The New General Mills Midyear Report 2002 SHAREHOLDER INFORMATION REPORT to SHARE
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The New General Mills Midyear Report 2002 SHAREHOLDER INFORMATION REPORT TO SHARE Transfer Agent, Registrar, Dividend Payments, Direct Deposit and The first half of General Mills’ 2002 fiscal year ended Dividend Reinvestment Plan on a very high note, as we completed our acquisition Wells Fargo Bank Minnesota, N.A. 161 North Concord Exchange of the worldwide Pillsbury businesses and brought P.O. Box 64854 27,000 people together to form our new organiza- St. Paul, MN 55164-0854 tion.We believe more strongly than ever that this Phone: (800) 670-4763 or (651) 450-4084 acquisition enhances General Mills’ future growth E-mail: prospects, by giving us leading brand positions in [email protected] attractive new Account access via Web site: www.shareowneronline.com retail food cate- “We believe more gories, by expand- Shareholder Reports/ strongly than ever ing our reach in Investor Inquiries Shareholders seeking information that the Pillsbury foodservice about General Mills are invited to acquisition enhances channels, and by contact the Investor Relations increasing our Department at (800) 245-5703. our future growth Within the 612, 651, 763 or 952 presence and area codes, call (763) 764-3202. prospects.” growth capabilities in international Company Addresses markets. Pages 2 Number One General Mills Boulevard Minneapolis, MN 55426 through 4 of this report highlight some of these Phone: (763) 764-7600 new business opportunities and introduce the new Mailing Address: members of General Mills’ senior leadership team. P.O. Box 1113 We’ve also completed two transactions related to Minneapolis, MN 55440 our Pillsbury acquisition. In order to gain regulatory clearance for that acquisition, we divested the CONTENTS Visit us on the Web 1 From the Chairman 6 Annual Meeting summary www.generalmills.com 2 The new General Mills 7 Financials Pillsbury enhances our 12 Briefly noted portfolio in many ways. Cheerios turns 60, new For more information about 5 A tale of two companies product news and more. General Mills, including financial From opposite sides of the results, SEC filings and product 14 2002 Olympic Winter Games news, visit our newly updated Mississippi, Pillsbury and General Mills is an Official Web site at www.generalmills.com. General Mills have grown Supplier to the 2002 Games. up together. © 2002 General Mills, Inc. Printed on recycled paper contain- ing at least 10 percent post-consumer material. This report to shareholders contains forward-looking statements based on management’s current views and assumptions.Actual events may differ. Please refer to our 2001 Form 10-K for further discussion of these matters. HOLDERS Calendar 2001 Stock Price Trend Pillsbury desserts and specialty products businesses (Index Dec. 29, 2000 = 100) along with certain General Mills brands. Our sale 120 General Mills +17% of these businesses to International Multifoods Corporation was completed on Nov. 13, 2001. S&P Packaged Foods -1% Subsequent to the end of the second quarter, we 100 completed a transaction with Nestlé USA, in S&P 500 -13% which it exercised its right to purchase our 80 50-percent equity stake in a U.S. ice cream joint venture. Pillsbury and Nestlé formed this joint venture in 1999, and Nestlé’s right to buy Jul Mar Nov Sep Pillsbury’s 50-percent interest was triggered by our May purchase of Pillsbury.This transaction also included In 2001, General Mills stock outperformed both the a license for the Häagen-Dazs brand in Canada. S&P 500 Index and the S&P Packaged Foods Index. We will continue to own the Häagen-Dazs business outside the United States and Canada. Combined cash proceeds to General Mills from these transac- Feb. 1, 2002, to shareholders of record Jan. 10, tions total $957 million.We intend to use the after- 2002.While our number of shares outstanding has tax proceeds, which we estimate will exceed increased significantly, we intend to maintain our $600 million, to reduce the debt we incurred prevailing annual dividend rate of $1.10 per share. to purchase Pillsbury. As we move into the second half of the fiscal Our reported financial results for the first half year, our focus is on continuing to make good of fiscal 2002 include three weeks of Pillsbury per- progress in our integration of Pillsbury and achieve formance.Total sales rose 15 percent to $4.11 bil- our targeted financial objectives for the year.We lion. If you exclude sales contributed by Pillsbury also have some new products and merchandising and by businesses we’ve divested, our first-half activities planned – you’ll find some of these events revenues grew 4 percent. First-half earnings after described on pages 12 to 14 of this report. tax before unusual items grew 5 percent to In closing, I want to acknowledge the 27,000 $381.1 million. Earnings per share before unusual people working across General Mills