Exhibit 99.2
FOR IMMEDIATE RELEASE
December 18, 2002
Contacts: (Media) Marybeth Thorsgaard 763-764-6364
(Analysts) Kris Wenker 763-764-2607
GENERAL MILLS REPORTS FISCAL 2003 SECOND QUARTER RESULTS
EARNINGS BEFORE UNUSUAL ITEMS GREW 22 PERCENT TO 77 CENTS PER SHARE
EPS INCLUDING UNUSUAL ITEMS UP 78 PERCENT
NET SALES INCREASED 60 PERCENT WITH INCREMENTAL CONTRIBUTIONS FROM PILLSBURY
COMPARABLE NET SALES GREW 5 PERCENT WORLDWIDE
COMPANY INCREASES FISCAL 2003 EPS GUIDANCE TO $2.60 TO $2.62
BEFORE UNUSUAL ITEMS
MINNEAPOLIS, MN - General Mills, Inc. (NYSE: GIS) today reported
results for the second quarter of fiscal 2003. Net sales for the thirteen weeks
ended Nov. 24, 2002, grew 60 percent to $2.95 billion including the incremental
contribution from the Pillsbury businesses acquired Oct. 31, 2001. Comparable
net sales, as if General Mills had owned Pillsbury for all of the previous year,
grew 5 percent. Comparable unit volume increased 3 percent in the quarter.
Second-quarter earnings after tax before unusual items grew 46 percent
to reach $290 million. Although the number of average diluted shares outstanding
was 19
-more-
-1-
percent higher for the period, diluted earnings per share before unusual items
rose 22 percent to 77 cents. Including unusual items, which are discussed below,
earnings after tax more than doubled to $276 million and diluted earnings per
share grew to 73 cents, up 78 percent.
Chairman and Chief Executive Officer Steve Sanger said the company was
pleased with these results. "Our strong second quarter provides the clearest
signal yet of the power of combining Pillsbury and General Mills. Our unit
volumes were up across nearly all of our major product lines and global market
areas. This business momentum is continuing in December. As a result, we see
General Mills well on track to meet or beat the goals we set back in June for
strong top-line and bottom-line growth in fiscal 2003."
Through the first six months of fiscal 2003, reported net sales
increased 64 percent to $5.32 billion. Comparable net sales and unit volume each
grew 2 percent in the first half. Earnings after tax before unusual items grew
to $501 million, up 31 percent. Diluted earnings per share before unusual items
totaled $1.33, up 7 percent. Including unusual items and the effect of an
accounting change in fiscal 2002, first-half net earnings after tax totaled $452
million in fiscal 2003 and $319 million in fiscal 2002. Diluted earnings per
share for the first half were $1.20, up 15 percent from $1.04 last year.
Unusual Items
- -------------
Results for both fiscal 2003 and 2002 included unusual items. In the second
quarter of 2003, the company recorded net unusual expense of $21 million pretax,
$14 million after tax (4 cents per diluted share). This primarily reflects
integration and transaction costs associated with the Pillsbury acquisition.
Those expenses were partially offset by $3 million pretax income from additional
insurance proceeds stemming from a 1994 oats handling incident. In last year's
second quarter, the company recorded net unusual expense of $109 million
pre-tax, $68 million after tax (22 cents per share).
-more-
-2-
Through the first half, net unusual expense totaled 13 cents per share,
compared to 19 cents per share in fiscal 2002. A complete description of unusual
items in both years is provided in footnote (2) to the financial statements
included in this press release.
EARNINGS SUMMARY
(in millions, except per share data)
Second Quarter First Half
-----------------------------------
FY03 FY02 FY03 FY02
EARNINGS AFTER TAX (EAT)
Before unusual items $ 290 $ 199 $ 501 $ 381
Unusual Items (14) (68) (49) (59)
SFAS No. 133 Adoption -- -- -- (3)
----- ----- ----- -----
Net Earnings $ 276 $ 131 $ 452 $ 319
AVG. DILUTED SHARES OUTSTANDING 377 318 376 307
EARNINGS PER SHARE (EPS)
Before unusual items $ .77 $ .63 $1.33 $1.24
Unusual Items (.04) (.22) (.13) (.19)
SFAS No. 133 Adoption -- -- -- (.01)
----- ----- ----- -----
EPS $ .73 $ .41 $1.20 $1.04
[NOTE: SALES FIGURES PROVIDED BELOW ARE AS REPORTED AND NET OF EXPENSES
RECLASSIFIED UNDER EITF 01-09. OPERATING PROFITS ARE AS REPORTED, BEFORE UNUSUAL
ITEMS. UNIT VOLUME COMPARISONS PROVIDED BELOW ARE ON A COMPARABLE BASIS, AS IF
GENERAL MILLS HAD OWNED THE PILLSBURY BUSINESSES FOR ALL OF THE PREVIOUS YEAR.]
