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General Mills
GIS
#960
Rank
$25.54 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$47.87
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Categories
  1. General Mills
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2024 Q1

General Mills - 10-Q quarterly report FY2024 Q1


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
 
☑
 
QUARTERLY
 
REPORT
 
PURSUANT
 
TO
 
SECTION
 
13
 
OR
 
15(d)
 
OF
 
THE
 
SECURITIES
 
EXCHANGE
 
ACT
 
OF
 
1934
FOR THE QUARTERLY
 
PERIOD ENDED
AUGUST 27, 2023
☐
 
TRANSITION
 
REPORT
 
PURSUANT
 
TO
 
SECTION
 
13
 
OR
 
15(d)
 
OF
 
THE
 
SECURITIES
 
EXCHANGE
 
ACT
 
OF
 
1934
FOR THE TRANSITION PERIOD FROM
 
TO
 
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
 
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
 
including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $.10 par value
 
GIS
 
New York Stock Exchange
0.125% Notes due 2025
GIS 25A
New York Stock Exchange
0.450% Notes due 2026
 
GIS 26
 
New York Stock Exchange
1.500% Notes due 2027
 
GIS 27
 
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
________________
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
 
Securities
Exchange Act of 1934
 
during the preceding 12
 
months (or for such shorter
 
period that the registrant
 
was required to file such
 
reports),
and (2) has been subject to such filing requirements for the past 90 days.
 
Yes
☑
 
No
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
has
 
submitted
 
electronically
 
every
 
Interactive
 
Data
 
File
 
required
 
to
 
be
 
submitted
pursuant to Rule 405
 
of Regulation S-T (§
 
232.405 of this chapter) during
 
the preceding 12 months (or
 
for such shorter period that
 
the
registrant was required to submit such files).
Yes
 
☑
 
No
☐
Indicate by check mark
 
whether the registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
smaller reporting
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer,”
 
“smaller
 
reporting
company,” and “emerging
 
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
 
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
 
If
 
an
 
emerging
 
growth
 
company,
 
indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
has
 
elected
 
not
 
to
 
use
 
the
 
extended
 
transition
 
period
 
for
complying with any new or revised financial accounting standards provided
 
pursuant to Section 13(a) of the Exchange Act.
 
☐
Indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the Exchange Act).
Yes
☐
 
No
☑
Number of
 
shares of
 
Common Stock
 
outstanding
 
as of
 
September 13,
 
2023:
581,279,229
 
(excluding
173,334,099
 
shares held
 
in the
treasury).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
PART
 
I.
 
FINANCIAL INFORMATION
Item 1.
 
Financial Statements
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Net sales
$
4,904.7
$
4,717.6
Cost of sales
3,134.2
3,269.9
Selling, general, and administrative expenses
839.3
791.4
Divestitures gain, net
-
(430.9)
Restructuring, impairment, and other exit costs
1.2
1.6
Operating profit
930.0
1,085.6
Benefit plan non-service income
(17.0)
(21.7)
Interest, net
117.0
87.7
Earnings before income taxes and after-tax earnings
 
from
 
 
joint ventures
830.0
1,019.6
Income taxes
173.2
216.1
After-tax earnings from joint ventures
23.5
19.8
Net earnings, including earnings attributable to noncontrolling interests
680.3
823.3
Net earnings attributable to noncontrolling interests
6.8
3.3
Net earnings attributable to General Mills
$
673.5
$
820.0
Earnings per share – basic
$
1.15
$
1.37
Earnings per share – diluted
$
1.14
$
1.35
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Net earnings, including earnings attributable to noncontrolling interests
$
680.3
$
823.3
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(18.1)
3.8
Other fair value changes:
Hedge derivatives
(2.3)
(38.3)
Reclassification to earnings:
Foreign currency translation
-
(7.4)
Hedge derivatives
0.2
(1.4)
Amortization of losses and prior service costs
9.1
14.1
Other comprehensive loss, net of tax
(11.1)
(29.2)
Total comprehensive
 
income
 
669.2
794.1
Comprehensive income attributable to noncontrolling interests
6.9
2.0
Comprehensive income attributable to General Mills
$
662.3
$
792.1
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Aug. 27, 2023
May 28, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
490.9
$
585.5
Receivables
1,791.1
1,683.2
Inventories
2,228.8
2,172.0
Prepaid expenses and other current assets
596.2
735.7
Total current
 
assets
5,107.0
5,176.4
Land, buildings, and equipment
3,585.2
3,636.2
Goodwill
14,522.0
14,511.2
Other intangible assets
6,965.7
6,967.6
Other assets
1,139.8
1,160.3
Total assets
$
31,319.7
$
31,451.7
LIABILITIES
 
AND EQUITY
Current liabilities:
Accounts payable
$
3,705.8
$
4,194.2
Current portion of long-term debt
1,174.6
1,709.1
Notes payable
584.3
31.7
Other current liabilities
1,603.1
1,600.7
Total current
 
liabilities
7,067.8
7,535.7
Long-term debt
10,523.5
9,965.1
Deferred income taxes
2,085.0
2,110.9
Other liabilities
1,128.0
1,140.0
Total liabilities
20,804.3
20,751.7
Stockholders' equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,185.7
1,222.4
Retained earnings
20,163.6
19,838.6
Common stock in treasury,
 
at cost, shares of
173.4
 
and
168.0
(8,874.3)
(8,410.0)
Accumulated other comprehensive loss
(2,288.1)
(2,276.9)
Total stockholders' equity
10,262.4
10,449.6
Noncontrolling interests
253.0
250.4
Total equity
10,515.4
10,700.0
Total liabilities and equity
$
31,319.7
$
31,451.7
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Consolidated Statements of Total
 
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,700.0
$
10,788.0
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,222.4
1,182.9
Stock compensation plans
7.3
9.3
Unearned compensation related to stock unit awards
(79.4)
(79.0)
Earned compensation
35.4
32.9
Ending balance
1,185.7
1,146.1
Retained earnings:
Beginning balance
19,838.6
18,532.6
Net earnings attributable to General Mills
673.5
820.0
Cash dividends declared ($
0.59
 
and $
0.54
 
per share)
(348.5)
(325.0)
Ending balance
20,163.6
19,027.6
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
Shares purchased, including $
4.2
 
million of excise tax
(6.4)
(504.7)
(6.9)
(500.8)
Stock compensation plans
1.0
40.4
2.3
102.9
Ending balance
(173.4)
(8,874.3)
(160.3)
(7,676.0)
Accumulated other comprehensive loss:
Beginning balance
(2,276.9)
(1,970.5)
Comprehensive loss
(11.2)
(27.9)
Ending balance
(2,288.1)
(1,998.4)
Noncontrolling interests:
Beginning balance
250.4
245.6
Comprehensive income
6.9
2.0
Distributions to noncontrolling interest holders
(4.3)
(1.9)
Divestiture
-
5.1
Ending balance
253.0
250.8
Total equity,
 
