MINNEAPOLIS, Dec. 15 /PRNewswire/ -- General Mills (NYSE: GIS - news) today reported diluted earnings per share of 62 cents per share for the second quarter of fiscal 2000, up 11 percent from 56 cents per share before unusual items earned in the same period last year. After-tax earnings grew 10 percent to $193.7 million. Sales for the 13-week period ended Nov. 28, 1999, totaled $1.82 billion, up 8 percent.
General Mills Chairman and Chief Executive Officer Steve Sanger said higher unit volumes drove the record second-quarter earnings performance. ``Our U.S. food volume was up 8 percent, including incremental contributions from businesses we have acquired over the past year. Even without acquisitions, our domestic volume grew 5 percent in the quarter. That performance reflected good growth for a number of our largest established brands plus an increased level of new product activity.''
Through six months, General Mills' diluted earnings per share totaled $1.12, up 10 percent from $1.02 earned before unusual items last year. Earnings after tax also grew 10 percent before unusual items to $352.2 million, and sales increased 8 percent to $3.39 billion.
``Results for the first half of fiscal 2000 met our expectations,'' Sanger continued. ``Our earnings per share are growing at a double-digit pace. That's consistent with our objective to deliver double-digit EPS growth for the full year.''
General Mills' net earnings for last year's second quarter included a restructuring charge of $32.3 million after-tax, or 10 cents per diluted share, primarily related to streamlining supply chain activities. Including this unusual item, earnings per diluted share totaled 46 cents in last year's second quarter, and 92 cents in last year's first half.
U.S. Operations
With the 8 percent increase in second-quarter shipments, General Mills' U.S. foods unit volume was up 7 percent through the first six months of fiscal 2000. This strong growth included incremental volume from three recently acquired businesses: Lloyd's refrigerated entrees (acquired January 1999); Farmhouse Foods side dishes (February 1999) and Gardetto's baked snack foods (August 1999). Excluding acquired businesses, General Mills' U.S. food volume was up 5 percent for the quarter and 4 percent through six months.
Big G cereal unit volume grew 5 percent in the second quarter. This growth included good gains by major established brands including Cheerios, Lucky Charms and Golden Grahams. In addition, the quarter included significant volume from new products. Honey Nut Chex, which reached nationwide distribution in March 1999, continues to record consistently strong volume and market shares. Nesquik and Sunrise cereals, launched in the spring of 1999, contributed incremental volume. The second quarter also included shipments of Millenios cereal, a limited-time Cheerios variety, and the nationwide launch of Brown Sugar and Oat Total cereal, a new variety added to the Total brand franchise. Through six months, Big G's share of cereal category pound volume in all Nielsen-measured outlets was up 1.5 percentage points to 27 percent, and its share of category dollar sales increased to more than 32 percent.
Combined unit volume for the company's other U.S. foods businesses grew 9 percent in the quarter. Second-quarter volume for Betty Crocker products declined 1 percent in total. The new Chicken Helper line continued to generate strong volume, but overall dinner mix shipments were lower due to declines by established Hamburger Helper varieties. A revised marketing program designed to restore dinner mix growth will be implemented in the second half. Volume for Betty Crocker desserts and family flour was also lower in the quarter, reflecting the impact of significantly higher competitive marketing spending.
Total unit volume for the company's convenience foods businesses (snacks and yogurt) grew 18 percent in the second quarter. Snacks performance included double-digit growth for fruit snacks, powered by strong introductory shipments of Pokemon fruit rolls. Volume for Chex Mix snacks grew 17 percent in the quarter, and the recently acquired Gardetto's business contributed additional volume. Yogurt volume continued to grow at a double-digit pace, fueled by solid gains from established Yoplait product lines and the continued success of new Yoplait Go-Gurt, which reached nationwide distribution during the quarter. Combined dollar share for Yoplait and Colombo grew to a record 34 percent for the first half, up 4 percentage points. In addition to these retail business gains, second-quarter unit volume for established Foodservice businesses grew 6 percent, and including Gardetto's, Foodservice volume grew 13 percent.
International Operations
Unit volume for the company's international operations was up 6 percent in the second quarter and 4 percent through the first half. Cereal Partners Worldwide (CPW), the company's joint venture with Nestle, posted an 11 percent volume increase for the quarter, led by strong performance in the United Kingdom, France, Spain, Portugal and Mexico. CPW's combined share of its worldwide markets for calendar 1999 to date grew to 20 percent. Total volume for Snack Ventures Europe (SVE), the company's joint venture with PepsiCo, increased 4 percent in the second quarter, despite continued market weakness in Russia. In SVE's core western European markets only, volume growth was 6 percent.
Through the first six months, international joint ventures contributed $6.6 million to General Mills' after-tax earnings, up from approximately breakeven in last year's first half.
In Canada, second-quarter volume was up 1 percent overall, as 5 percent growth in cereal volume offset softness on certain Betty Crocker products. Honey Nut Chex cereal was successfully introduced during the quarter and General Mills' cereal share in Canada grew to 17 percent for the year-to-date.
