General Mills Inc – ‘8-K’ for 12/14/94 – EX-20

As of:  Friday, 12/16/94   ·   For:  12/14/94   ·   Accession #:  40704-94-47   ·   File #:  1-01185

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         2±    10K 
 2: EX-20       Exb.20 to 8-K Filing                                   4±    15K 

EX-20   —   Exb.20 to 8-K Filing

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.                                                                   

Dates Referenced Herein

This ‘8-K’ Filing		Date		Other Filings
		6/1/95		None on these Dates
Filed on:		12/16/94
For Period End:		12/14/94
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