | |||||||||||||||
Diluted earnings per share, as
reported |
$ | 1.66 | $ | 1.09 | $ | 2.91 | $ | 1.88 | $ | 3.80 | ||||||||||
Mark-to-market effects (a) |
(0.12 | ) | 0.49 | (0.09 | ) | 0.65 | 0.22 | |||||||||||||
Divestitures gain, net (b) |
| (0.22 | ) | | (0.21 | ) | (0.11 | ) | ||||||||||||
Gain from insurance settlement
(c) |
| | | | (0.08 | ) | ||||||||||||||
Uncertain tax item (d) |
| | | | 0.15 | |||||||||||||||
Diluted earnings per share,
excluding
items affecting comparability |
$ | 1.54 | $ | 1.36 | $ | 2.82 | $ | 2.32 | $ | 3.98 | ||||||||||
(a) | See Note 3. | |
(b) | Gain on sale of PopSecret product line, net of losses on sales and discontinuation of certain bread dough and concentrates product lines. | |
(c) | Settlement with an insurance carrier covering the loss of a manufacturing plant in Argentina in fiscal 2008. | |
(d) | Effect of a Federal court decision on an uncertain tax matter. |
Earnings comparisons as a percent of net sales excluding mark-to-market effects follows:
Quarter Ended | ||||||||||||||||
In Millions | Nov. 29, 2009 | Nov. 23, 2008 | ||||||||||||||
Percent of | Percent of | |||||||||||||||
Comparisons as a % of Net Sales | Value | Net Sales | Value | Net Sales | ||||||||||||
Gross margin as reported (a) |
$ | 1,746.1 | 42.8 | % | $ | 1,219.6 | 30.4 | % | ||||||||
Mark-to-market effects (b) |
(67.4 | ) | (1.6) | % | 269.2 | 6.7 | % | |||||||||
Adjusted gross margin |
$ | 1,678.7 | 41.2 | % | $ | 1,488.8 | 37.1 | % | ||||||||
Operating profit as reported |
$ | 878.7 | 21.5 | % | $ | 616.3 | 15.4 | % | ||||||||
Mark-to-market effects (b) |
(67.4 | ) | (1.6) | % | 269.2 | 6.7 | % | |||||||||
Divestiture (gain) (c) |
| | % | (128.8 | ) | (3.2) | % | |||||||||
Adjusted operating profit |
$ | 811.3 | 19.9 | % | $ | 756.7 | 18.9 | % | ||||||||
Net earnings as reported |
$ | 565.5 | 13.9 | % | $ | 378.2 | 9.4 | % | ||||||||
Mark-to-market effects, net of tax (b) |
(42.5 | ) | (1.1) | % | 169.6 | 4.2 | % | |||||||||
Divestiture (gain) (c) |
| | % | (74.8 | ) | (1.8) | % | |||||||||
Adjusted net earnings |
$ | 523.0 | 12.8 | % | $ | 473.0 | 11.8 | % | ||||||||
Six-Month Period Ended | ||||||||||||||||
In Millions | Nov. 29, 2009 | Nov. 23, 2008 | ||||||||||||||
Percent of | Percent of | |||||||||||||||
Comparisons as a % of Net Sales | Value | Net Sales | Value | Net Sales | ||||||||||||
Gross margin as reported (a) |
$ | 3,204.8 | 42.2 | % | $ | 2,411.4 | 32.1 | % | ||||||||
Mark-to-market effects (b) |
(52.6 | ) | (0.7) | % | 360.6 | 4.8 | % | |||||||||
Adjusted gross margin |
$ | 3,152.2 | 41.5 | % | $ | 2,772.0 | 36.9 | % | ||||||||
Operating profit as reported |
$ | 1,571.6 | 20.7 | % | $ | 1,087.5 | 14.5 | % | ||||||||
Mark-to-market effects (b) |
(52.6 | ) | (0.7) | % | 360.6 | 4.8 | % | |||||||||
Divestiture (gain) (c) |
| | % | (128.8 | ) | (1.7) | % | |||||||||
Adjusted operating profit |
$ | 1,519.0 | 20.0 | % | $ | 1,319.3 | 17.6 | % | ||||||||
Net earnings as reported |
$ | 986.1 | 13.0 | % | $ | 656.7 | 8.8 | % | ||||||||
Mark-to-market effects, net
of tax (b) |
(33.1 | ) | (0.5) | % | 227.2 | 3.0 | % | |||||||||
Divestiture (gain) (c) |
| | % | (74.8 | ) | (1.0) | % | |||||||||
Adjusted net earnings |
$ | 953.0 | 12.5 | % | $ | 809.1 | 10.8 | % | ||||||||
(a) | Net sales less cost of sales. | |
(b) | See Note 3. | |
(c) | Gain on sale of PopSecret product line. |
A reconciliation of total segment operating profit to the relevant GAAP measure, operating
profit, is included in the Statements of Operating Segment Results.
A reconciliation of International segment and region sales growth rates as reported to
International segment and region sales growth rates excluding the impact of foreign currency
exchange follows:
Quarter Ended Nov. 29, 2009 | ||||||||||||
Impact of | ||||||||||||
Percentage Change | Foreign | Percentage Change in | ||||||||||
in Net Sales | Currency | Net Sales on Constant | ||||||||||
as Reported | Exchange | Currency Basis | ||||||||||
Europe |
4 | % | 3 | % | 1 | % | ||||||
Canada |
15 | 6 | 9 | |||||||||
Asia/Pacific |
12 | 6 | 6 | |||||||||
Latin America |
(8 | ) | (3 | ) | (5 | ) | ||||||
Total International |
7 | % | 4 | % | 3 | % | ||||||
Six-Month Period Ended Nov. 29, 2009 | ||||||||||||
Impact of | ||||||||||||
Percentage Change in | Foreign | Percentage Change in | ||||||||||
Net Sales | Currency | Net Sales on Constant | ||||||||||
as Reported | Exchange | Currency Basis | ||||||||||
Europe |
(5) | % | (5) | % | | % | ||||||
Canada |
9 | (1 | ) | 10 | ||||||||
Asia/Pacific |
6 | | 6 | |||||||||
Latin America |
(3 | ) | (5 | ) | 2 | |||||||
Total International |
1 | % | (3) | % | 4 | % | ||||||