ending balance
$
10,515.4
$
10,825.6
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
680.3
$
823.3
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
137.2
134.3
After-tax earnings from joint ventures
(23.5)
(19.8)
Distributions of earnings from joint ventures
15.8
15.5
Stock-based compensation
35.3
33.5
Deferred income taxes
(14.5)
9.2
Pension and other postretirement benefit plan contributions
(7.4)
(5.3)
Pension and other postretirement benefit plan costs
(5.3)
(6.7)
Divestitures gain, net
-
(430.9)
Restructuring, impairment, and other exit costs
2.4
(15.7)
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(457.4)
(209.7)
Other, net
15.2
61.1
Net cash provided by operating activities
378.1
388.8
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(141.7)
(90.9)
Acquisition, net of cash acquired
-
(252.1)
Proceeds from divestitures, net of cash divested
-
610.7
Other, net
6.2
(1.9)
Net cash (used) provided by investing activities
(135.5)
265.8
Cash Flows - Financing Activities
Change in notes payable
551.8
188.0
Proceeds from common stock issued on exercised options
4.5
65.5
Purchases of common stock for treasury
(500.5)
(500.8)
Dividends paid
(348.5)
(325.0)
Distributions to noncontrolling interest holders
(4.3)
(1.9)
Other, net
(37.2)
(34.9)
Net cash used by financing activities
(334.2)
(609.1)
Effect of exchange rate changes on cash and cash equivalents
(3.0)
(20.5)
(Decrease) Increase in cash and cash equivalents
(94.6)
25.0
Cash and cash equivalents - beginning of year
585.5
569.4
Cash and cash equivalents - end of period
$
490.9
$
594.4
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(104.4)
$
(91.1)
Inventories
(54.3)
(243.3)
Prepaid expenses and other current assets
140.9
79.5
Accounts payable
(443.8)
(130.4)
Other current liabilities
4.2
175.6
Changes in current assets and liabilities
$
(457.4)
$
(209.7)
See accompanying notes to consolidated financial statements.
 
 
 
 
9
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
 
FINANCIAL STATEMENTS
(Unaudited)
(1) Background
The accompanying
 
Consolidated Financial
 
Statements of
 
General Mills,
 
Inc. (we,
 
us, our,
 
General Mills,
 
or the Company)
 
have been
prepared in
 
accordance with
 
accounting principles
 
generally accepted
 
in the
 
United States
 
(GAAP) 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, including
 
the elimination
 
of all
 
intercompany transactions
 
and
any
 
noncontrolling
 
interests’
 
share
 
of
 
those
 
transactions.
 
Operating
 
results
 
for
 
the
 
fiscal
 
quarter
 
ended
 
August
 
27,
 
2023,
 
are
 
not
necessarily indicative of the results that may be expected for the fiscal year ending
 
May 26, 2024.
 
These
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
Consolidated
 
Financial
 
Statements
 
and
 
footnotes
 
included
 
in
 
our
 
Annual
Report on Form
 
10-K for the fiscal
 
year ended May
 
28, 2023. The
 
accounting policies used
 
in preparing these
 
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
 
Statements in that Form 10-K with the exception of
new requirements adopted in the first quarter of fiscal 2024.
In the first quarter
 
of fiscal 2024, we
 
adopted optional accounting guidance
 
to ease the burden
 
in accounting for reference
 
rate reform.
The new
 
standard provides
 
temporary expedients
 
and exceptions
 
to existing
 
accounting requirements
 
for contract
 
modifications
 
and
hedge accounting
 
related to transitioning
 
from discontinued
 
reference rates.
 
This resulted in
 
modifying contracts,
 
where necessary,
 
to
apply a new reference rate,
 
primarily SOFR. The adoption of
 
this accounting guidance did not
 
have a material impact on our
 
results of
operations or financial position.
In the
 
first quarter
 
of fiscal
 
2024, we adopted
 
new requirements
 
for enhanced
 
disclosures related
 
to supplier
 
financing programs.
 
The
new standard requires
 
disclosure of the
 
key terms of
 
the program and
 
a rollforward of
 
the related obligation
 
during the annual
 
period,
including
 
the
 
amount
 
of
 
obligations
 
confirmed
 
and
 
obligations
 
subsequently
 
paid.
 
We
 
have
 
historically
 
presented
 
the
 
key
 
terms
 
of
these programs
 
and the associated
 
obligation outstanding
 
(please see Note
 
6). The
 
rollforward requirement
 
is effective
 
in fiscal 2025.
The adoption did not have a material impact on our financial statements and related
 
disclosures.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisition and Divestiture
During
 
the first
 
quarter
 
of fiscal
 
2023,
 
we
 
acquired
 
TNT Crust,
 
a
 
manufacturer
 
of high-quality
 
frozen pizza
 
crusts
 
for
 
regional
 
and
national pizza
 
chains, foodservice
 
distributors, and
 
retail outlets,
 
for a
 
purchase price
 
of $
253.0
 
million. We
 
financed the
 
transaction
with U.S. commercial paper.
 
We consolidated
 
the TNT Crust business into
 
our Consolidated Balance Sheets
 
and recorded goodwill
 
of
$
156.7
 
million. The
 
goodwill is
 
included in
 
the North
 
America Foodservice
 
segment and
 
is not
 
deductible for
 
tax purposes.
 
The pro
forma effects of this acquisition were not material.
 
During the
 
first quarter
 
of fiscal
 
2023,
 
we completed
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly
 
Salad side
 
dishes business
 
to
Eagle Family Foods Group for $
606.8
 
million and recorded a pre-tax gain of $
442.2
 
million.
(3) Restructuring, Impairment, and Other Exit Costs
During the
 
first quarter
 
of fiscal 2024,
 
we did not
 
undertake any
 
new restructuring
 
actions. We
 
recorded $
9.8
 
million of restructuring
charges
 
in
 
the first
 
quarter
 
of fiscal
 
2024
 
and
 
$
2.3
 
million
 
of
 
restructuring
 
charges
 
in the
 
first
 
quarter
 
of
 
fiscal
 
2023 for
 
previously
announced restructuring actions. We
 
expect these actions to be completed by the end of fiscal 2025.
We
 
paid net
 
$
7.4
 
million of
 
cash in
 
the first quarter
 
of fiscal 2024
 
related to
 
restructuring actions
 
previously announced.
 
We
 
paid net
$
18.0
 
million of cash in the same period of fiscal 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
Restructuring and impairment charges and project-related
 
costs are recorded in our Consolidated Statement of Earnings as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Cost of sales
$
8.6
$
0.7
Restructuring, impairment, and other exit costs
1.2
1.6
Total restructuring
 
charges
$
9.8
$
2.3
Project-related costs classified in cost of sales
$
0.8
$
-
The roll forward of our restructuring and other exit cost reserves, included
 
in other current liabilities, is as follows:
In Millions
Total
Reserve balance as of May 28, 2023
$
47.7
Fiscal 2024 charges, including foreign currency translation
1.2
Utilized in fiscal 2024
(6.4)
Reserve balance as of Aug. 27, 2023
$
42.5
The reserve balance primarily consists of expected severance payments
 
associated with restructuring actions.
 
