General Mills 10-Q 2005
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
GENERAL MILLS, INC. AND SUBSIDIARIES
GENERAL MILLS, INC. AND SUBSIDIARIES
GENERAL MILLS, INC. AND SUBSIDIARIES
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the thirteen weeks ended August 28, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending May 28, 2006.
These statements should be read in conjunction with the consolidated financial statements and footnotes included in our Form 10-K for the year ended May 29, 2005. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note One to the consolidated financial statements in our Form 10-K.
Stock-based Compensation Expense for Stock Options
We use the intrinsic value method for measuring the cost of compensation paid in shares of our common stock. This method defines our cost as the excess of the stocks market value at the time of the grant over the amount that the employee is required to pay. Our stock option plans require that the employees payment (i.e., exercise price) be the market value as of the grant date. The following table illustrates the pro forma effect on net earnings and earnings per share if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation using the Black-Scholes option-pricing model.
These amounts reflect the expensing of share awards made to retirement-eligible employees over the expected vesting period of the award. SFAS 123(R), when adopted, will require the expensing of future awards over the period to retirement eligibility, if less than the vesting period. Future share-based compensation amounts may differ from the pro forma amounts presented based on that change as well as any changes in the number of options granted or their fair values.
No options were granted in the first quarters of fiscal 2006 or fiscal 2005.
(2) Restructuring and Other Exit Costs
In the first quarter of fiscal 2006, we recorded restructuring and other exit costs of $9 million, consisting of $8 million of charges related to an asset impairment recognized at one of our production plants and $1 million of charges associated with restructuring actions previously announced.
In the first quarter of fiscal 2005, we recorded restructuring and other exit costs of $40 million, consisting of $38 million of charges associated with first-quarter supply chain initiatives and $2 million of charges associated with restructuring actions previously announced. The first-quarter initiatives were undertaken to further increase asset utilization and reduce manufacturing and sourcing costs, resulting in decisions regarding plant closures and production realignment.
Fiscal 2005 supply chain actions also resulted in certain associated expenses, primarily adjustments to the depreciable life of the assets necessary to reflect the shortened asset lives that coincide with final production dates. These associated expenses were recorded as cost of sales. In the first quarter of fiscal 2006, the expense recorded in cost of sales was $2 million; in the first quarter of fiscal 2005, the expense recorded in cost of sales was $5 million.
(3) Goodwill and Brand Intangibles
During the first quarter of fiscal 2006 we finalized the allocation of Goodwill and Brand Intangibles resulting from the Pillsbury acquisition within the International segment. The impact of this allocation, primarily foreign currency translation, was an increase to Goodwill and Brand Intangibles totaling $88 million and an increase to Deferred Income Tax Liabilities of $22 million. The net adjustment of $66 million was recorded in Accumulated Other Comprehensive Income.
The changes in the carrying amount of our Goodwill and Brand Intangibles for the first quarter of fiscal 2006 were as follows:
The activity occurring in the first quarter of fiscal 2006 is primarily foreign currency translation.
The components of inventories are as follows:
(5) Stockholders Equity
The following table provides detail of Total Comprehensive Income:
The changes in other comprehensive income are primarily non-cash items.
Accumulated Other Comprehensive Income balances, net of tax effects, were as follows:
(6) Earnings Per Share
We adopted Emerging Issues Task Force Issue No. 04-8, The Effect of Contingently Convertible Debt on Diluted Earnings per Share (EITF 04-8) in the third quarter of fiscal 2005. The adoption increased our diluted shares outstanding by 29 million shares to give effect to the contingent issuance of shares under our zero coupon convertible debentures issued in October 2002. Also, net earnings used for earnings per share calculations were adjusted, using the if-converted method. Our diluted shares outstanding and earnings per share (EPS) calculations for first quarter fiscal 2005 were restated by $0.02 to present comparable information.
On September 15, 2005, we notified the holders of our convertible debentures of their right to surrender their bonds for purchase by us on October 28, 2005. We intend to satisfy this obligation in cash; however, under the provisions of EITF 04-8, our EPS calculation will include an incremental share effect until the debentures are purchased by us.
Basic and diluted earnings per share were calculated using the following:
(7) Notes Payable
The components of notes payable at the end of the respective periods were as follows:
(8) Share Repurchases
Throughout the fiscal 2006 first quarter we repurchased 16 million shares of common stock for $749 million. We purchased 4 million of these shares in a secondary market offering in late August. At August 28, 2005, we had unpaid obligations associated with our share repurchases totaling $203 million included in other current liabilities. We settled these obligations shortly after the end of our fiscal quarter.
