General Mills Proxy Stmnt

Diageo PLC
23 August 2000


DIAGEO                                  23 AUGUST 2000

GENERAL MILLS FILES PRELIMINARY PROXY STATEMENT WITH THE SEC

General Mills yesterday filed with the United States Securities
and Exchange Commission its preliminary Proxy Statement seeking
approval by General Mills shareholders of the proposed
combination of General Mills and Pillsbury.  In accordance with
US securities laws, the General Mills proxy statement contains
balance sheet information for Pillsbury at 30 June 2000 and 1999,
and profit and loss accounts and cash flow statements for the
years ended 30 June 2000 and 1999 and the 9 months ended 30 June
1998, all prepared in accordance with US GAAP.  This information
was provided by Diageo in accordance with its obligations under
the Agreement and Plan of the Merger relating to Pillsbury.

Extracts from these financial disclosures and the accompanying
management discussion and analysis are set out below.  As these
financial statements have been prepared in accordance with US
GAAP, the figures and trends disclosed will differ from those
which will appear in Pillsbury's UK GAAP figures which will
presented as part of Diageo's Preliminary Statement of its
results for the year ended 30 June 2000.  These results will be
announced on 7 September 2000.

A free copy of the Proxy Statement filed by General Mills may be
obtained at the US Securities and Exchange Commission's web site
at http://www.sec.gov.

THE PILLSBURY COMPANY AND SUBSIDIARIES
(wholly owned by Diageo plc)

Combined Balance Sheets
June 30, 2000 and 1999

Assets
                                                2000         1999
                                                   (US dollars in
                                                  million, except
                                               share information)
Current assets:                            $                     
  Cash and cash equivalents                        56          45
  Receivables:                                                   
    Trade receivables, less                                      
    allowance for returns,                                       
    discounts and doubtful                                       
    accounts of $14 in 2000                                      
    and $12 in 1999                               399         439
    Other accounts receivable                      42          51
  Inventories                                     468         452
  Prepaids and other assets                       105          98
    Total current assets                        1,070       1,085
                                                                 
  Investment in joint ventures                    136          36
  Goodwill and other                                             
  intangibles, net                              6,648       6,716
  Property, plant and equipment,                                 
  net                                           1,412       1,375
  Other long-term assets                          198         176
    Total assets                                9,464       9,388
                                                                 
Liabilities and Stockholders' Deficit
                                                                 
Current liabilities:                                             
  Accounts payable                                354         350
  Accrued advertising and                                        
  promotions                                      118         134
  Accrued compensation and                                       
  benefits                                         99         155
  Accrued income taxes                            129         144
  Current portion of long-term                                   
  debt                                             43          38
  Other current liabilities                       244         274
    Total current liabilities                     987       1,095
  Payables to affiliated                                         
  companies, net                                7,486       7,299
  Long-term debt                                  161         161
  Deferred taxes                                1,036       1,012
  Other long-term liabilities                     412         416
    Total liabilities                          10,082       9,983
Stockholders' deficit:                                           
  Common stock and paid-in                                       
  capital - par value $1 per                                     
  share; 1,000 shares authorized,                                
  issued and outstanding                        3,169       3,053
  Accumulated deficit                          (3,774)     (3,626)
  Accumulated other comprehensive                                
  loss                                            (13)        (22)
    Total stockholders' deficit                  (618)       (595)
    Total liabilities and                                        
    stockholders' deficit                       9,464       9,388

THE PILLSBURY COMPANY AND SUBSIDIARIES
(wholly owned by Diageo plc)

Combined Statements of Operations

For the years ended June 30, 2000 and 1999 and the nine months
ended June 30, 1998

                                                            Nine
                                      Year       Year     months
                                     ended      ended      ended
                                  June 30,   June 30,   June 30,
                                      2000       1999       1998
                                        (US dollars in millions)
                                                      
Sales                               $6,078      6,137      4,502
Cost and expenses:                                              
  Cost of sales                     (3,438)    (3,467)    (2,550)
  Selling, general and                                          
  administrative                    (1,853)    (1,930)    (1,489)
  Amortization of intangibles         (206)      (201)      (150)
  Other income                          28         28          7
  Unusual items                        (63)       (93)       (60)
  Net interest expense -                                        
  external                             (14)       (11)       (13)
  Net interest expense -                                        
  affiliated companies                (616)      (540)      (398)
  Factoring and other charges                                   
  from affiliated companies            (70)       (70)       (48)
  (Losses)/gains on disposal of                                 
  businesses and tangible fixed                                 
  assets                               (13)       (76)         12
                                                                