The charges
 
recognized in
 
the roll forward
 
of our reserves
 
for restructuring
 
and other exit
 
costs do not
 
include items
 
charged
 
directly
to expense
 
(e.g., asset
 
impairment charges,
 
accelerated depreciation,
 
the gain
 
or loss
 
on the
 
sale of
 
restructured assets,
 
and the
 
write-
off
 
of
 
spare parts)
 
and other
 
periodic
 
exit costs
 
are
 
recognized
 
as incurred,
 
as those
 
items are
 
not reflected
 
in our
 
restructuring
 
and
other exit cost reserves on our Consolidated Balance Sheets.
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
 
 
In Millions
Aug. 27, 2023
May 28, 2023
Goodwill
$
14,522.0
$
14,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,715.0
6,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
386.9
386.3
Less accumulated amortization
(136.2)
(131.1)
Intangible assets subject to amortization, net
250.7
255.2
Other intangible assets
6,965.7
6,967.6
Total
$
21,487.7
$
21,478.8
Based on
 
the carrying
 
value of
 
finite-lived intangible
 
assets as
 
of August
 
27, 2023,
 
annual amortization
 
expense for
 
each of
 
the next
five fiscal years is estimated to be approximately $
20
 
million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
The changes in the carrying amount of goodwill during the first quarter of fiscal 2024
 
were as follows:
In Millions
North America
Retail
Pet
North America
Foodservice
International
Joint Ventures
Total
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
Other activity, primarily
 
 
foreign currency translation
0.1
-
(0.1)
8.2
2.6
10.8
Balance as of Aug. 27, 2023
$
6,542.5
$
6,062.8
$
805.5
$
716.6
$
394.6
$
14,522.0
The changes in the carrying amount of other intangible assets during the first quarter
 
of fiscal 2024 were as follows:
In Millions
Total
Balance as of May 28, 2023
$
6,967.6
Amortization, net of foreign currency translation
(1.9)
Balance as of Aug. 27, 2023
$
6,965.7
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
 
brand intangible assets had
 
risk of decreasing coverage.
 
We
 
will continue to
monitor these businesses for potential impairment.
(5) Inventories
The components of inventories were as follows:
In Millions
Aug. 27, 2023
May 28, 2023
Finished goods
$
2,093.0
$
2,066.9
Raw materials and packaging
553.5
572.2
Grain
130.1
133.8
Excess of FIFO over LIFO cost
(547.8)
(600.9)
Total
$
2,228.8
$
2,172.0
 
(6) Risk Management Activities
 
Many commodities we
 
use in the
 
production and distribution
 
of our products
 
are exposed to
 
market price risks.
 
We
 
utilize derivatives
to manage price risk for our principal
 
ingredients and energy costs, including
 
grains (oats, wheat, and corn), oils
 
(principally soybean),
dairy products, natural
 
gas, and diesel fuel.
 
Our primary objective
 
when entering into
 
these derivative contracts
 
is to achieve
 
certainty
with
 
regard
 
to
 
the
 
future
 
price
 
of
 
commodities
 
purchased
 
for
 
use
 
in
 
our
 
supply
 
chain.
 
We
 
manage
 
our
 
exposures
 
through
 
a
combination of purchase orders, long-term
 
contracts with suppliers, exchange-traded
 
futures and options, and over-the-counter
 
options
and swaps.
 
We
 
offset
 
our exposures
 
based on
 
current and
 
projected market
 
conditions and
 
generally seek
 
to acquire
 
the inputs
 
at as
close as possible to or below our planned cost.
We
 
use derivatives
 
to manage
 
our exposure
 
to changes
 
in commodity
 
prices. We
 
do not
 
perform the
 
assessments required
 
to achieve
hedge
 
accounting
 
for
 
commodity
 
derivative
 
positions.
 
Accordingly,
 
the
 
changes
 
in
 
the
 
values
 
of
 
these
 
derivatives
 
are
 
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
 
not meet the
 
criteria for
 
cash flow hedge
 
accounting, we believe
 
that these instruments
 
are effective
 
in achieving our
objective of providing certainty
 
in the future price of commodities purchased
 
for use in our supply chain.
 
Accordingly, for
 
purposes of
measuring
 
segment
 
operating
 
performance,
 
these
 
gains
 
and
 
losses
 
are
 
reported
 
in
 
unallocated
 
corporate
 
items
 
outside
 
of
 
segment
operating results
 
until such time
 
that the exposure
 
we are manag
 
ing affects
 
earnings. At
 
that time, we
 
reclassify the
 
gain or
 
loss from
unallocated
 
corporate
 
items
 
to
 
segment
 
operating
 
profit,
 
allowing
 
our
 
operating
 
segments
 
to
 
realize
 
the
 
economic
 
effects
 
of
 
the
derivative without experiencing any resulting mark-to-market volatility,
 
which remains in unallocated corporate items.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Unallocated corporate items for the quarters ended August 27, 2023, and
 
August 28, 2022, included:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Net gain (loss) on mark-to-market valuation of certain
 
 
commodity positions
$
28.4
$
(72.3)
Net loss (gain) on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
3.2
(43.0)
Net mark-to-market revaluation of certain grain inventories
13.3
(59.4)
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
44.9
$
(174.7)
As of August 27, 2023,
 
the net notional value of commodity
 
derivatives was $
278.2
 
million, of which $
113.2
 
million related to energy
inputs and
 
$
165.0
 
million related
 
to agricultural
 
inputs. These
 
contracts relate
 
to inputs
 
that generally
 
will be
 
utilized within
 
the next
12
 
months.
We
 
also have
 
net investments
 
in foreign
 
subsidiaries that
 
are denominated
 
in euros.
 
As of
 
August 27,
 
2023, we
 
hedged a
 
portion
 
of
these investments with €
2,954.1
 
million of euro-denominated bonds.
The
 
fair
 
values
 
of
 
the
 
derivative
 
positions
 
used
 
in
 
our
 
risk
 
management
 
activities
 
and
 
other
 
assets
 
recorded
 
at
 
fair
 
value
 
were
 
not
material as of
 
August 27, 2023,
 
and were Level
 
1 or Level
 
2 assets and
 
liabilities in the
 
fair value
 
hierarchy.
 
We
 
did not significantly
change our valuation techniques from prior periods.
 
We
 
offer
 
certain
 
suppliers
 
access
 
to
 
third-party
 
services
 
that
 
allow
 
them
 
to
 
view
 
our
 
scheduled
 
payments
 
online.
 