(9) Interest Expense
The components of net interest, including minority interest, expense were as follows:
(10) Statements of Cash Flows
During the first thirteen weeks of fiscal 2006, we made cash interest payments of $99 million, versus $140 million in the same period last year. In the first thirteen weeks of fiscal 2006, we made tax payments of $21 million, versus $33 million in the same period last year.
(11) Retirement and Other Postretirement Benefit Plans
Components of net pension and postretirement (income) expense for each fiscal period are as follows:
(12) Operating Segments
We operate exclusively in the consumer foods industry, with multiple operating segments organized generally by product categories.
We aggregate our operating segments into three reportable segments: 1) U.S. Retail; 2) International; and 3) Bakeries and Foodservice. Our U.S. Retail segment reflects business with a wide variety of grocery stores; specialty stores; drug, dollar and discount chains; and mass merchandisers operating throughout the United States. Our major product categories in this business segment are ready-to-eat cereals, meals, refrigerated and frozen dough products, baking products, snacks, yogurt and organic foods. Our consolidated International business segment includes a retail business in Canada that largely mirrors our U.S. Retail product mix, along with retail and foodservice businesses competing in key markets in Europe, Latin America and the Asia/Pacific region. Our Bakeries and Foodservice segment consists of products marketed to retail and wholesale bakeries, commercial and noncommercial foodservice distributors and operators, and convenience stores throughout the United States and Canada.
Management reviews operating results to evaluate segment performance. Segment operating profit excludes general corporate expenses, restructuring and other exit costs, interest expense, stock-based compensation costs, and income taxes, as they are centrally managed at the corporate level and are excluded from the measure of segment profitability reviewed by management. Under our supply chain organization, our manufacturing, warehouse, distribution and sales activities are substantially integrated across our operations in order to maximize efficiency and productivity. As a result, fixed assets, capital expenditures, and depreciation and amortization expenses are neither maintained nor available by operating segments.
The measurement of operating segment results is consistent with the presentation of the Consolidated Statements of Earnings. Intercompany transactions between reportable operating segments were not material in the periods presented.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
This Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the year ended May 29, 2005, for important background regarding, among other things, our key business drivers.
RESULTS OF OPERATIONS
For the quarter ended August 28, 2005, we reported net diluted earnings per share of $0.64, up 42 percent from $0.45 per share earned in the same period last year. Earnings after tax were $252 million in the first quarter of fiscal 2006, up 38 percent from $183 million last year. Net sales for the thirteen weeks ended August 28, 2005 grew 3 percent to $2.66 billion and segment operating profits increased 21 percent to $500 million.
Net sales growth during the first quarter of fiscal 2006 was the result of 1 point of volume growth, primarily in International, and 2 points of growth from pricing and product mix across all of our businesses. Promotional spending and foreign currency exchange effects were flat compared to the same period in fiscal 2005.
Cost of sales was down $24 million in the quarter versus last year. Cost of sales as a percent of sales decreased from 61.2 percent to 58.5 percent primarily as the result of manufacturing efficiencies and product mix partially offset by increased energy costs. Cost of sales in the first quarter of fiscal 2005 also included $5 million of costs associated with a product recall in our Snacks division.
Selling, general and administrative expense (SG&A) was up $31 million in the quarter versus last year. SG&A as a percent of sales in the quarter increased from 23.6 percent last year to 24.1 percent this year. The increase in SG&A from the first quarter of fiscal 2005 is primarily the result of customer freight costs and corporate expense items. Customer freight costs increased by $23 million from a year ago, primarily the result of increased fuel costs. Corporate expense items increased to $37 million from $20 million as a result of higher employee benefit expense and a $10 million write-down of the asset value of a low-income housing investment.
Interest expense for the quarter totaled $90 million, lower than last years first quarter amount of $113 million, primarily as the result of last years debt pay down and the maturation of interest rate swaps.
In the first quarter of fiscal 2006, we recorded restructuring and other exit costs of $9 million, including $8 million of an asset impairment charge and $1 million associated with restructuring actions previously announced. This compares to restructuring and other exit costs of $40 million recorded in the first quarter of fiscal 2005. The costs associated with previously announced restructuring actions included in cost of sales also decreased during the quarter to $2 million, down from $5 million in the first quarter of fiscal 2005.
The effective tax rate was 35.7 percent for the first quarter. This compares to 34.6 percent in first quarter fiscal 2005. The increase in the tax rate from 2005 is primarily the result of increased state tax expense.