      Total costs, expenses and                                 
      losses                        (6,245)    (6,360)    (4,689)
                                                                
      Loss before taxes and                                     
      earnings from joint                                       
      ventures                        (167)      (223)      (187)
                                                                
Income tax benefit (expense)             4        (17)        16
                                                                
Earnings from joint ventures,                                   
net of income taxes                     22         10          7
                                                                
      Net loss                        (141)      (230)      (164)

Management Discussion and Analysis of Financial Condition and
Results of Operations

Pillsbury's principal business is its branded packaged food
businesses in the United States with a business strategy to
strengthen and increase consumer appeal for its branded products.
Pillsbury's foodservice and bakery business strategy is to grow
the business through organic growth and with tactical
acquisitions to enable the business to become a major supplier to
both the wholesale and retail food industries in the United
States and Canada.  Pillsbury's international business strategy
is to pursue growth in other areas of the world by focusing on
the Pillsbury key brands, as well as select local brands and
foodservice opportunities.

As a part of Diageo, the Pillsbury capital and debt structure has
been determined principally by intercompany financing of the
Pillsbury acquisition by Grand Metropolitan Public Limited
Company (now a wholly owned subsidiary of Diageo) in 1989 and by
Pillsbury's acquisition of Pet Incorporated in 1995 as well as
other Pillsbury acquisitions.  This structure is highly
leveraged, resulting in significant interest expense for
Pillsbury.

The merger agreement provides that at the closing of the
combination with General Mills, Pillsbury will have an aggregate
of up to $5.142 billion of debt, consisting of existing third
party debt and new debt.  Pillsbury will distribute the proceeds
of this new debt to Diageo prior to closing, at Pillsbury's
election, either as a dividend and/or by repaying intercompany
obligations.  At the time the transaction is completed, Pillsbury
and Diageo will settle all remaining intercompany obligations
owed by any Pillsbury entity to any Diageo entity (other than
those being acquired by General Mills), and any receivables of
any Pillsbury entity owed by any such Diageo entity to a
Pillsbury entity (by way of capital contribution or dividend in
kind).

In the discussion below, organic movement refers to the local
currency movements excluding the impact of acquisitions and
disposals.

Year Ended June 30, 2000 Compared With Year Ended June 30, 1999

                                                      Year ended
                                                         June 30
                                              2000          1999
Selected Financial Information                   ($ in millions)
                                                        
Net sales                                    6,078         6,137
Cost of sales                                3,438         3,467
Selling, general and administrative          1,853         1,930
Amortization of intangibles                    206           201
Unusual expense items                           63            93
Earnings before interest, taxes and                             
earnings from joint ventures                   533           398
Interest expense, net, factoring and                            
other charges from affiliated                                   
companies                                      700           621
                                                                
Net (loss)                                   (141)         (230)

In fiscal 2000, reported sales for Pillsbury declined 1% as sales
increases from acquisitions were more than offset by the absence
of Haagen-Dazs sales due to the October 1999 formation of the ice
cream joint venture with Nestle, the sales of which are not
included in Pillsbury's net sales, and by lower sales from
several product lines.  Sales on an organic basis were flat.  The
fiscal 2000 net loss of $141 million improved from a fiscal 1999
net loss of $230 million due principally to a 4% decrease in
selling, general and administrative expenses (principally from
the absence of Haagen-Dazs selling, general and administrative
expenses and lower selling and brokerage costs) and lower unusual
expense items (restructuring and acquisition integration costs)
that more than offset an increase in interest expense, net,
factoring and other charges from affiliated companies.

In the discussion below, consumer takeaway represents sales of
Pillsbury products in the retail grocery channel, not net sales
of Pillsbury.  The percentage movements shown for consumer
takeaway by category are given, as they are regarded as the most
meaningful comparison to determine market performance.  The
consumer takeaway and category information provided below is
sourced from information supplied by ACNielsen.

In Pillsbury North America (PNA), volume and net sales declined
2% on an organic basis reflecting the strong competitive
environment in refrigerated baked goods, frozen breakfast, frozen
vegetables, and Mexican foods and reduced marketing spending on
shelf stable vegetables.  Marketing investment as a percentage of
net sales rose 2 percentage points over last year as the decline
in sales was greater than the decrease in marketing spending.

Within the Dough based products, Refrigerated Baked Goods net
sales and consumer takeaway declined 3% and 2% respectively while
the category grew 1%.  In Frozen Breakfast, net sales declined 7%
while consumer takeaway was off 5% and the category declined 2%.
In Frozen Pizza and Snacks, net sales increased 9% with consumer
takeaway up 8% primarily driven by category growth of 9%.