U.S. Retail Segment Results
- ---------------------------
Second-quarter net sales for General Mills' domestic retail operations grew 42
percent to $2.15 billion, and operating profits before unusual items rose 39
percent to $494 million. Comparable unit volume increased 4 percent, with gains
posted by five of the company's six major divisions.
-more-
-3-
Unit volume for Big G was up 5 percent. Top established cereal brands,
including Honey Nut Cheerios, Cinnamon Toast Crunch and Lucky Charms, posted
good volume gains, and the popular line of Big G Milk `N Cereal Bars contributed
1 percentage point to the growth rate. In the Meals Division, unit volume rose 4
percent, led by Green Giant vegetables, Betty Crocker dinner mixes, and
Progresso soup. Pillsbury USA unit volume grew 3 percent, with the strongest
gains posted by frozen baked goods, Totino's pizza and hot snacks, and
refrigerated ready-to-bake cookies, sweet rolls and biscuits. Yogurt unit volume
was up 20 percent for the quarter, on continued strong performance by new
Yoplait Whips! and established product lines. In Snacks, granola bars led unit
volume growth of 2 percent. Baking products volume declined 10 percent in the
quarter, reflecting the impact of heavy competitive promotional activity.
Consumer movement for the company's major brands also was good, with composite
retail sales across all outlets up 3 percent in the quarter, which did not
include the Thanksgiving holiday this year.
Bakeries and Foodservice Segment Results
- ----------------------------------------
Net sales for the company's Bakeries and Foodservice segment doubled for the
quarter to $483 million, and operating profits rose 34 percent to $51 million.
Comparable unit volume was up 2 percent, outpacing foodservice industry trends.
Performance in supercenter retail bakeries and convenience stores led the
second-quarter volume increase.
International Segment Results
- -----------------------------
Net sales for General Mills' consolidated international businesses more than
tripled to $325 million and operating profits rose to $21 million. Comparable
unit volume was down 2 percent overall, due to continuing macroeconomic weakness
in Latin America. However, comparable volumes grew in all other major geographic
regions. Dough products delivered good growth in Asia, and Old El Paso and Green
Giant led performance in Europe. Comparable unit volume in Canada was up 3
percent, led by good growth in cereal.
-more-
-4-
Joint Venture Summary
- ---------------------
Second-quarter earnings after tax from joint ventures totaled $14 million
compared to $3 million last year. The strong increase reflects a full three
months of incremental profit contribution from Haagen-Dazs ice cream joint
ventures in Asia, along with volume-driven gains by the Cereal Partners
Worldwide (CPW) joint venture with Nestle and the Snack Ventures Europe (SVE)
joint venture with PepsiCo. Together, CPW and SVE contributed $10 million in
after-tax profits for the quarter. Total joint-venture results also included
introductory marketing expenses for 8th Continent, the company's soymilk joint
venture with DuPont. Through the first six months, joint venture earnings after
tax totaled $31 million.
Corporate Items
- ---------------
Corporate unallocated expense before unusual items totaled a net $4 million in
the second quarter. Last year's second-quarter unallocated expense was higher
due to certain costs associated with completion of the Pillsbury acquisition.
Interest expense for the second quarter of fiscal 2003 totaled $140
million, lower than forecast due to favorable rates and the success of the
company's recent actions to refinance much of its commercial paper with
longer-term debt. The company now expects fiscal 2003 interest expense will be
between $555 and $580 million, down from an original forecast of $600 million.
The effective tax rate excluding unusual items for the first half was 35.0
percent, consistent with the estimated full-year rate.
Outlook
- -------
Looking ahead, Sanger said, "For the third quarter, we expect our unit volume
growth to accelerate to a mid single-digit rate, and we'd estimate diluted
earnings per share before unusual items will total 65 to 66 cents, in line with
the current First Call consensus estimate. We've delivered solid operating
performance through the first half of this year, and the favorable interest-rate
environment together with our successful
-more-
-5-
debt refinancing has given us additional financial flexibility. As a result, we
have increased our fiscal 2003 earnings guidance to a range of $2.60 to $2.62
per share before unusual items."
