Accounting & Tax

General Mills Details SEC Probe

At issue is the company's practice of quarter-end ''loading'' to meet internal targets.
Stephen TaubApril 8, 2004

General Mills has served up some details of the Securities and Exchange Commission’s investigation into the company’s sales practices.

According to its quarterly report filed on Wednesday, the cereal maker stated that the SEC is focusing on at least two disclosure issues related to the company’s U.S. retail division.

One issue involves “loading” — the use of discounts or other promotional programs to encourage retailers and wholesalers to increase their purchases of products. The SEC, according to the filing, is looking into how well the company disclosed its practice of loading at the end of fiscal quarters to help meet internal sales targets, as well as the impact of loading on current and future results of operations.

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In addition, according to the filing, the SEC believes that the company misstated its policy on product returns.

In early February, the company announced that it had received a Wells notice from the SEC in connection with the commission’s probe, first made public in October, into the company’s sales practices and related accounting. The notice also covered chief executive officer Steve Sanger and chief financial officer James Lawrence.

In Wednesday’s filing, the company stated that Sanger and Lawrence responded to the notice with a written explanation of the factual and legal bases for the company’s belief that its sales practices comply with all applicable regulations. The SEC replied with a formal request for additional information, added the company.