Exhibit 99.2
THE PILLSBURY COMPANY, SUBSIDIARIES, AND RELATED ENTITIES
Combined Balance Sheets
(Unaudited)
September 30, 2001 and 2000
ASSETS 2001 2000
-------- --------
(In millions,
except share
information)
Current assets:
Cash and cash equivalents $ 63 43
Receivables:
Trade receivables, less allowance for returns, discounts
and doubtful accounts of $11 in 2001 and $14 in 2000 476 491
Other accounts receivable 45 48
Inventories 574 515
Prepaids and other assets 107 103
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Total current assets 1,265 1,200
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Investment in joint ventures 141 152
Goodwill and other intangibles, net 6,367 6,593
Property, plant and equipment, net 1,365 1,391
Other long-term assets 274 205
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Total assets $ 9,412 9,541
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 320 347
Accrued advertising and promotions 139 152
Accrued compensation and benefits 115 123
Accrued income taxes 127 152
Current portion of long-term debt 70 45
Other current liabilities 153 196
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Total current liabilities 924 1,015
-------- --------
Payables to affiliated companies, net 7,582 7,594
Long-term debt 164 162
Deferred taxes 1,047 1,028
Other long-term liabilities 411 415
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Total liabilities 10,128 10,214
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Stockholders' deficit:
Common stock and paid-in capital - par value $1 per share;
1,000 shares authorized, issued and outstanding 3,351 3,176
Accumulated deficit (4,001) (3,822)
Accumulated other comprehensive loss (66) (27)
-------- --------
Total stockholders' deficit (716) (673)
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Total liabilities and stockholders' deficit $ 9,412 9,541
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See accompanying notes to the combined financial statements.
1
THE PILLSBURY COMPANY, SUBSIDIARIES, AND RELATED ENTITIES
Combined Statements of Operations
(Unaudited)
For the three months ended September 30, 2001 and 2000
2001 2000
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(In millions)
Sales $ 1,380 1,426
Costs and expenses:
Cost of sales (783) (830)
Selling, general and administrative (427) (418)
Amortization of intangibles (52) (52)
Other income 1 4
Unusual items (20) (5)
Net interest expense - external (5) (5)
Net interest expense - affiliated companies (149) (163)
Factoring and other charges from
affiliated companies 1 (15)
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Total costs, expenses and losses (1,434) (1,484)
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Loss before taxes and earnings from
joint ventures (54) (58)
Income tax benefit 11 10
Earnings from joint ventures, net of
income taxes 13 13
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Net loss $ (30) (35)
======= =======
See accompanying notes to the combined financial statements.
2
THE PILLSBURY COMPANY, SUBSIDIARIES, AND RELATED ENTITIES
Combined Statements of Stockholders' Deficit and Comprehensive Income (Loss)
(Unaudited)
For the three months ended September 30, 2001 and 2000
COMMON ACCUMULATED
STOCK AND OTHER
PAID-IN ACCUMULATED COMPREHENSIVE
CAPITAL DEFICIT INCOME (LOSS) TOTAL
------- ------- ------------- -----
(In millions)
Balance at June 30, 2000 $ 3,169 (3,774) (13) (618)
Comprehensive income (loss):
Net loss -- (35) -- (35)
Other comprehensive income (loss):
Foreign currency translation -- -- (13) (13)
Cumulative effect of an accounting change, net of tax -- -- (3) (3)
Reclassification of derivative loss to earnings, net of tax -- -- 2 2
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Other comprehensive loss (14) (14)
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Total comprehensive loss (49)
-------
Capital contributions from parent entity 7 -- -- 7
Dividends declared to affiliated entities -- (13) -- (13)
------- ------- ------- -------
Balance at September 30, 2000 $ 3,176 (3,822) (27) (673)
======= ======= ======= =======
Balance at June 30, 2001 $ 3,295 (3,968) (59) (732)
Comprehensive income (loss):
Net loss -- (30) -- (30)
Other comprehensive income (loss):
Foreign currency translation -- -- (7) (7)
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Other comprehensive loss (7) (7)
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Total comprehensive loss (37)
-------
Capital contributions from parent entity 56 -- -- 56
Dividends declared to affiliated entities -- (3) -- (3)
------- ------- ------- -------
Balance at September 30, 2001 $ 3,351 (4,001) (66) (716)
======= ======= ======= =======
See accompanying notes to the combined financial statements.