The
 
third-party
services also
 
allow suppliers
 
to finance
 
advances on
 
our scheduled
 
payments at
 
the sole
 
discretion of
 
the supplier
 
and the third
 
party.
We
 
have no
 
economic interest
 
in these
 
financing arrangements
 
and no
 
direct relationship
 
with the
 
suppliers, the
 
third parties,
 
or any
financial institutions
 
concerning these
 
services, including
 
not providing
 
any form
 
of guarantee
 
and not
 
pledging assets
 
as security
 
to
the third
 
parties or
 
financial institutions.
 
All of
 
our accounts
 
payable remain
 
as obligations
 
to our
 
suppliers as
 
stated in
 
our supplier
agreements. As
 
of August
 
27, 2023,
 
$
1,362.8
 
million of
 
our total
 
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.
 
As of
 
May 28,
 
2023, $
1,430.1
 
million of
 
our total
 
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.
(7) Debt
The components of notes payable were as follows:
 
 
In Millions
Aug. 27, 2023
May 28, 2023
U.S. commercial paper
$
529.2
$
-
Financial institutions
55.1
31.7
Total
$
584.3
$
31.7
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of August 27, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
 
and uncommitted credit facilities
$
3.3
$
-
The
 
credit
 
facilities
 
contain
 
covenants,
 
including
 
a
 
requirement
 
to
 
maintain
 
a
 
fixed
 
charge
 
coverage
 
ratio
 
of
 
at
 
least
2.5
 
times.
We
were in compliance with all credit facility covenants as of August 27, 2023.
Long-Term
 
Debt
 
The fair values
 
and carrying
 
amounts of long-term
 
debt, including
 
the current portion,
 
were $
10,811.1
 
million and $
11,698.1
 
million,
respectively,
 
as
 
of
 
August
 
27,
 
2023.
 
The
 
fair
 
value
 
of
 
long-term
 
debt
 
was
 
estimated
 
using
 
market
 
quotations
 
and
 
discounted
 
cash
 
13
flows based
 
on our
 
current incremental
 
borrowing rates
 
for similar
 
types of
 
instruments. Long
 
-term debt
 
is a
 
Level 2
 
liability in
 
the
fair value hierarchy.
 
In the first
 
quarter of fiscal
 
2024, we issued
 
€
500.0
 
million of floating-rate
 
notes due
November 8, 2024
. We
 
used the net proceeds
 
to
repay €
500.0
 
million of floating-rate notes due
July 27, 2023
.
 
In the fourth quarter
 
of fiscal 2023, we
 
issued €
250.0
 
million of floating-rate notes
 
due
November 10, 2023
. We
 
used the net proceeds
to repay €
250.0
 
million of floating-rate notes due
May 16, 2023
.
In the
 
fourth quarter
 
of fiscal
 
2023, we
 
issued €
750.0
 
million of
3.907
 
percent fixed-rate
 
notes due
April 13, 2029
. We
 
used the
 
net
proceeds to repay €
500.0
 
million of
1.0
 
percent fixed-rate notes due
April 27, 2023
, and €
250.0
 
million of floating-rate notes due
May
16, 2023
.
In the fourth
 
quarter of fiscal
 
2023, we
 
issued $
1,000.0
 
million of
4.95
 
percent fixed-rate
 
notes due
March 29, 2033
. We
 
used the net
proceeds to repay our outstanding commercial paper and for general
 
corporate purposes.
In the second
 
quarter of fiscal
 
2023, we issued
 
$
500.0
 
million of
5.241
 
percent fixed-rate notes
 
due
November 18, 2025
. We
 
used the
net proceeds to repay a portion of our outstanding commercial paper and for general
 
corporate purposes.
In the
 
second quarter
 
of fiscal
 
2023, we
 
issued €
250.0
 
million of
 
floating-rate notes
 
due
May 16, 2023
. We
 
used the
 
net proceeds
 
to
repay €
250.0
 
million of
0.0
 
percent fixed-rate notes due
November 11, 2022
.
In the
 
second quarter
 
of fiscal
 
2023,
 
we repaid
 
$
500.0
 
million of
2.6
 
percent fixed-rate
 
notes due
October 12, 2022
, using
 
proceeds
from the issuance of commercial paper.
Certain
 
of
 
our
 
long-term
 
debt
 
agreements
 
contain
 
restrictive
 
covenants.
As of August 27, 2023, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
 
Cereals,
 
LLC
 
(GMC)
 
Class A
 
Interests
 
receives
 
quarterly
 
preferred
 
distributions
 
from
available net
 
income based
 
on the application
 
of a
 
floating preferred
 
return rate
 
to the
 
holder’s capital
 
account balance
 
established in
the most recent
 
mark-to-market valuation
 
(currently $
251.5
 
million). The
 
floating preferred return
 
rate on GMC’s
 
Class A Interests is
the
 
sum
 
of
 
the
three-month Term SOFR
 
plus
186
 
basis
 
points.
 
The
 
preferred
 
return
 
rate
 
is
 
adjusted
 
every
three years
 
through
 
a
negotiated agreement with the Class A Interest holder or through
 
a remarketing auction.
Our noncontrolling interests contain restrictive covenants. As of August 27, 2023, we were in compliance with all of these covenants.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
(9) Stockholders’ Equity
 
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
General Mills
Noncontrolling
Interests
 
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
 
$
673.5
$
6.8
$
820.0
$
3.3
Other comprehensive (loss) income:
Foreign currency translation
$
(22.0)
$
3.8
(18.2)
0.1
$
(48.0)
$
53.1
5.1
(1.3)
Other fair value changes:
Hedge derivatives
(2.7)
0.4
(2.3)
-
(49.8)
11.5
(38.3)
-
Reclassification to earnings:
Foreign currency translation
-
-
-
-
(7.4)
-
(7.4)
-
Hedge derivatives (a)
(1.3)
1.5
0.2
-
(1.9)
0.5
(1.4)
-
Amortization of losses and
 
prior service costs (b)
11.5
(2.4)
9.1
-
18.2
(4.1)
14.1
-
Other comprehensive (loss) income
$
(14.5)
$
3.3
(11.2)
0.1
$
(88.9)
$
61.0
(27.9)
(1.3)
Total comprehensive income
$
662.3
$
6.9
$
$
792.1
$
2.0
(a)
 
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,
 
were as follows:
 
In Millions
Aug. 27, 2023
May 28, 2023
Foreign currency translation adjustments
$
(726.8)
$
(708.6)
Unrealized gain from hedge derivatives
3.8
5.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,655.7)
(1,670.6)
Prior service credits
90.6
96.4
Accumulated other comprehensive loss
$
(2,288.1)
$
(2,276.9)
 