Sanger also said that fiscal 2004 is expected to be another year of
strong growth for General Mills. "Our unit volume growth will benefit from the
brand-building actions we have begun implementing this year, and we'll also have
a 53rd week in next year's fiscal calendar. In addition, we expect cost
synergies from the Pillsbury acquisition to increase from a targeted $350
million in fiscal 2003 to $475 million in fiscal 2004." Sanger said the company
plans to give specific guidance on fiscal 2004 financial targets in February.
GENERAL MILLS WILL HOLD A BRIEFING FOR INVESTORS TODAY, DECEMBER 18, 2002,
BEGINNING AT 3:00 P.M. EST. YOU MAY ACCESS THE WEBCAST FROM GENERAL MILLS'
CORPORATE HOME PAGE: www.generalmills.com.
--------------------
This press release 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. 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 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, and foreign economic conditions,
including currency rate fluctuations. The company undertakes no obligations to
publicly revise any forward-looking statements to reflect future events or
circumstances.
####
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)
13 Weeks Ended 26 Weeks Ended
------------------ ------------------
Nov. 24, Nov. 25, Nov. 24, Nov. 25,
2002 2001 2002 2001
------- ------- ------- -------
Net Sales $ 2,953 $ 1,842 $ 5,315 $ 3,246
Costs & Expenses:
Cost of sales 1,768 1,040 3,154 1,761
Selling, general and administrative 623 415 1,156 787
Interest, net 140 69 282 118
Unusual items 21 109 76 94
------- ------- ------- -------
Total Costs and Expenses 2,552 1,633 4,668 2,760
------- ------- ------- -------
Earnings before Taxes and Earnings from Joint Ventures 401 209 647 486
Income Taxes 139 81 226 176
Earnings from Joint Ventures 14 3 31 12
------- ------- ------- -------
Earnings before cumulative effect of change
in accounting principle 276 131 452 322
Cumulative effect of change in accounting principle -- -- -- (3)
------- ------- ------- -------
Net Earnings $ 276 $ 131 $ 452 $ 319
======= ======= ======= =======
Earnings per Share - Basic:
Earnings before cumulative effect of change
in accounting principle $ .75 $ .43 $ 1.23 $ 1.09
Cumulative effect of change in accounting principle -- -- -- (.01)
------- ------- ------- -------
Earnings per Share - Basic $ .75 $ .43 $ 1.23 $ 1.08
======= ======= ======= =======
Average Number of Shares - Basic 368 307 368 296
======= ======= ======= =======
Earnings per Share - Diluted:
Earnings before cumulative effect of change
in accounting principle $ .73 $ .41 $ 1.20 $ 1.05
Cumulative effect of change in accounting principle -- -- -- (.01)
------- ------- ------- -------
Earnings per Share - Diluted $ .73 $ .41 $ 1.20 $ 1.04
======= ======= ======= =======
Average Number of Shares - Assuming Dilution 377 318 376 307
======= ======= ======= =======
See accompanying notes.
GENERAL MILLS, INC.
OPERATING SEGMENTS
(Unaudited) (In Millions)
13 Weeks Ended 26 Weeks Ended
------------------- -------------------
Nov. 24, Nov. 25, Nov. 24, Nov. 25,
2002 2001 2002 2001
------- ------- ------- -------
Net Sales:
U.S. Retail $ 2,145 $ 1,512 $ 3,755 $ 2,692
Bakeries and Foodservice 483 240 921 395
International 325 90 639 159
------- ------- ------- -------
Total $ 2,953 $ 1,842 $ 5,315 $ 3,246
======= ======= ======= =======
Operating Profit Before Unusual Items:
U.S. Retail $ 494 $ 356 $ 855 $ 653
Bakeries and Foodservice 51 38 104 64
International 21 6 43 9
Unallocated Corporate Items (4) (13) 3 (28)
------- ------- ------- -------
Total $ 562 $ 387 $ 1,005 $ 698
======= ======= ======= =======
Operating Profit Including Unusual Items:
U.S. Retail $ 497 $ 272 $ 850 $ 589
Bakeries and Foodservice 50 38 70 64
International 21 6 43 9
Unallocated Corporate Items (27) (38) (34) (58)
------- ------- ------- -------
Total $ 541 $ 278 $ 929 $ 604
======= ======= ======= =======
9
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)
(Unaudited) (Unaudited)
------- -------
Nov. 24, Nov. 25, May 26,
2002 2001 2002
-------- -------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,747 $ 853 $ 975
Receivables 1,236 1,219 1,010
Inventories 1,280 1,079 1,055
Prepaid expenses and other 155 864 156
Deferred income taxes 264 62 241
-------- -------- --------
Total Current Assets 4,682 4,077 3,437
-------- -------- --------
Land, Buildings and Equipment 4,590 4,581 4,618