to drive our items totaled $1.24, a penny below prior-year integration forward and deliver strong business results.This reflects the impact of increased shares results.The talent and commitment of General outstanding, as we issued a net 79 million shares of Mills people give me great confidence in our General Mills common stock to Diageo in con- future prospects. junction with the Pillsbury acquisition. General Mills’ shares performed well in calendar 2001 relative to our food company peers and the Sincerely, broader market. For the year, General Mills’ stock price rose 17 percent, while the S&P Packaged Foods Index declined 1 percent, and the S&P 500 Index fell 13 percent.Total return to General Mills shareholders in calendar 2001, including both stock Stephen W.Sanger price appreciation and dividends, was 20 percent. Chairman and Chief Executive Officer On Dec. 17, 2001, your board of directors approved a quarterly dividend of $.275 per share, payable January 25, 2002 The New General DOUGH EXPERTISE MORE CONVENIENCE hat’s new about General Mills? In 2001, Pillsbury took baking convenience Lots of things! With the acquisi- a step further, introducing freezer-to-oven W tion of Pillsbury, our company has retail dough products. Using innovative form- gained new product lines, such as refrigerated ing and packaging technology, these products and frozen dough, and the technologies that give consumers quick, easy-to-prepare biscuits go with them.We have increased our portfolio in a portion-controlled, resealable bag.This of convenient meals for consumers strapped new line joins Pillsbury frozen breakfast pas- for time.And our presence around the globe tries and waffles in the freezer aisle. has expanded significantly with the addition of The Totino’s brand, a part of the Pillsbury Pillsbury’s international businesses.All these portfolio since 1975, uses dough to create additions give us more opportunities to grow. savory, frozen snacks and pizzas.These products appeal to moms and teens for an after-school DOUGH KNOW-HOW snack or quick dinner. Since acquiring a small, refrigerated dough Over the past 10 years, the combination business in 1951, Pillsbury has changed the of Pillsbury’s refrigerated and frozen dough shape of baking. Consumers embraced the products has generated 7 percent compound cans of Poppin’ Fresh dough, which provided a annual sales growth.We expect to see contin- convenient way to bake fresh rolls and biscuits, ued good growth as we capitalize on Pillsbury’s eliminating the time and mess involved in bak- dough expertise. ing from scratch. Five decades later, Pillsbury has Dough innovation also has played a major a 74 percent dollar share of a category that gen- role in the success of Pillsbury’s bakeries and erates $1.4 billion in annual retail sales. foodservice business. Foodservice operators want products that can reduce preparation time 2 GENERAL MILLS MIDYEAR REPORT PETER ROBINSON SENIOR VICE PRESIDENT PRESIDENT,PILLSBURY USA U.K. native Peter Robinson explains that he wanted to tour the United States while in col- lege.“To raise money for a Greyhound bus ticket, I took my first job in the foods industry, as a cutter in a meat packing plant.” So began a 31-year career in consumer foods.While Mills running Pillsbury’s North American busi- ness for three years, Robinson has been working hard to develop dough-based products to meet the needs of con- GLOBAL GROWTH sumers everywhere. He is especially pleased with Pillsbury’s latest innova- tion – freezer-to-oven biscuits, packaged in resealable bags.These biscuits have been so popular, Robinson and his team have expanded the concept to cookies, sweet rolls and dinner rolls. By focusing on product quality and meeting consumer needs with innovative, convenient new offerings, Robinson expects good growth ahead for the Pillsbury mega-brand. PAUL OLIVER SENIOR VICE PRESIDENT and waste. Pillsbury has worked hard to meet PRESIDENT,BAKERIES AND FOODSERVICE those needs by offering dough products in a When Paul Oliver moved to Minneapolis nine variety of forms, including frozen ready-to-bake, years ago to lead the Bakeries and Foodservice partially baked, and heat-and-serve. division for Pillsbury, he wasn’t sure about leav- The next time you grab a sandwich at ing his native Canada. After all, he had spent 11 Subway or a meal with a biscuit at KFC, you years developing the Canadian business for will be enjoying a Pillsbury dough product. Pillsbury. Turns out it was a good move. Pillsbury has developed expertise in customizing Oliver has grown the Bakeries and products for foodservice operators. Pillsbury also Foodservice business to more than provides mixes for bakeries in grocery stores like $1 billion in sales.When combined with Kroger and Albertson’s. In addition, customized General Mills’ foodservice business, mixes are sold to wholesale bakeries that make Oliver’s expanded division grows to dough-based products for brands like $1.7 billion in sales.