Earnings after tax from joint ventures totaled $18 million in the first quarter, compared to $26 million a year earlier. Our Snack Ventures Europe (SVE) joint venture was terminated on February 28, 2005 and our interest was redeemed. Earnings from our joint ventures excluding SVE in the first quarter of fiscal 2005 were $16 million. Net sales for Cereal Partners Worldwide (CPW), our joint venture with Nestlé, were up 8 percent. Net sales for our Häagen-Dazs ice cream joint ventures in Asia matched the results from the 2005 first quarter. 8th Continent, our soy products joint venture with DuPont, achieved double-digit net sales growth in the quarter, and increased its dollar share of the refrigerated soymilk category sales to 17 percent.
Average shares outstanding decreased by 14 million from the first quarter of fiscal 2005 due primarily to the impact of our repurchase of shares from Diageo plc in October 2004 and our fiscal 2006 first quarter share repurchases, offset by the issuance of shares upon stock option exercises.
U.S. Retail Segment Results
Net sales for our U.S. Retail operations were $1.80 billion for the first quarter, up 2 percent primarily as a result of pricing and product mix. Volume and promotional spending remained flat versus the first quarter of fiscal 2005. Operating profits for the quarter improved 15 percent from $354 million last year to $406 million this year.
U.S. Retail Net Sales and Volume Growth Fiscal 2006 vs. 2005
For the first quarter, Yoplait made the strongest contribution to domestic retail sales growth, with a 19 percent overall increase led by the performance of Yoplait Light and new items including Chocolate Whips and Go-Gurt Smoothies. Other significant contributors to net sales growth in the first quarter were Meals, led by Progresso soup and Green Giant vegetables, and Snacks, with increases in the Nature Valley and Chex Mix businesses. Pillsbury USA net sales finished down one percent compared with nine percent growth in the first quarter of last year. Baking Products net sales matched last years first-quarter results, which were up double-digits from fiscal 2004. Big G cereals also matched prior-year results, as a six percent volume decline was offset by higher pricing.
Consumer retail purchases of our products grew one percent in the quarter in ACNielsen-measured channels including projections for Wal-Mart.
General Mills Retail Dollar Sales Growth Fiscal 2006 vs. 2005
International Segment Results
Net sales for our consolidated international businesses were up 11 percent in the first quarter to $446 million. This increase was primarily the result of unit volumes increasing seven percent, with gains in all our regions. Favorable foreign currency effects contributed 3 points of sales growth. Operating profits for the quarter grew to $61 million in fiscal 2006, up from $36 million last year.
Bakeries and Foodservice Segment Results
First quarter net sales for our Bakeries and Foodservice segment declined 1 percent to $417 million. Operating profits for the segment reached $33 million, up from $23 million in last years first quarter as favorable product mix and operating efficiencies offset a three percent decline in volume.
During the first thirteen weeks of fiscal 2006, operating activities provided cash of $138 million. This compares to cash provided by operations in the first thirteen weeks of fiscal 2005 of $39 million. This $99 million improvement was due primarily to the increase in net earnings of $69 million and a reduction in the use of working capital year-over-year of $43 million.
During the first thirteen weeks of fiscal 2006, investments for land, buildings and equipment and intangibles totaled $45 million. We expect to spend approximately $450 million for capital projects in fiscal 2006, primarily for fixed assets to support future growth and increase supply chain productivity.
On September 15, 2005, we notified holders of our Zero Coupon Senior Debentures Due 2022 of their right to surrender the debentures to us for purchase on October 28, 2005. There is $2.23 billion aggregate principal amount at maturity of the debentures outstanding, which would result in an aggregate purchase price of $1.59 billion if all of the debentures are surrendered to us for purchase. We will not incur a gain or loss on extinguishment if these bonds are surrendered to us for purchase. We intend to pay for debentures surrendered to us for purchase entirely in cash. We expect to fund our purchase of the debentures through the issuance of commercial paper, or, alternatively, through direct borrowings from our committed bank lines.
Commercial paper is a continuing source of short-term financing. We issue commercial paper in the United States, Canada and Europe. Our commercial paper borrowings are supported by fee-paid committed credit lines consisting of a $1.1 billion facility expiring in January 2006, a $750 million facility expiring in April 2006, and a $750 million facility expiring in January 2009. As of August 28, 2005, we had no outstanding borrowings under these facilities.
We believe that cash flows from operations, together with available short- and long-term debt financing, will be adequate to meet our liquidity and capital needs.