Less accumulated depreciation (1,867) (1,764) (1,854)
-------- -------- --------
Net Land, Buildings and Equipment 2,723 2,817 2,764
Goodwill 6,369 8,377 8,473
Other Intangible Assets 3,611 83 90
Other Assets 1,891 1,770 1,776
-------- -------- --------
Total Assets $ 19,276 $ 17,124 $ 16,540
======== ======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 1,499 $ 1,184 $ 1,217
Current portion of debt 100 584 248
Notes payable 2,379 7,220 3,600
Other current liabilities 848 821 682
-------- -------- --------
Total Current Liabilities 4,826 9,809 5,747
Long-term Debt 7,480 2,206 5,591
Deferred Income Taxes 1,734 493 407
Other Liabilities 1,128 1,063 1,066
-------- -------- --------
Total Liabilities 15,168 13,571 12,811
-------- -------- --------
Minority Interest 299 9 153
Stockholders' Equity:
Common stock 5,672 5,689 5,733
Retained earnings 2,818 2,630 2,568
Less common stock in treasury (4,250) (4,351) (4,292)
Unearned compensation (55) (54) (57)
Accumulated other comprehensive income (376) (370) (376)
-------- -------- --------
Total Stockholders' Equity 3,809 3,544 3,576
-------- -------- --------
Total Liabilities and Equity $ 19,276 $ 17,124 $ 16,540
======== ======== ========
GENERAL MILLS, INC.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(1) Last year's second-quarter and six-month results include only three weeks
of the Pillsbury business, which was acquired October 31, 2001.
(2) In the second quarter of fiscal 2003, we recorded unusual items of $21
million pretax expense, $14 million after tax ($.04 per diluted share),
representing $24 million of expenses related to relocating production from
former Pillsbury facilities being closed and other Pillsbury transaction
and integration costs. These costs were partially offset by additional
insurance settlements of $3 million pretax covering a 1994 oats handling
incident.
In last year's second quarter, we recorded unusual items totaling $109
million pretax expense, $68 million after tax ($.22 per diluted share),
representing $25 million pretax of Pillsbury integration costs and $87
million pretax of cereal reconfiguration charges, partially offset by
additional insurance settlements of $3 million pretax covering the 1994
oats handling incident.
For the six months ended November 24, 2002, unusual items totaled $76
million pretax expense, $49 million after tax ($.13 per diluted share),
representing $41 million pretax charges associated with the closure of our
St. Charles, Illinois plant, and $38 million of expenses related to
relocating production from former Pillsbury facilities being closed and
other Pillsbury transaction and integration costs. These costs were
partially offset by additional insurance settlements of $3 million pretax
covering the 1994 oats handling incident.
For the six months last year, unusual items totaled $94 million pretax
expense, $59 million after tax ($.19 per diluted share), representing $30
million pretax of Pillsbury transaction and integration costs; $87 million
pretax of cereal reconfiguration charges; $4 million pretax charges for the
exit from the Squeezit beverage business; and $3 million pretax, net of
insurance recovery, associated with a flash flood at our Cincinnati, Ohio,
cereal plant; partially offset by additional insurance settlements of $30
million pretax covering the 1994 oats handling incident.
(3) Effective with the first quarter fiscal 2002, we adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The
cumulative effect of adopting this accounting change was a $3 million
charge, as reflected on the consolidated statements of earnings.
(4) In the fourth quarter of fiscal 2002, we adopted Emerging Issues Task Force
(EITF) Issue 01-09, which resulted in the reclassification of certain sales
incentive and trade promotion expenses from selling, general and
administrative expenses to a reduction of net sales. The impact was a
reduction of net sales, and a corresponding reduction in selling, general
and administrative expense, of $501 million in the second quarter of fiscal
2002, and $868 million for the first half of fiscal 2002.
(5) The Pillsbury acquisition valuation and purchase price allocation was
completed in the second quarter of fiscal 2003. Intangible assets included
in the final allocation were acquired brands of $3.5 billion and goodwill
of $5.6 billion. Deferred income taxes of $1.3 billion, associated with the
brand intangibles, were also recorded.