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General Mills Reports Fiscal 2013 First Quarter Results

General Mills will hold a briefing for investors today, September 19, 2012, beginning at 8:30 a.m. Eastern time. You may access the web cast from General Mills’ internet home page: generalmills.com.

Adjusted diluted EPS, gross margin excluding mark-to-market effects, total segment operating profit, international sales excluding foreign currency translation effects, and adjusted effective tax rate are each non-GAAP measures. Reconciliations of these measures to their relevant GAAP measures appear in Note 8 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 “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; 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.

 
Consolidated Statements of Earnings and Supplementary Information
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
     
Quarter Ended
 

Aug. 26, 2012

 

Aug. 28, 2011

% Change

 
Net sales $ 4,051.0 $ 3,847.6 5.3 %
Cost of sales 2,422.7 2,401.1 0.9 %
Selling, general, and administrative expenses 839.0 807.5 3.9 %

Restructuring, impairment, and other exit costs

  9.2     0.1   NM
Operating profit 780.1 638.9 22.1 %
Interest, net   83.0     85.4   (2.8 ) %
Earnings before income taxes and after-tax

earnings from joint ventures

697.1 553.5 25.9 %
Income taxes 158.1 177.5 (10.9 ) %
After-tax earnings from joint ventures   23.1     28.3   (18.4 ) %
Net earnings, including earnings attributable

to redeemable and noncontrolling interests

562.1 404.3 39.0 %
Net earnings (loss) attributable to redeemable

and noncontrolling interests

  13.2     (1.3 ) NM
Net earnings attributable to General Mills $ 548.9   $ 405.6   35.3   %
Earnings per share - basic $ 0.84   $ 0.63   33.3   %
Earnings per share - diluted $ 0.82   $ 0.61   34.4   %
Dividends per share $ 0.330   $ 0.305   8.2   %
 
Quarter Ended
Comparisons as a % of net sales:  

Aug. 26, 2012

 

Aug. 28, 2011

Basis Pt Change

 
Gross margin 40.2 % 37.6 % 260
Selling, general, and administrative expenses 20.7 % 21.0 % (30 )
Operating profit 19.3 % 16.6 % 270
Net earnings attributable to General Mills 13.5 % 10.5 % 300
 
Quarter Ended
Comparisons as a % of net sales excluding

certain items affecting comparability (a):

 

Aug. 26, 2012

 

Aug. 28, 2011

Basis Pt Change

 
Gross margin 38.2 % 38.6 % (40 )
Operating profit 17.5 % 17.6 % (10 )
Net earnings attributable to General Mills 10.8 % 11.1 % (30 )
 
(a) See Note 8 for a reconciliation of this measure not defined by generally accepted accounting principles (GAAP).
 
See accompanying notes to consolidated financial statements.
 
 
Operating Segment Results and Supplementary Information
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
     
Quarter Ended
     

Aug. 26, 2012

   

Aug. 28, 2011

 

% Change

   
Net sales:
U.S. Retail $ 2,493.9 $ 2,510.3 (0.7 ) %
International 1,085.5 856.3 26.8 %
Bakeries and Foodservice     471.6       481.0     (2.0 ) %
Total   $ 4,051.0     $ 3,847.6     5.3   %
 
Operating profit:
U.S. Retail $ 575.1 $ 585.2 (1.7 ) %
International 125.8 80.7 55.9 %
Bakeries and Foodservice     67.7       61.4     10.3   %
Total segment operating profit 768.6 727.3 5.7 %
 
Unallocated corporate items (20.7 ) 88.3 (123.4 ) %

Restructuring, impairment, and other exit costs

    9.2       0.1     NM  
Operating profit   $ 780.1     $ 638.9     22.1   %
 
Quarter Ended

Aug. 26, 2012

   

Aug. 28, 2011

 

Basis Pt Change

 

Segment operating profit as a % of net sales:

U.S. Retail 23.1 % 23.3 % (20 )
International 11.6 % 9.4 % 220
Bakeries and Foodservice     14.4 %     12.8 %   160    
Total segment operating profit     19.0 %     18.9 %   10    
 
See accompanying notes to consolidated financial statements.
 