3
THE PILLSBURY COMPANY, SUBSIDIARIES, AND RELATED ENTITIES
Combined Statements of Cash Flows
(Unaudited)
For the three months ended September 30, 2001, 2000
2001 2000
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(In millions)
Cash flows - operating activities:
Net loss $ (30) (35)
Adjustments to reconcile net loss to cash flow:
Depreciation and amortization 94 92
Deferred income taxes (6) (8)
Change in current assets and liabilities, net of effects
from businesses acquired:
Receivables (73) (98)
Inventories (111) (47)
Prepaids and other assets (20) (5)
Accounts payable 13 (7)
Accruals and other current liabilities (15) 20
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Net cash used in operating activities (148) (88)
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Cash flows - investment activities:
Purchases of property, plant and equipment (32) (32)
Proceeds from disposal of property, plant and equipment 2 1
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Net cash used by investment activities (30) (31)
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Cash flows - financing activities:
Proceeds from long-term debt 6 4
Payment of long-term debt (2) (1)
Net borrowings from affiliated entities 189 116
Dividends paid (3) (13)
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Net cash provided by financing activities 190 106
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Increase (decrease) in cash and cash equivalents 12 (13)
Cash and cash equivalents - beginning of period 51 56
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Cash and cash equivalents - end of period $ 63 43
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Supplemental cash flow information:
Cash paid for interest $ 158 171
Cash paid (received) for taxes 16 (30)
See accompanying notes to the combined financial statements.
4
THE PILLSBURY COMPANY, SUBSIDIARIES, AND RELATED ENTITIES
Notes to Combined Financial Statements
(Unaudited)
September 30, 2001 and 2000
1. Background
The Pillsbury Company (hereafter Pillsbury), its subsidiaries and its
related entities (hereafter the Company) included in the combined
financial statements was a wholly owned indirect subsidiary of Diageo
plc (Diageo), a company incorporated under the laws of England and
Wales, as of and during the periods of these combined financial
statements.
These combined financial statements do not include certain information
and footnotes required by accounting principles generally accepted in
the United States for complete financial statements. However, 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 three months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the full
fiscal year.
These combined financial statements should be read in conjunction with
the combined financial statements and footnotes for the year ended June
30, 2001. The accounting policies used in preparing these combined
financial statements are the same as those described in Note (2) to the
combined financial statements for the year ended June 30, 2001.
Certain amounts in the prior year combined financial statements have
been reclassified to conform to the current year presentation.
2. Unusual Items
In the three month periods ended September 30, 2001 and September 30,
2000, the Company recorded $20 million and $5 million, respectively,
primarily for merger costs related to the acquisition of the Company by
General Mills. These costs were primarily comprised of retention
incentives and legal and outside professional fees.
3. Subsequent Event
On October 31, 2001, Diageo sold the Company to General Mills, Inc. for
134 million shares of General Mills, Inc. stock, together with cash
paid and debt assumed by General Mills, Inc. totaling $3.8 billion.
Certain Retail and Foodservice businesses of Pillsbury were disposed of
on November 13, 2001 in connection with the transaction. The Retail
businesses divested include: Pillsbury Desserts & Baking Mixes; Martha
White Desserts & Baking Mixes; Hungry Jack Potatoes and Dry Breakfast,
including certain international export sales in Puerto Rico, U.S.
Virgin Islands, and Mexico; and Pet Milk. The Foodservice businesses
divested include non-custom foodservice dry mix products in boxes of
seven pounds and less and non-custom frosting products in packages of
eleven pounds and less.
5
Also in connection with the transaction, a joint venture partner of
Pillsbury, on December 26, 2001, exercised its right triggered by the
change in ownership of Pillsbury, to purchase Pillsbury's 50 percent
equity interest in Ice Cream Partners USA LLC (ICP). ICP was a joint
venture formed for the manufacture, marketing and distribution of
Haagen-Dazs ice cream products in the United States.
6