With respect to the holders of minority interests in General Mills Cereals LLC (GMC), certain interests will be exchanged for shares of our perpetual preferred stock upon the occurrence of certain events, including a decrease in our long-term debt rating below either Ba3 as rated by Moodys or BB- as rated by Standard & Poors or Fitch, Inc., or a failure to pay a quarterly dividend on our common stock. In addition, if GMC fails to make certain required distributions, we will be restricted from paying any dividend (other than dividends in the form of shares of common stock) or other distributions on shares of our common stock, and may not repurchase or redeem shares of our common stock, until such distributions are paid. Our cash and cash equivalents have included $10 million in GMC and $100 million in General Mills Capital, Inc. that have been restricted from use for general corporate purposes since the sale of the minority interests.
There were no material changes outside the ordinary course of our business in our contractual obligations during the first thirteen weeks of fiscal 2006.
Throughout the first quarter of fiscal 2006 we repurchased 16 million shares of common stock for $749 million, including 4 million shares in a secondary offering in late August. At August 28, 2005, we had unpaid obligations associated with our share repurchases totaling $203 million included in other current liabilities. We settled these obligations shortly after the end of our fiscal quarter.
Our total debt balances were as follows:
Our notes payable increased during the quarter primarily as a result of our share repurchases.
CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are described in Note One to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended May 29, 2005. The accounting policies used in preparing our interim fiscal 2006 consolidated financial statements are the same as those described in our Form 10-K.
Our critical accounting policies are those that have meaningful impact on the reporting of our financial condition and results, and that require significant management judgment and estimates. These policies include our accounting for (a) trade and consumer promotion activities; (b) asset impairments; (c) income taxes; and (d) pension and postretirement liabilities.
Trade and Consumer Promotion Activities
We report sales net of certain coupon and trade promotion costs. The trade promotion costs include payments to customers to perform merchandising activities on our behalf, such as advertising or in-store displays, discounts to our list prices to lower retail shelf prices, and payments to gain distribution of new products.
The amount and timing of expense recognition for trade and consumer promotion activities involve management judgment related to estimated participation and performance levels. The vast majority of year-end liabilities associated with these activities are resolved within the following fiscal year and therefore do not require highly uncertain long-term estimates. For interim reporting, we estimate the annual trade promotion expense and recognize pro rata period expense generally in proportion to revenue, adjusted for estimated year-to-date expenditures.
Promotional funds for our retail businesses are initially established at the beginning of each year, and paid out over the course of the year based on the customers performance of agreed-upon merchandising activity. During the year, additional funds may also be used in response to competitive activities, as a result of changes in the mix of our marketing support, or to help achieve interim unit volume targets.
We set annual sales objectives and interim targets as a regular practice to manage our business. Our sales employees are salaried, and are eligible for annual cash incentives based on performance against objectives set at the start of the year. These objectives include goals for unit volume and the trade promotion cost per unit required to achieve the unit volume goal. Our sales employees have discretion to plan and adjust the timing of merchandising activity over the course of the year, and they also have some discretion to adjust the level of trade promotion funding applied to a particular event.
Our unit volume in the last week of each quarter has been consistently higher than the average for the preceding weeks of the quarter. In comparison to the average daily shipments in the first 12 weeks of a quarter, the final week of each quarter has approximately two to four days worth of incremental shipments (based on a five-day week), reflecting increased promotional activity at the end of the quarter. This increased activity includes promotions to assure that our customers have sufficient inventory on hand to support major marketing events or increased seasonal demand early in the next quarter, as well as promotions intended to help achieve interim unit volume targets. This increased sales activity results in shipments that are in direct response to orders from customers or authorized pursuant to pre-arranged inventory-management agreements, and accordingly are recognized as revenue within that quarter. The two to four day range of increased unit volume in the last week of each quarter has been generally consistent from quarter to quarter over the last three years.
As part of our effort to assess the results of our promotional activities, we regularly estimate the amount of retailer inventory in the system defined as product that we have shipped to our customers that has not yet been purchased from our customers by the end-consumer. While it is not possible for us to measure the absolute level of inventory, we are able to estimate the change that occurs each month by comparing our shipments to retail customers with their sales to end-consumers (takeaway) as reported by ACNielsen including panel projections for Wal-Mart. Our estimate indicates inventory levels peak in November when retailers have increased inventories to meet seasonal demand for products like refrigerated dough and ready-to-serve soup. This seasonal trend is generally consistent from year to year, even as retailers have taken actions to reduce their ongoing inventory levels.
We also assess the effectiveness of our promotional activities by evaluating the end-consumer purchases of our products subsequent to the reporting period. If, due to quarter-end promotions or other reasons, our customers purchase more product in any reporting period than end-consumer demand will require in future periods, then our sales level in future reporting periods would be adversely affected.