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
     
 

Aug. 26, 2012

 

Aug. 28, 2011

 

May 27, 2012

(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,508.4 $ 338.2 $ 471.2
Receivables 1,473.5 1,504.0 1,323.6
Inventories 1,808.5 1,788.1 1,478.8
Deferred income taxes 63.2 13.4 59.7
Prepaid expenses and other current assets   363.8     452.7     358.1  
 
Total current assets 5,217.4 4,096.4 3,691.4
 
Land, buildings, and equipment 3,603.5 3,565.2 3,652.7
Goodwill 8,207.7 8,301.4 8,182.5
Other intangible assets 4,723.7 4,935.8 4,704.9
Other assets   883.0     994.4     865.3  
 
Total assets $ 22,635.3   $ 21,893.2   $ 21,096.8  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 1,264.9 $ 1,181.9 $ 1,148.9
Current portion of long-term debt 1,441.1 1,125.9 741.2
Notes payable 1,682.1 1,022.7 526.5
Other current liabilities   1,587.4     1,553.5     1,426.6  
 
Total current liabilities 5,975.5 4,884.0 3,843.2
 
Long-term debt 5,462.0 5,901.1 6,161.9
Deferred income taxes 1,127.5 1,417.1 1,171.4
Other liabilities   2,125.5     1,777.6     2,189.8  
 
Total liabilities   14,690.5     13,979.8     13,366.3  
 
Redeemable interest 851.6 904.4 847.8
 
Stockholders' equity:
 

Common stock, 754.6 shares issued, $0.10 par value

75.5 75.5 75.5
Additional paid-in capital 1,288.7 1,293.0 1,308.4
Retained earnings 10,289.6 9,396.6 9,958.5

Common stock in treasury, at cost, shares of 109.8, 110.3 and 106.1

(3,346.1 ) (3,251.1 ) (3,177.0 )
Accumulated other comprehensive loss   (1,662.5 )   (1,014.7 )   (1,743.7 )
 
Total stockholders' equity 6,645.2 6,499.3 6,421.7
 
Noncontrolling interests   448.0     509.7     461.0  
 
Total equity   7,093.2     7,009.0     6,882.7  
 
Total liabilities and equity $ 22,635.3   $ 21,893.2   $ 21,096.8  
 
See accompanying notes to consolidated financial statements.
 
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
 
Quarter Ended
 

Aug. 26, 2012

   

Aug. 28, 2011

Cash Flows - Operating Activities

Net earnings, including earnings attributable to redeemable and noncontrolling interests

$ 562.1 $ 404.3

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 139.2 125.5
After-tax earnings from joint ventures (23.1 ) (28.3 )
Distributions of earnings from joint ventures 37.0 31.6
Stock-based compensation 38.3 44.5
Deferred income taxes (51.2 ) 22.3
Tax benefit on exercised options (18.1 ) (12.4 )
Pension and other postretirement benefit plan contributions (5.5 ) (3.9 )
Pension and other postretirement benefit plan costs 32.6 19.4
Restructuring, impairment, and other exit income (8.6 ) (0.9 )

Changes in current assets and liabilities, excluding the effects of acquisitions

(130.5 ) (134.8 )
Other, net   (83.4 )   (26.5 )
Net cash provided by operating activities   488.8     440.8  
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment (140.6 ) (132.8 )
Acquisitions, net of cash acquired (31.8 ) (900.1 )
Investments in affiliates, net 7.5 -
Proceeds from disposal of land, buildings, and equipment 0.3 0.3
Exchangeable note 14.5 (131.6 )
Other, net   (3.5 )   6.5  
Net cash used by investing activities   (153.6 )   (1,157.7 )
Cash Flows - Financing Activities
Change in notes payable 1,155.9 712.6
Payment of long-term debt (0.4 ) (6.6 )
Proceeds from common stock issued on exercised options 39.0 24.0
Tax benefit on exercised options 18.1 12.4
Purchases of common stock for treasury (272.5 ) (109.9 )
Dividends paid (217.8 ) (200.3 )
Distributions to noncontrolling and redeemable interest holders (29.5 ) -
Other, net   -     (0.3 )
Net cash provided by financing activities   692.8     431.9  
Effect of exchange rate changes on cash and cash equivalents   9.2     3.6  
Increase (decrease) in cash and cash equivalents 1,037.2 (281.4 )
Cash and cash equivalents - beginning of year   471.2     619.6  
Cash and cash equivalents - end of period $ 1,508.4   $ 338.2  
 

Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions:

Receivables

$ (143.8 ) $ (156.9 )
Inventories (324.0 ) (135.3 )
Prepaid expenses and other current assets (5.4 ) 55.5
Accounts payable 176.9 70.9
Other current liabilities   165.8     31.0  
Changes in current assets and liabilities $ (130.5 ) $ (134.8 )
 
See accompanying notes to consolidated financial statements.
 

GENERAL MILLS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

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