(10) Stock Plans
We
 
have various
 
stock-based compensation
 
programs under
 
which awards,
 
including stock
 
options, restricted
 
stock, restricted
 
stock
units, and performance
 
awards, may be granted
 
to employees and non-employee
 
directors. These programs
 
and related accounting
 
are
described in Note
 
12 to the
 
Consolidated Financial
 
Statements included
 
in our Annual
 
Report on Form
 
10-K for the
 
fiscal year ended
May 28, 2023.
Compensation expense related to stock-based payments recognized
 
in the Consolidated Statements of Earnings was as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Compensation expense related to stock-based payments
$
35.3
$
33.5
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings
 
were as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Windfall tax benefits from stock-based payments
$
8.4
$
12.8
As
 
of
 
August
 
27,
 
2023,
 
unrecognized
 
compensation
 
expense
 
related
 
to
 
non-vested
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
performance share units was $
172.2
 
million. This expense will be recognized over
25
 
months, on average.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
Net cash proceeds from the exercise of stock options
 
less shares used for withholding taxes and the intrinsic
 
value of options exercised
were as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Net cash proceeds
$
4.5
$
65.5
Intrinsic value of options exercised
$
2.1
$
32.0
We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-
pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and
dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,
excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We
also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially
those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting
the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 28, 2023.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Estimated fair values of stock options granted
 
$
17.47
$
14.16
Assumptions:
Risk-free interest rate
4.0
%
3.3
%
Expected term
8.5
years
8.5
years
Expected volatility
21.4
%
20.9
%
Dividend yield
2.8
%
3.1
%
The total grant date fair value of restricted stock unit awards that vested during
 
the period was as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Total grant date fair
 
value
$
104.8
$
82.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
 
Quarter Ended
In Millions, Except per Share Data
Aug. 27, 2023
Aug. 28, 2022
Net earnings attributable to General Mills
$
673.5
$
820.0
Average
 
number of common shares - basic EPS
586.3
600.2
Incremental share effect from: (a)
Stock options
2.8
3.3
Restricted stock units and performance share units
2.3
2.5
Average
 
number of common shares - diluted EPS
591.4
606.0
Earnings per share – basic
$
1.15
$
1.37
Earnings per share – diluted
$
1.14
$
1.35
(a)
 
Incremental
 
shares
 
from
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
 
performance
 
share
 
units
 
are
 
computed
 
by
 
the
 
treasury
 
stock
method.
 
Stock
 
options,
 
restricted
 
stock
 
units,
 
and
 
performance
 
share units
 
excluded
 
from
 
our
 
computation
 
of
 
diluted
 
EPS
 
because
 
they
were not dilutive were as follows
:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
1.6
0.8
 
(12) Share Repurchases
Share repurchases were as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Shares of common stock
6.4
6.9
Aggregate purchase price
$
504.7
$
500.8
 
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Net cash interest payments
$
83.9
$
55.2
Net income tax payments
$
13.7
$
9.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
(14) Retirement and Postemployment Benefits
Components of net periodic benefit expense (income) are as follows:
 
Defined Benefit
Pension Plans
Other Postretirement
 
Benefit Plans
Postemployment
Benefit Plans
Quarter Ended
Quarter Ended
Quarter Ended
In Millions
Aug. 27,
2023
Aug. 28,
2022
Aug. 27,
2023
Aug. 28,
2022
Aug. 27,
2023
Aug. 28,
2022
Service cost
$
14.2
$
17.6
$
1.2
$
1.4
$
1.8
$
2.1
Interest cost
74.2
64.6
5.3
4.5
1.0
0.8
Expected return on plan assets
(102.9)
(105.0)
(8.7)
(7.8)
-
-
Amortization of losses (gains)
21.5
28.3
(5.1)
(4.9)
-
0.1
Amortization of prior service costs (credits)
0.4
0.4
(5.4)
(5.8)
0.1
0.1
Other adjustments
-
-
-
-
2.6
3.0
Net expense (income)
$
7.4
$
5.9
$
(12.7)
$
(12.6)
$
5.5
$
6.1
 
(15) Income Taxes
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
the
 
Inflation
 
Reduction
 
Act
 
(IRA)
 
was
 
signed
 
into
 
law.
 
The
 
IRA
 
introduces
 
a
 
Corporate
Alternative Minimum Tax
 
beginning in our fiscal 2024
 
and an excise tax on
 
the repurchase of corporate
 
stock starting after January
 
1,
2023. We
 
do not expect the IRA to have a material impact on our financial
 
results, including our annual estimated effective tax
 
rate, or
on our liquidity.
(16) Contingencies
During
 
fiscal
 
2020,
 
we
 
received
 
notice
 
from
 
the
 
tax
 
authorities of
 
the
 
State of
 
São
 
Paulo,
 
Brazil
 
regarding
 
our
 
compliance
 
with
 
its
state sales tax requirements.
 
As a result, we
 
have been assessed additional
 
state sales taxes, interest,
 
and penalties. We
 
believe that we
have meritorious defenses against this claim and will vigorously defend
 
our position. As of August 27, 2023, we are unable to estimate
any possible loss and have not recorded a loss contingency for this matter.
(17) Business Segment and Geographic Information
We
 
operate
 
in
 
the
 
packaged
 
foods
 
industry.
 
Our
 
operating
 
segments
 
are
 
as
 
follows:
 
North
 
America
 
Retail,
 
International,
 
Pet,
 
and
North America Foodservice.
 
Our North America Retail
 
operating segment reflects business
 
with a wide variety of
 
grocery stores, mass merchandisers, membership
stores,
 
natural
 
food
 
chains,
 
drug,
 
dollar
 
and
 
discount
 
chains,
 
convenience
 
stores,
 
and
 
e-commerce
 
grocery
 
providers.
 
Our
 
product
categories
 
in
 
this
 
business
 
segment
 
include
 
ready-to-eat
 
cereals,
 
refrigerated
 
yogurt,
 
soup,
 
meal
 
kits,
 
refrigerated
 
and
 
frozen
 
dough
products,
 
dessert
 
and
 
baking
 
mixes,
 
frozen
 
pizza
 
and
 
pizza
 
snacks,
 
snack
 
bars,
 
fruit
 
snacks,
 
savory
 
snacks,
 
and
 
a
 
wide
 
variety
 
of
organic products including ready-to-eat cereal, frozen
 
and shelf-stable vegetables, meal kits, fruit snacks, and snack bars.
Our
 
International
 
operating
 
segment
 
consists
 
of
 
retail
 
and
 
foodservice
 
businesses
 
outside
 
of
 
the
 
United
 
States
 
and
 
Canada.
 
Our
product categories include super-premium
 
ice cream and frozen desserts, meal kits, salty snacks,
 
snack bars, dessert and baking mixes,
and
 
shelf
 
stable
 
vegetables.
 