In non-dough products, Desserts and Specialty Products net sales
increased 1% but consumer takeaway and the category declined 1%.
In Green Giant Shelf Stable, net sales declined 15% and consumer
takeaway was off 9% while the category declined 1%.  In Green
Giant Frozen, net sales and consumer takeaway declined 10% and 7%
respectively and the category declined 2%.  In Progresso, net
sales of ready-to-serve soup were up 17% and consumer takeaway
increased 14% driven by effective advertising and the total
canned soup category was flat. Mexican net sales declined 7% with
a 4% drop in consumer takeaway while the category grew 4%.

In Bakeries and Foodservice, a 5% organic increase in volume was
achieved due principally to continued growth in frozen dough from
biscuits and cookies.  Volume in absolute terms increased 35%
over last year including a full year of Heinz bakery products (9
months previous year), a full year of Hazelwood Farms Bakeries
(versus one month in fiscal 1999) and approximately four months
from the recent DCA Bakery acquisition.  Net sales increased 30%
to $1,245 million.

Pillsbury International organic volume and net sales grew 1% and
4% respectively.  International recorded strong growth in Europe
and Asia Pacific regions while organic volume declined in Latin
America from difficult economic conditions in Argentina and
Brazil.

Unusual expense items in the year ended June 30, 2000 amounted to
$63 million before income tax benefits.  Included were $38
million in restructuring costs for Pillsbury's March 2000
reorganization which included 400 employee terminations and
transition payments to a new sales broker; $17 million for
integration costs related to the acquisitions of DCA Bakery,
Hazelwood Farms Bakeries and the bakery products division of
Heinz; and $8 million for costs incurred in connection with the
creation of the ice cream joint venture with Nestle USA.

Unusual expense items in the year ended June 30, 1999 amounted to
$93 million before income tax benefits.  Included were $28
million for integration costs related to the acquisitions of
Hazelwood Farms Bakeries and the bakery products division of
Heinz; and $65 million for the closure of a Haagen-Dazs
production facility in New Jersey.

Cash flow.  A summary of Pillsbury's cash flow for the two years
ended June 30, 2000 is as follows:

                                                      Year ended
                                                         June 30
                                                2000        1999
                                                 ($ in millions)
                                                                
From operations                                   128        235
Net capital expenditures                         (258)      (303)
Acquisitions of businesses                       (172)      (526)
Disposals of businesses                             7        221
External debt, net                                  5       (117)
Net borrowings from affiliated                                  
companies                                         303        957
Dividends                                          (7)      (482)
Other                                               5         14
                                                                
Increase (decrease) in cash and                                 
cash equivalents                                   11        (1)

In fiscal 2000, cash requirements for capital expenditures of
$258 million and acquisitions of businesses (principally
foodservice and bakery acquisitions) for $172 million were met by
cash inflow from operations of $128 million (net of $628 million
for interest) and an increase ($303 million) in net borrowings
from financing affiliated companies of Diageo under Diageo's
centralized cash management system.  In fiscal 1999, net cash
flow was flat as cash inflows from operations ($235 million, net
of $555 million for interest), disposals of businesses ($221
million), and net borrowings from affiliated companies ($957
million) were offset by capital expenditures ($303 million),
acquisitions of foodservice and other businesses ($526 million),
external debt repayments ($117 million), and dividends ($482
million).

Year ended June 30, 1999 Compared with 9 Months Ended June 30,
1998 and Compared With Year Ended June 30, 1998

In fiscal 1998, Pillsbury changed its year end from September 30
to June 30.  The following discussion of sales for the year ended
June 30, 1999 has been prepared based on a comparison to the
unaudited results of Pillsbury for the year ended June 30, 1998.

                                                    9  Unaudited
                                               months       Year
                                         Year   ended      ended
                                        ended    June       June
                                      June 30      30         30
                                         1999    1998       1998
Selected Financial Information                   ($ in millions)
                                                       
Net sales                               6,137   4,502      6,008
Cost of sales                           3,467   2,550        (a)
Selling, general and                                            
administrative                          1,930   1,489        (a)
Amortization of intangibles               201     150        (a)
Unusual expense items                      93      60        (a)
Earnings before interest,                                       
taxes and earnings from joint                                   
ventures                                  398     272        (a)
Interest expense, net,                                          
factoring and other charges                                     
from affiliated companies                 621     459        (a)
Net (loss)                               (230)   (164)       (a)

Notes:

(a) Not available

Net sales for Pillsbury increased $129 million (2%) from $6,008
million in the year ended June 30, 1998 to $6,137 million in the
year ended June 30, 1999.  On an organic basis, net sales were up
2% compared to the year ended June 30, 1998 reflecting growth in
all three divisions.  Organic volume was up 1% for the year.

