EXHIBIT 20
FOR IMMEDIATE RELEASE
December 14, 1994
Contacts:
(Analysts) Dean Belbas 12/14 (212) 906-1531
12/15 (612) 540-2443
(Media) Austin Sullivan 12/14 (212) 906-1531
12/15 (612) 540-7264
GENERAL MILLS PLANS TO SEPARATE INTO
TWO PUBLIC CORPORATIONS
MINNEAPOLIS, MINN. -- General Mills announced today
that it is planning to separate into two independent public
corporations, one for Consumer Foods and one for
Restaurants. General Mills, Inc. will become a highly
focused consumer foods growth company with fiscal 1995 sales
of approximately $5.5 billion. The Restaurant company
(currently unnamed) will be the world's largest full-service
restaurant organization, with strong growth vehicles and
fiscal 1995 sales of approximately $3.2 billion. In a tax-
free transaction, General Mills' shareholders will receive
one share in the Restaurant company for each General Mills,
Inc. share they currently own. It is planned that the
Restaurant company will be listed on the New York Stock
Exchange, as is General Mills.
Chairman and CEO Bruce Atwater said this plan was
approved by the General Mills Board of Directors, which
believes that separate corporations with highly integrated
strategy, organization, and incentive programs will produce
the strongest growth performance and thereby enhance long-
term shareholder value. It is expected that the two
companies will become separate entities approximately
June 1, 1995, subject to final approval of the General Mills
Board of Directors.
The board elected Stephen W. Sanger (age 48) as
President and CEO of the food operation and Joe R. Lee (53)
as President and CEO of the restaurant operation effective
Dec. 14, 1994. It is planned that they would be elected
Chairman and CEO of their separate corporations upon
completion of this transaction, at which time Atwater will
retire as Chairman and CEO of General Mills, Inc.
Atwater stated, "Each company will be led by an
exceptionally strong management team. Steve Sanger and Joe
Lee are widely regarded as top executives in their
respective industries. Steve has been a General Mills
employee for more than 20 years, and was President of Big G
cereals during one of its strongest growth periods. Joe was
manager of the first Red Lobster ever opened in 1968 and has
led the General Mills restaurant business to great growth.
Furthermore, the management teams of the two proposed new
companies have the best long-term growth records in their
industries."
General Mills ten-year compound growth rate in earnings
per share before unusual items was 12.2 percent from 1984
through fiscal 1994. The five-year compound growth rate
from 1989 to 1994 was 12.8 percent, with both periods
exceeding General Mills' corporate growth goal of 12 percent
in spite of a very slow growth year in fiscal 1994.
Consumer Foods' ten-year compound growth rate in
operating earnings through 1994 was 12.6 percent. Foods
management has produced a long record of industry-leading
new product successes, strong share of market growth and
early, major productivity actions. They also led the cereal
industry in dealing with its increasingly ineffective price-
up/spend-back strategy. The resulting improvement in the
company's Big G cereal profitability was a key factor in the
8 percent growth in Foods operating profit in the quarter
just completed. The General Mills strategy of reducing both
prices and promotional spending has now resulted in
substantial moderation of excessive industry promotions.
General Mills' cereal market shares are now showing
continuing growth from their low points during the summer of
1994.
Restaurants' ten-year compound growth rate in operating
earnings through 1994 was 17.3 percent. Restaurant
management has created the largest and most profitable
casual dining business in an extremely competitive industry.
Red Lobster has grown dramatically since its inception and
has had only one down year in operating earnings (1984) in
27 years of concept evolution and growth. Profits were up
over 20 percent in fiscal 1994 in an increasingly
competitive casual-dining environment. The Olive Garden has
also had a remarkable growth record. From its first store
opening in 1983, the concept has grown to over $1.1 billion
in sales in fiscal 1995, posting earnings gains every year
except fiscal 1994. The Olive Garden is now showing
improved results as several changes which were in the
planning stage for the past two years are being implemented
in the marketplace.
The strongest periods of growth at General Mills have
always coincided with structural changes that gave
management of individual businesses increased responsibility
and stronger incentives. For example, the changes in
corporate structure that narrowed focus from participation
in 13 industries in the mid 1970s to a concentration on only
Consumer Foods and Restaurants in the late 1980s drove
strong growth performance. The managements of both the
consumer foods and restaurant companies believe that the
stage is now set for strong future growth, and that the
separation will contribute to that growth potential being
fully realized. Each management team will be motivated to
continue its strong growth record with substantial equity-
based incentives whose value will depend on their own growth
performance.
The new consumer foods company will have a growth goal
of 12 percent in earnings per share over the next three
years. The company's ability to achieve this goal will be
enhanced by the fact that growth initiatives such as CPW
(the strategic alliance with Nestle on international
cereals), Snack Ventures Europe, (the joint venture with
PepsiCo Foods International), and the recently announced
joint venture in Latin America with CPC International on
baking and dessert mixes will have a stronger effect
on the growth rate on the base of the consumer foods company
rather than the combined company. In addition, the food
operation will be studying possible restructuring actions to
enhance its future growth rate. Any restructuring actions
will be announced before the end of the current fiscal year.
The restaurant company will have a growth goal of 15
percent in earnings per share over the next three years.
Against the smaller base of restaurants only, the earnings
improvement expected in the company's newest concept, China
Coast, as well as the turnaround now under way at The Olive
Garden, will have a magnified effect on growth rates. The
restaurant operation is also studying possible restructuring
actions on the same timetable as foods.
It is currently planned that the consumer foods company
(General Mills, Inc.) will retain 80 percent of the current
company's debt with the restaurant company assuming 20
percent. Both companies expect to maintain strong bond
ratings.
The consumer foods company will have a larger free cash
flow, i.e., cash flow after dividends at the current rate
and after fixed-asset investments, than the combined
company. This free cash flow may be used for additional
growth investments, dividend increases, and other corporate
purposes.
The restaurant company will also have a strong balance
sheet, with cash flow adequate to fund all currently planned
investments. The restaurant company also plans to establish
a nominal dividend upon its formation.
Dillon, Read & Co., Inc. is acting as financial advisor
to the company with respect to this transaction. Davis,
Polk and Wardwell is acting as counsel to the company in
providing the Board of Directors with an opinion on the tax-
free nature of the distribution to General Mills and its
shareholders.