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General Mills settles
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May 31, 2001: 4:26 p.m. ET
Cereal maker gets partial recovery from 1994 oat pesticide incident
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NEW YORK (CNNfn) - General Mills Inc. said Thursday it had partially settled a dispute arising from a 1994 incident involving oat pesticide and will receive about $34 million in its fiscal fourth quarter as a result.
General Mills, the nation's largest cereal maker, said it settled with a group of insurance companies who participated in the reinsurance of a property policy covering a 1994 incident, when an independent contractor substituted one pesticide for another in treating some of the company's raw oat supplies.
The Minneapolis-based company said it would record a $55 million gain from the settlement in its fourth quarter, which ended on May 27. After taxes, the settlement will add $34 million, or 12 cents a share, to General Mills' quarterly results. It will be recorded as an unusual item.
"We are pleased with this settlement as a partial recovery of the costs we incurred," said General Mills chief executive officer Steve Sanger. "It's welcome news to the General Mills people who worked so hard in 1994 to help the company rebound from this event."
General Mills said it took a charge of nearly $150 million in 1994 to cover losses on oats after a contractor used a pesticide that wasn't approved by the Environmental Protection Agency for use on oats. The contractor concealed the substitution from the company and was later convicted on criminal charges, General Mills said.
General Mills settled with another insurer in 1998, and a separate arbitration proceeding with other reinsurers will continue, the company said.
General Mills (GIS: Research, Estimates) shares closed Thursday down 4 cents at $42.36. 
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General Mills
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