We
 
also
 
sell
 
super-premium
 
ice
 
cream
 
and
 
frozen
 
desserts
 
directly
 
to
 
consumers
 
through
 
owned
 
retail
shops. Our
 
International segment
 
also includes
 
products manufactured
 
in the United
 
States for
 
export, mainly
 
to Caribbean
 
and Latin
American markets, as well as
 
products we manufacture
 
for sale to our international
 
joint ventures. Revenues from
 
export activities are
reported in the region or country where the end customer is located.
Our Pet operating segment includes
 
pet food products sold primarily in the
 
United States and Canada in national
 
pet superstore chains,
e-commerce retailers,
 
grocery stores,
 
regional pet
 
store chains,
 
mass merchandisers,
 
and veterinary
 
clinics and
 
hospitals. Our
 
product
categories include dog and cat food (dry
 
foods, wet foods, and treats) made with
 
whole meats, fruits, vegetables and other
 
high-quality
natural
 
ingredients.
 
Our
 
tailored
 
pet
 
product
 
offerings
 
address
 
specific
 
dietary,
 
lifestyle,
 
and
 
life-stage
 
needs
 
and
 
span
 
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
 
functions,
 
and textures and cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
sell are branded
 
to the consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
and nearly
 
all are
 
branded to
 
our customers.
 
We
 
sell to
 
distributors and
 
operators in
 
many customer
 
channels including
 
foodservice,
vending, and supermarket bakeries.
Operating profit
 
for these
 
segments excludes
 
unallocated corporate
 
items, gain
 
or loss
 
on divestitures,
 
and restructuring,
 
impairment,
and
 
other
 
exit
 
costs.
 
Unallocated
 
corporate
 
items
 
include
 
corporate
 
overhead
 
expenses,
 
variances
 
to
 
planned
 
North
 
American
employee
 
benefits
 
and
 
incentives,
 
certain
 
charitable
 
contributions,
 
restructuring
 
initiative
 
project-related
 
costs,
 
gains
 
and
 
losses
 
on
corporate investments,
 
and other
 
items that
 
are not
 
part of
 
our measurement
 
of segment
 
operating performance.
 
These include
 
gains
and
 
losses
 
arising
 
from
 
the
 
revaluation
 
of
 
certain
 
grain
 
inventories
 
and
 
gains
 
and
 
losses
 
from
 
mark-to-market
 
valuation
 
of
 
certain
commodity positions
 
until passed back
 
to our operating
 
segments. These items
 
affecting operating
 
profit are centrally
 
managed at
 
the
corporate
 
level
 
and
 
are
 
excluded
 
from
 
the
 
measure
 
of
 
segment
 
profitability
 
reviewed
 
by
 
executive
 
management.
 
Under
 
our
 
supply
chain organization, our manufacturing,
 
warehouse, and distribution activities are substantially integrated
 
across our operations in order
to maximize
 
efficiency
 
and productivity.
 
As a
 
result, fixed
 
assets and
 
depreciation and
 
amortization expenses
 
are neither
 
maintained
nor available by operating segment.
Our operating segment results were as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Net sales:
North America Retail
$
3,073.0
$
2,988.8
International
715.8
652.5
Pet
579.9
579.9
North America Foodservice
536.0
496.4
Total
$
4,904.7
$
4,717.6
Operating profit:
North America Retail
$
798.2
$
777.8
International
50.0
34.8
Pet
111.2
123.1
North America Foodservice
59.1
53.6
Total segment operating
 
profit
$
1,018.5
$
989.3
Unallocated corporate items
87.3
333.0
Divestitures gain, net
-
(430.9)
Restructuring, impairment, and other exit costs
1.2
1.6
Operating profit
$
930.0
$
1,085.6
Net sales for our North America Retail operating units were as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
U.S. Snacks
$
954.5
$
887.2
U.S. Meals & Baking Solutions
941.9
949.2
U.S. Morning Foods
927.8
904.0
Canada
248.8
248.4
Total
$
3,073.0
$
2,988.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
Net sales by class of similar products were as follows:
 
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Snacks
$
1,136.7
$
1,068.4
Cereal
817.9
814.7
Convenient meals
665.5
679.2
Pet
579.9
580.8
Dough
534.9
464.8
Baking mixes and ingredients
466.5
473.5
Yogurt
368.4
346.0
Super-premium ice cream
224.0
183.5
Other
110.9
106.7
Total
$
4,904.7
$
4,717.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
Item 2.
 
Management’s Discussion and Analysis
 
of Financial Condition and Results of Operations.
INTRODUCTION
This
 
Management’s
 
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
 
fiscal
 
year
 
ended
 
May
 
28,
 
2023
 
for
 
important
background
 
regarding,
 
among other
 
things, our
 
key business
 
drivers.
 
Significant
 
trademarks and
 
service marks
 
used in
 
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
 
“Glossary” section below.
We
expect the largest
 
factors impacting our performance
 
in fiscal 2024
 
will be the economic
 
health of consumers, the
 
moderating rate
of input
 
cost inflation
 
,
 
and
 
the increasing
 
stability of
 
the supply
 
chain environment
 
.
 
We
 
expect
 
to drive
 
organic
 
net sales
 
growth
 
in
fiscal 2024
 
through strong
 
marketing, innovation,
 
in-store support,
 
and net
 
price realization
 
generated through
 
our Strategic
 
Revenue
Management (SRM)
 
capability,
 
most of
 
which will
 
be carried
 
over from
 
SRM actions
 
taken in
 
fiscal 2023.
 
We
 
anticipate input
 
cost
inflation of
 
approximately 5
 
percent in
 
fiscal 2024
 
and expect
 
to generate
 
higher levels
 
of Holistic
 
Margin Management
 
(HMM) cost
savings compared to fiscal 2023.
CONSOLIDATED
 
RESULTS
 
OF OPERATIONS
First Quarter Results
In the first
 
quarter of fiscal
 
2024, net sales
 
and organic net
 
sales increased 4
 
percent compared to
 
the same period
 
last year.
 
Operating
profit decreased
 
14 percent
 
to $930
 
million, primarily
 
driven by
 
a net
 
gain on
 
divestitures
 
in fiscal
 
2023, higher
 
input costs,
 
and
 
an
increase in selling,
 
general and administrative
 
(SG&A) expenses, including
 
increased media and
 
advertising expenses, partially
 
offset
by favorable net price
 
realization and mix
 
and a favorable change
 
to the mark-to-market valuation
 
of certain commodity positions
 
and
grain
 
inventories.
 
Operating
 
profit
 
margin
 
of
 
19.0
 
percent
 
decreased
 
400
 
basis
 
points.
 
Adjusted
 
operating
 
profit
 
of
 
$899
 
million
increased 2 percent on
 
a constant-currency basis, primarily
 
driven by favorable net price
 
realization and mix, partially offset
 
by higher
input costs, an
 
increase in SG&A
 
expenses, including
 
increased media and
 
advertising expenses, and
 
a decrease in
 
contributions from
volume
 
growth.
 
Adjusted
 
operating
 
profit
 
margin
 
decreased
 
40
 
basis
 
points
 
to
 
18.3
 
percent.
 
Diluted
 
earnings
 
per
 
share
 
of
 
$1.14
decreased 16 percent in the first
 
quarter of fiscal 2024. Adjusted diluted
 
earnings per share of $1.09 decreased 1
 
percent on a constant-
currency basis compared
 
to the first quarter
 
of fiscal 2023.
 