Share Repurchases/Interest Expense
During the second quarter, General Mills repurchased 2.5 million shares of common stock under the company's ongoing program. Through the first six months of fiscal 2000, a total of 4.1 million shares have been repurchased at an average price of approximately $39 per share. Average diluted shares outstanding for the quarter totaled 313.1 million. Interest expense of $34.1 million in the quarter was up from the prior year, reflecting higher rates and higher debt levels associated with acquisitions and share repurchase activity.
General Mills' effective tax rate was 35.4 percent for the quarter, compared with 36.6 percent in the same period a year earlier. The company currently expects its effective tax rate for the full 2000 fiscal year to average about 35.5 percent.
Outlook
``We're pleased with our first-half results,'' Sanger said. ``We're seeing continued good unit volume momentum in December, which gives us a good start for the third quarter. Our plans anticipate slower unit-volume growth in the fourth quarter than we achieved through the first half. That's because we'll be comparing against strong new-product sell-in volume for Big G cereals in last year's fourth quarter, and we'll be overlapping prior-year volume from Farmhouse and Lloyd's.
``Earlier today we announced an agreement to acquire Small Planet Foods, a leading organic foods company with annual sales of approximately $60 million and exciting growth prospects. The transaction is subject to regulatory review. Assuming it is completed, this acquisition will be modestly dilutive to earnings in our second half (approximately 1 to 2 cents per share). Nevertheless, we remain on track to deliver low double-digit growth in earnings per share for fiscal 2000. We also believe our prospects remain excellent for delivering double-digit EPS growth over the longer term.''
This press release contains forward-looking statements based on management's current
views and assumptions. Actual events may differ. Please refer to the cautionary statements
related to forward-looking information contained in our 1999 Form 10-K for further
discussion of these matters.
GENERAL MILLS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (In Millions, Except per Share Data)
13 Weeks Ended 26 Weeks Ended
Nov 28, Nov 29, Nov 28, Nov 29,
1999 1998 1999 1998
Sales $1,817.2 $1,677.4 $3,390.8 $3,150.5
Costs & Expenses:
Cost of sales 728.2 699.0 1,349.6 1,282.7
Selling, general
and administrative 760.0 667.8 1,437.2 1,301.9
Interest, net 34.1 29.4 66.8 59.2
Unusual items -- 51.6 -- 51.6
Total Costs
and Expenses 1,522.3 1,447.8 2,853.6 2,695.4
Earnings before Taxes and
Earnings (Losses) from
Joint Ventures 294.9 229.6 537.2 455.1
Income Taxes 104.3 83.7 191.6 166.8
Earnings (Losses) from
Joint Ventures 3.1 (2.3) 6.6 .3
Net Earnings $ 193.7 $ 143.6 $ 352.2 $ 288.6
Earnings per
Share - Basic $ .64 $ .47 $ 1.16 $ .94
Average Number of Shares 303.5 305.8 303.9 307.0
Earnings per
Share - Diluted $ .62 $ .46 $ 1.12 $ .92
Average Number of Shares -
Assuming Dilution 313.1 313.5 313.7 314.1
Note: All share and per share data have been adjusted for the two-for-one stock split effective November 8, 1999.
GENERAL MILLS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)
(Unaudited)
Nov 28, Nov 29, May 30,
1999 1998 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 70.4 $ 9.5 $ 3.9
Receivables 562.5 468.4 490.6
Inventories 497.3 438.4 426.7
Prepaid expenses and other 80.4 77.4 83.7
Deferred income taxes 94.8 119.9 97.6
Total Current Assets 1,305.4 1,113.6 1,102.5
Land, Buildings and Equipment 2,843.4 2,592.0 2,718.9
Less accumulated depreciation (1,469.5) (1,367.2) (1,424.2)
Net Land, Building and Equipment 1,373.9 1,224.8 1,294.7
Intangibles 830.3 621.4 722.0
Other Assets 1,084.7 1,061.0 1,021.5
Total Assets $4,594.3 $4,020.8 $4,140.7
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 672.4 $ 638.8 $ 647.4
Current portion of debt 98.7 196.4 90.5
Notes payable 893.7 396.0 524.4
Accrued taxes 167.2 137.0 135.0
Other current liabilities 259.7 282.5 303.0
Total Current Liabilities 2,091.7 1,650.7 1,700.3
Long-term Debt 1,664.7 1,592.8 1,702.4
Deferred Income Taxes 296.2 282.3 288.9
Deferred Income Taxes-Tax Leases 100.5 120.2 111.3
Other Liabilities 184.5 177.5 173.6
Total Liabilities 4,337.6 3,823.5 3,976.5
Stockholders' Equity:
Common stock 679.9 626.8 657.9
Retained earnings 2,013.1 1,749.1 1,827.4
Less common stock in treasury (2,307.3) (2,071.5) (2,195.3)
Unearned compensation (66.5) (73.0) (68.9)
Accumulated other comprehensive income (62.5) (34.1) (56.9)
Total Stockholders' Equity 256.7 197.3 164.2
Total Liabilities and Equity $4,594.3 $4,020.8 $4,140.7