As part of our ongoing evaluation of sales, we also monitor customer returns. We generally do not allow a right of return on our products. However, on a limited case-by-case basis with prior approval, we may allow customers to return products in saleable condition for redistribution to other customers or outlets. These returns are recorded as reductions of net sales in the period of the return. Monthly returns are consistently below 1 percent of sales, and have averaged approximately 0.5 percent of total monthly shipments over the last three years.
Evaluating the impairment of long-lived assets, including goodwill and other intangible assets, involves management judgment in estimating the fair values and future cash flows related to these assets, as well as assessing our plans for their future use. Although the predictability of long-term cash flows may be somewhat uncertain, and assuming our plans for future use remain unchanged, our evaluations indicate fair values of assets significantly in excess of stated book values. Therefore, we believe the risk of unrecognized impairment is low.
Income tax expense involves management judgment as to the ultimate resolution of any tax issues. Historically, our assessments of the ultimate resolution of tax issues have been reasonably accurate. The current open tax issues are not dissimilar in size or substance from historical items, except for the accounting for losses recorded as part of the Pillsbury transaction.
The accounting for pension and other postretirement liabilities requires the estimation of several critical factors. The assumptions used in the determination of those liabilities are described in our Form 10-K for the year ended May 29, 2005.
NEW ACCOUNTING RULES
The Financial Accounting Standards Board (FASB) issued SFAS No. 123(R), Share-Based Payment, in December 2004, which will require the cost of employee compensation paid with equity instruments to be measured based on grant-date fair values and recognized over the vesting period. In April 2005, the Securities and Exchange Commission announced the adoption of a new rule that amends the compliance dates for SFAS No. 123(R). The new rule allows companies to implement SFAS No. 123(R) at the beginning of their fiscal year that begins after June 15, 2005. Under the new rule, SFAS No. 123(R) will become effective for us in the first quarter of fiscal 2007. We are still evaluating the impact of adopting SFAS 123(R) on our consolidated financial statements.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs An Amendment of ARB No. 43, Chapter 4. SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS No. 151 is effective for the fiscal year beginning after June 15, 2005, and is effective for us in the first quarter of fiscal 2007. We do not expect SFAS No. 151 to have a material impact on our results of operations or financial condition.
In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets An Amendment of APB Opinion No. 29. SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for the first fiscal period beginning after June 15, 2005, and is effective for us in the second quarter of fiscal 2006. We do not expect SFAS No. 153 to have a material impact on our results of operations or financial condition.
In December 2004, the FASB issued Staff Position No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004, (FSP No. 109-2). FSP No. 109-2 provides guidance with respect to recording the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the Jobs Act) on income tax expense and deferred tax liability. FSP No. 109-2 includes a one year reduced tax rate on repatriation of foreign earnings and a phased-in tax deduction provided for qualifying domestic production activities. We are currently evaluating the impact of repatriation provisions as Treasury guidance is provided. However, the range of reasonably possible amounts of unremitted earnings that is being considered for repatriation in fiscal year 2006 is between $0 and $60 million with the respective income tax impact ranging from $0 to $3 million based on a 5.25 percent tax rate.
In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, (FIN 47). FIN 47 requires that liabilities be recognized for the fair value of a legal obligation to perform asset retirement activities that are conditional on a future event if the amount can be reasonably estimated. We will adopt FIN 47 at the end of fiscal 2006 and do not expect it to have a material impact on our results of operations or financial condition.
This report contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 that are based on managements current expectations and assumptions. The words or phrases will likely result, are expected to, will continue, is anticipated, estimate, project or similar expressions identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in such statements. We wish to caution you not to place undue reliance on any such forward-looking statements, which speak only as of the date made.
Our future results could be affected by a variety of factors, such as: 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; actions of competitors other than as described above; economic conditions, including changes in inflation rates, interest rates or tax rates; 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 changes in accounting standards and labeling and advertising regulations; changes in customer 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; 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; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war. We undertake no obligation to publicly revise any forward-looking statements to reflect future events or circumstances.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our market risk during the thirteen weeks ended August 28, 2005. For additional information, see Market Risk Management on pages 22-23 of our Form 10-K for fiscal 2005.
Item 4. Controls and Procedures.
We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of August 28, 2005, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during our fiscal quarter ended August 28, 2005, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. OTHER INFORMATION
The following table sets forth information with respect to shares of our common stock that we purchased during the three fiscal months ended August 28, 2005.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.