See the “Non-GAAP
 
Measures” section below
 
for a description
 
of our use
of measures not defined by GAAP.
A summary of our consolidated financial results for the first quarter of
 
fiscal 2024 follows:
 
Quarter Ended Aug. 27, 2023
In millions,
except per share
Quarter Ended
Aug. 27, 2023 vs.
Aug. 28, 2022
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
 
$
4,904.7
4
%
Operating profit
930.0
(14)
%
19.0
%
Net earnings attributable to General Mills
673.5
(18)
%
Diluted earnings per share
$
1.14
(16)
%
Organic net sales growth rate (a)
4
%
Adjusted operating profit (a)
899.0
2
%
18.3
%
2
%
Adjusted diluted earnings per share (a)
$
1.09
(2)
%
(1)
%
(a)
 
See the "Non-GAAP Measures" section below for our use of measures not defined by
 
GAAP.
Consolidated
net sales
 
were as follows:
 
Quarter Ended
Aug. 27, 2023
Aug. 27, 2023 vs.
 
Aug. 28, 2022
Aug. 28, 2022
Net sales (in millions)
$
4,904.7
4%
$
4,717.6
Contributions from volume growth (a)
(2)
pts
Net price realization and mix
6
pts
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
Net sales
 
in the
 
first quarter
 
of fiscal
 
2024
 
increased 4
 
percent compared
 
to the
 
same period
 
in fiscal
 
2023,
 
driven by
 
favorable
 
net
price realization and mix, partially offset by a decrease in
 
contributions from volume growth.
Components of organic net sales growth are shown in the following
 
table:
 
 
Quarter Ended Aug. 27, 2023 vs.
Quarter Ended Aug. 28, 2022
Contributions from organic volume growth (a)
(2)
pts
Organic net price realization and mix
7
pts
Organic net sales growth
4
pts
Foreign currency exchange
Flat
Acquisitions and divestitures
Flat
Net sales growth
4
pts
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Organic net sales increased 4 percent
 
in the first quarter of fiscal 2024 compared
 
to the same period in fiscal 2023, driven by favorable
organic net price realization and mix, partially offset
 
by a decrease in contributions from organic volume growth
 
.
Cost of
 
sales
decreased $136 million
 
to $3,134
 
million in
 
the first
 
quarter of
 
fiscal 2024
 
compared to
 
the same
 
period in
 
fiscal 2023.
The decrease included
 
a $54 million decrease attributable
 
to lower volume and
 
a $150 million increase attributable
 
to product rate and
mix. We
 
recorded a
 
$45 million
 
net decrease
 
in cost
 
of sales
 
related to
 
the mark-to-market
 
valuation of
 
certain commodity
 
positions
and grain inventories in the first quarter of fiscal 2024
 
compared to a $175 million net increase in the first quarter
 
of fiscal 2023.
 
In the
first quarter
 
of fiscal
 
2023,
 
we recorded
 
a $21
 
million
 
charge
 
related
 
to a
 
voluntary recall
 
on certain
 
international
Häagen-Dazs
 
ice
cream products.
 
We
 
also recorded $9
 
million of restructuring
 
charges and $1
 
million of restructuring
 
initiative project-related
 
costs in
cost of sales in the first
 
quarter of fiscal 2024 compared
 
to $1 million of restructuring
 
charges in the first
 
quarter of fiscal 2023 (please
refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A expenses
increased $48 million
 
to $839 million in
 
the first quarter
 
of fiscal 2024,
 
compared to the
 
same period in
 
fiscal 2023,
primarily driven
 
by increased
 
media and
 
advertising expenses.
 
SG&A expenses
 
as a
 
percent of
 
net sales
 
in the
 
first quarter
 
of fiscal
2024 increased 30 basis points compared to the first quarter of fiscal 2023.
Divestitures
 
gain,
 
net
 
totaled $431
 
million in
 
the first
 
quarter of
 
fiscal 2023,
 
primarily related
 
to the
 
sale of
 
our Helper
 
main meals
and
 
Suddenly
 
Salad
 
side
 
dishes
 
business
 
(please
 
refer
 
to
 
Note
 
2
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Part
 
I,
 
Item
 
1
 
of
 
this
report).
 
Restructuring, impairment,
 
and other exit
 
costs
totaled $1 million
 
in the first
 
quarter of fiscal
 
2024,
 
compared to $2
 
million in the
same period last year (please refer to Note 3 to the Consolidated Financial
 
Statements in Part I, Item 1 of this report).
Benefit plan
 
non-service income
totaled $17 million
 
in the
 
first quarter
 
of fiscal
 
2024, compared
 
to $22 million
 
in the
 
same period
last year, primarily reflecting an increase
 
in interest costs, partially offset by lower amortization of losses.
 
Interest,
 
net
for
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
totaled
 
$117 million,
 
up
 
$29 million
 
from
 
the
 
first
 
quarter
 
of fiscal
 
2023,
 
primarily
driven by higher interest rates and higher average long-term debt levels.
The
effective tax rate
 
for the first quarter of fiscal
 
2024 was 20.9 percent compared
 
to 21.2 percent for the first
 
quarter of fiscal 2023.
The
 
0.3
 
percentage
 
point
 
decrease
 
was
 
primarily
 
due
 
to
 
certain
 
unfavorable
 
tax
 
components
 
related
 
to
 
the
 
divestitures
 
in
 
the
 
first
quarter of
 
fiscal 2023,
 
partially offset
 
by certain
 
nonrecurring discrete
 
tax benefits
 
in the
 
first quarter
 
of fiscal
 
2023 and
 
unfavorable
earnings mix
 
by jurisdiction
 
in the
 
first quarter
 
of fiscal
 
2024. Our
 
effective
 
tax rate
 
excluding certain
 
items affecting
 
comparability
was
 
21.1
 
percent
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
compared
 
to
 
19.7
 
percent
 
in
 
the
 
same
 
period
 
last
 
year
 
(see
 
the
 
“Non-GAAP
Measures”
 
section
 
below
 
for
 
a
 
description
 
of
 
our
 
use
 
of
 
measures
 
not
 
defined
 
by
 
GAAP).
 
The
 
1.4
 
percentage
 
point
 
increase
 
was
primarily
 
due
 
to
 
certain
 
nonrecurring
 
discrete
 
tax
 
benefits
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023
 
and
 
unfavorable
 
earnings
 
mix
 
by
jurisdiction in the first quarter of fiscal 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
After-tax
 
earnings from
 
joint ventures
 
for the
 
first quarter
 
of fiscal
 
2024
increased to
 
$24 million compared
 
to $20 million
 
in the
same period in fiscal 2023,
 
primarily driven by higher net
 
sales as a result of favorable
 
net price realization and mix
 
at Cereal Partners
Worldwide
 
(CPW) and
 
favorable
 
discrete tax
 
items at
 
CPW,
 
partially
 
offset
 
by higher
 
input
 
costs at
 
CPW and
 
Häagen-Dazs
 
Japan,
Inc. (HDJ). On
 
a constant-currency basis,
 
after-tax earnings from
 
joint ventures increased 26
 
percent (see the
 
“Non-GAAP Measures”
section below for a description of our use of measures not defined by GAAP).
 
