General Mills Rings in 80th Anniversary on the New York Stock Exchange

GIS Shareholder Return Has Significantly Outpaced the Market Over 80 Years

General Mills (NYSE: GIS) rings in its 80th anniversary on the New York Stock Exchange today, celebrating a rich history of eight decades of superior shareholder returns through both good economic times and bad.

Formed in a merger of regional flour milling companies in 1928, General Mills has grown to become one of the largest food companies in the world, rewarding investors throughout its 80-year journey. As a symbol of the company’s heritage, and to celebrate the 80th anniversary of the company’s first day of trading, Ford Bell, the grandson of General Mills founder James Ford Bell, will ring the closing bell at the New York Stock Exchange today.

A Rich and Rewarding History
General Mills has a long track record of delivering superior returns to shareholders that meet or beat the overall market over any extended period, and in all economic climates. Over the past 80 years, the company’s stock price has averaged a 7.5 percent annual increase, significantly outpacing the market as represented by the Dow Jones Industrial Average, which averaged a 4.3 percent annual increase during that same 80-year period.

General Mills and its predecessor firm have paid dividends without interruption or reduction for 110 years, and since 2005 the company has grown dividends at a 9 percent compound rate.

For calendar year 2008, General Mills is one of only 19 companies in the S&P 500 reflecting a gain in its stock price– up 10.8 percent year-to-date (through Nov. 28). Factoring in dividends, General Mills is one of only 24 companies in the S&P 500 with a positive total shareholder return this calendar year, up 13.85 percent.

James Ford Bell – The Man Behind the Merger that Created General Mills
Credit for the company’s early success goes to innovators such as James Ford Bell, who came to Minnesota from Philadelphia when his father, James Stroud Bell, accepted the position of president of Washburn Crosby Company, the forerunner to General Mills.

Even on GIS’ first day of trading on Nov. 30, 1928, the new General Mills was already home to such iconic American food brands as Gold Medal flour, Betty Crocker and Wheaties. For decades, the Washburn Crosby Company had demonstrated a knack for understanding consumers and for providing them with innovative and inventive new products.

James Ford Bell – fascinated by the milling industry – specialized in cereal chemistry as a student at the University of Minnesota, and learned the ropes through a myriad of assignments at the company prior to being named Washburn Crosby’s president in 1925.

Buoyed by his energy and curiosity, and his experience serving as head of the Milling division of Herbert Hoover’s U.S. Food Administration during World War I, Bell approached his leadership role at Washburn Crosby with a keen eye toward efficiency and innovation. For years, Washburn Crosby had been acquiring mills in strategic locations to provide uniform flour quality to a broad swath of the population. As the back half of the 1920s dawned, the milling industry was contracting following the World War I boom. Bell saw it as a time to expand the company, but some of the owners saw it as the time to sell.

Opportunity Knocks
In the spring of 1928, on his way to a family vacation in Atlantic City, Bell received a telegram informing him that a suitor, Blair & Co., needed to see him immediately. Changing trains in New York City, he put his family on the connection to Atlantic City and made his way over to the Blair offices. Pressed at the meeting for a price, Bell said that he “fished a figure out of the air of $40 million.” The Blair leaders rose from their chairs, pumped Bell’s hand and told him they had a deal.

Bell found a phone and called John Crosby, chairman of Washburn Crosby. Hearing what had happened, Crosby told Bell that he had no authority to sell the company. “This I acknowledged,” said Bell, recounting the story. “But when I asked him whether I had the authority if I could get $40 million, (Crosby) promptly said that I had.”

The deal falls through
Weeks later, the leaders of both companies gathered in New York to close the deal. At the final moment, as fate would have it, a single dissenting Blair director refused to support the deal, and forced the offer to be withdrawn.

The sale was off. But at that very moment, Bell decided to seek out George F. Baker, an 80-year-old banking patriarch at First National Bank. Instead of talking about a sale of the company, Bell pitched Baker on his idea for a sizable combination of regional milling companies that would reshape the flour milling industry. Baker listened to Bell’s expansion dreams, and said, “I like your language. Go out and see what you can do.”

Over the next few months, Bell brought the Red Star Milling Company of Wichita, Kan., on board, and on June 22, 1928, they came together as the new “General Mills,” a name that fulfilled Bell’s desire for a moniker that was simple, dramatic and suggested breadth. The stock debuted on the New York Stock Exchange on Nov. 30, 1928, at $65 per share, and swelled to $86 in early trading.
The once reticent Sperry Company in San Francisco soon joined, providing a milling link to the Pacific Coast. Mills in the important milling states of Oklahoma and Texas were purchased early the next year, adding to the company’s mills in Minneapolis, Buffalo, Chicago, Kansas City, Louisville, Montana and California. But 1929 didn’t turn out quite as expected.

In Good Times and Bad
The stock market crash in October 1929 led to the Great Depression. Times were difficult in America, but even in the challenging 1930s, General Mills continued to perform for shareholders. Throughout the Great Depression, General Mills maintained employment and continued to pay its dividend. Only a handful of companies in America have paid dividends on common stock without interruption since 1928. That select list includes General Mills – and with its predecessor companies, General Mills has now paid dividends without reduction or interruption for 110 years.

General Mills shares have also performed for GIS shareholders. If a person had invested $1,000 in GIS shares on the first day that General Mills started trading, held it since and reinvested the dividends, it would be worth more than $5 million today.

Eight decades later, General Mills is one of the world’s largest food companies. It operates in over 100 countries and markets more than 100 consumer brands, including Cheerios, Häagen-Dazs, Nature Valley, Betty Crocker, Pillsbury, Green Giant, Old El Paso, Progresso, and more. Headquartered in Minneapolis, Minn., General Mills had fiscal 2008 global net sales of US$14.9 billion, including the company’s $1.2 billion proportionate share of joint venture net sales.

GIS Fun Facts
GIS Trading Volume Nov. 30, 1928: 3,100 Shares
GIS Average Daily NYSE Volume 2008: 3,416,122 shares
GIS Opening Price Nov. 30, 1928: $65
DJIA Close Nov. 30, 1928: 293.28

GIS Long-Term Shareholder Return
50-year GIS return (calendar 1957-2007) is 14 percent. (S&P for same period was 11 percent).
40- year GIS return (calendar 1967-2007) is 13 percent. (S&P for same period was 10 percent).
30-year GIS return (calendar 1977-2007) is 14 percent. (S&P for same period was 13 percent).
20-year GIS return (calendar 1987-2007) is 12 percent. (S&P for same period was 12 percent).
10-year GIS return (calendar 1997-2007) is 8 percent. (S&P for same period was 6 percent).