In the discussion below, consumer takeaway represents sales of
Pillsbury products in the retail grocery channel, not net sales
of Pillsbury.  The percentage movements shown for consumer
takeaway by category are given, as they are regarded as the most
meaningful comparison to determine share of total sales.  The
consumer takeaway information provided below is sourced from
information supplied by ACNielsen.

In PNA, volume for the year was flat.   Organic net sales growth
was 1% for the year.  In Refrigerated Baked Goods, net sales and
consumer takeaway were up 2%.  In Frozen Breakfast, net sales
were up 8% and consumer takeaway up 9% with consumer takeaway of
toaster pastry up 19% following an increase in production
capacity.  In Desserts and Specialty Products, net sales and
consumer takeaway declined 4%.  In Green Giant Shelf Stable,
volume and net sales increased 11% and 17% respectively.  In
Green Giant Frozen, volume was off 1% and net sales declined 4%.
In Progresso, net sales of ready-to-serve soup increased 11% and
consumer takeaway was up 10%.  Mexican net sales in North America
continued to decline and were 6% less than the prior year.
Internationally, the Old El Paso brand continued to perform well
with net sales in Europe up 35%.

In Bakeries and Foodservice, a 5% organic increase in volume was
achieved.  Volume increased 29% including the acquisitions of the
Heinz bakery products unit in October 1998 and of the Hazelwood
Farms Bakeries business in May 1999.  Net sales increased 17%.

A number of tactical acquisitions were made in the International
business, but weaker economic conditions in Japan, Brazil and
Argentina depressed results.  Volume on a comparable basis was in
line with last year, however net sales were up 4% due to price
increases and mix improvements.

Unusual expense items in the 9 months ended June 30, 1998 were
$60 million before income tax benefits and included $58 million
arising from employee stock option plans where the performance
criteria were waived following the merger of Grand Metropolitan
Public Limited Company and Guinness PLC in December 1997.

Cash flow.  A summary of the cash flow for the 9 months ended
June 30, 1998 is as follows:

                                                  9 months ended
                                                         June 30
                                                            1998
                                                 ($ in millions)
                                                                
From operations                                             (23)
Net capital expenditures                                   (204)
Acquisitions of businesses                                  (16)
Disposals of businesses                                      28
External debt, net                                          (12)
Net borrowings from affiliated                              214
companies
Dividends                                                    (4)
Other                                                         3
                                                                
Decrease in cash and cash                                       
equivalents                                                 (14)

In the 9 months ended June 30, 1998, cash requirements for
capital expenditures of $204 million were principally provided by
an increase in net borrowings from affiliated companies as there
was a cash outflow of $23 million from operations (of which $409
million was for interest).

Qualitative and Quantitative Disclosures about Market Risks

Risk management

Pillsbury's funding, liquidity and exposure to interest rate and
foreign exchange rate risks are managed by Diageo's treasury
department on a group wide basis.

Commodity price risk

Certain raw materials used in the production/distribution of
Pillsbury's products are exposed to price fluctuations.  This
risk is managed through an integrated set of financial
instruments including purchase orders, non-cancelable contracts,
futures contracts, futures options and swaps.  Pillsbury uses
these financial instruments to hedge anticipated purchases of
wheat flour, soybean oil, corn flour and anticipated usage of
diesel fuel.  Commodity futures are then either sold at the time
the raw material is purchased or they are exchanged with the
company manufacturing the raw material to determine the contract
price.  Commodity contracts are held in the balance sheet at fair
value but any gains or losses are deferred until the contracts
are sold or exchanged.  As of June 30, 2000, Pillsbury has
unrealized losses of $2 million on open futures and options
contracts for anticipated future purchases of wheat flour,
soybean oil and corn flour and deferred losses of $2 million on
closed contracts.  Anticipated profits from the sale of the
finished goods are expected to cover these losses.  The estimated
maximum potential one-day loss at fair value on the open futures
and option contracts as of June 30, 2000 is approximately
$700,000.  The estimated maximum one-day loss was calculated
using loss-limits in place at the exchanges in which Pillsbury
does business (principally the Kansas City Board of Trade).