PILLSBURY <PSY> HURT BY RESTAURANT OPERATIONS
Pillsbury Corp, reporting lower
earnings for the third quarter ended February 28, said a strong
performance by its Foods Group was offset by Restaurants Group
declines.
    Excluding unusual items, it said restaurants operating
profit was down in the quarter 12 pct from a year ago as sales
rose four pct.
    It said Burger King USA and Bennigan's reported higher
operating profit, but profits fell sharply at Steak and Ale,
which introduced a new menu.
    Pillsbury also reported lower profits at Distron, Burger
King's distribution arm, and said increased investment spending
on developing concepts - QuikWok, Bay Street and Key West Grill
- hurt results.
    It said Foods operating profit, excluding unusual items,
rose 10 pct with international operations and domestic breads
and baking products major contributors to improvement in the
quarter.
    A turnaround in grain merchandising was a major factor in
profit improvement for the nine months, Pillsbury said.
    Pillsbury said corporate expense showed a 4.3 mln dlr
profit in the quarter reflecting a 10.5 mln dlr gain on the
sale of a joint interest in an Australian food company and
lower corporate expenses, largely as a result of an early
retirement program initiated a year ago.
    Earlier, Pillsbury reported fourth quarter earnings of 48.5
mln dlrs, or 56 cts a share, down from 55.4 mln dlrs, or 63 cts
a share a year ago. Sales advanced to 1.53 billion dlrs from
1.46 billion dlrs.
    Pillsbury said loss of investment tax credits under the
1986 Federal Tax Reform Act reduced per-share earnings by nine
cts in the quarter and 19 cts in the nine months.
    As a result of the act, it said its effective income tax
rate rose eight points to 48.1 pct in the quarter and 5.5
percentage points to 49.7 pct for the nine months.
 Reuter