The components of our joint ventures’ net sales growth are shown in the following
 
table:
 
Quarter Ended Aug. 27, 2023 vs.
Quarter Ended Aug. 28, 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(11)
pts
(5)
pts
Net price realization and mix
19
pts
9
pts
Net sales growth in constant currency
8
pts
4
pts
7
pts
Foreign currency exchange
1
pt
(5)
pts
Flat
Net sales growth
9
pts
(1)
pt
7
pts
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Average
 
diluted
 
shares
 
outstanding
decreased
 
by
 
15
 
million
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
from
 
the
 
same
 
period
 
a
 
year
 
ago
primarily due to share repurchases, partially offset by option
 
exercises.
 
SEGMENT OPERATING
 
RESULTS
Our businesses are
 
organized into
 
four operating segments:
 
North America Retail,
 
International,
 
Pet, and North
 
America Foodservice.
Please
 
refer
 
to
 
Note
 
17
 
of
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Part
 
I,
 
Item
 
1
 
of
 
this
 
report
 
for
 
a
 
description
 
of
 
our
 
operating
segments.
North America Retail Segment Results
North America Retail net sales were as follows:
 
Quarter Ended
Aug. 27,
2023
Aug. 27, 2023 vs
Aug. 28, 2022
Aug. 28,
2022
Net sales (in millions)
$
3,073.0
3
%
$
2,988.8
Contributions from volume growth (a)
(5)
pts
Net price realization and mix
8
pts
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
North
 
America
 
Retail
 
net
 
sales
 
increased
 
3
 
percent
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2023,
driven by favorable net price realization and mix, partially offset
 
by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
The components of North America Retail organic net
 
sales growth are shown in the following table:
 
Quarter Ended
Aug. 27, 2023
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
8
pts
Organic net sales growth
4
pts
Foreign currency exchange
Flat
Divestiture (b)
(1)
pt
Net sales growth
3
pts
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestiture of our Helper main meals and Suddenly Salad side dishes businesses in
 
fiscal 2023. Please see Note 2 to the
 
Consolidated Financial Statements in Part I, Item 1 of this report.
North
 
America Retail
 
organic
 
net sales
 
increased 4
 
percent in
 
the first
 
quarter of
 
fiscal 2024,
 
compared to
 
the same
 
period in
 
fiscal
2023,
 
driven by
 
favorable organic
 
net price
 
realization and
 
mix,
 
partially offset
 
by a
 
decrease in
 
contributions from
 
organic
 
volume
growth.
North America Retail net sales percentage change by operating unit are shown
 
in the following table:
 
Quarter Ended
Aug. 27, 2023
U.S. Snacks
8
%
U.S. Morning Foods
3
%
Canada (a)
Flat
U.S. Meals & Baking Solutions
(1)
%
Total
3
%
(a)
 
On a constant-currency basis,
 
Canada net sales increased 4
 
percent in the first quarter of
 
fiscal 2024,
 
compared to the same period
in fiscal 2023. See the "Non-GAAP Measures" section below for our use of this measure not
 
defined by GAAP.
Segment operating
 
profit increased 3
 
percent to
 
$798 million in the
 
first quarter of
 
fiscal 2024,
 
compared to $778 million
 
in the same
period in
 
fiscal 2023,
 
primarily driven
 
by favorable
 
net price
 
realization and
 
mix, partially
 
offset by
 
higher input
 
costs, a
 
decrease in
contributions from volume
 
growth, and an
 
increase in SG&A expenses
 
,
 
including increased media
 
and advertising expenses. Segment
operating
 
profit
 
increased
 
3
 
percent
 
on
 
a
 
constant-currency
 
basis
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
compared
 
to
 
the
 
same
 
period
 
in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
 
not defined by GAAP).
International Segment Results
International net sales were as follows:
 
Quarter Ended
Aug. 27,
2023
Aug. 27, 2023 vs
Aug. 28, 2022
Aug. 28,
2022
Net sales (in millions)
$
715.8
10
%
$
652.5
Contributions from volume growth (a)
(5)
pts
Net price realization and mix
13
pts
Foreign currency exchange
1
pt
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
International net sales increased 10 percent in the first quarter of fiscal 2024,
 
compared to the same period in fiscal 2023 which
included the impact of the voluntary recall on certain international
Häagen-Dazs
 
ice cream products, driven by favorable net price
realization and mix and favorable foreign currency exchange, partially
 
offset by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
The components of International organic net sales growth
 
are shown in the following table:
 
Quarter Ended
Aug. 27, 2023
Contributions from organic volume growth (a)
(5)
pts
Organic net price realization and mix
13
pts
Organic net sales growth
9
pts
Foreign currency exchange
1
pt
Net sales growth
10
pts
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
International organic net
 
sales increased 9 percent
 
in the first quarter of
 
fiscal 2024,
 
compared to the same period
 
in fiscal 2023 which
included the
 
impact of
 
the voluntary
 
recall on
 
certain international
Häagen-Dazs
 
ice cream
 
products,
 
driven by
 
favorable organic
 
net
price realization and mix, partially offset by a decrease in
 
contributions from organic volume growth.
Segment operating
 
profit increased
 
44 percent
 
to $50 million
 
in the
 
first quarter
 
of fiscal
 
2024,
 
compared to
 
$35 million in
 
the same
period
 
in
 
fiscal
 
2023,
 
primarily
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix
 
and
 
the
 
voluntary
 
recall
 
on
 
certain
 
international
Häagen-Dazs
 
ice cream
 
products in
 
fiscal 2023,
 
partially offset
 
by higher
 
input costs.
 
Segment operating
 
profit increased
 
52 percent
on
 
a
 
constant-currency
 
basis
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2023
 
(see
 
the
 
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Pet Segment Results
Pet net sales were as follows:
 
Quarter Ended
Aug. 27,
2023
Aug. 27, 2023 vs
Aug. 28, 2022
Aug. 28,
2022
Net sales (in millions)
$
579.9
Flat
$
579.9
Contributions from volume growth (a)
(5)
pts
Net price realization and mix
5
pts
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Pet net
 
sales in
 
the first
 
quarter of
 
fiscal 2024
 
matched the same
 
period in
 
fiscal 2023,
 
as favorable
 
net price realization
 
and mix
 
was
offset by a decrease in contributions from volume growth.
The components of Pet organic net sales growth are shown in the following
 
table:
 
Quarter Ended
Aug. 27, 2023
Contributions from organic volume growth (a)
(5)
pts
Organic net price realization and mix
5
pts
Organic net sales growth
Flat
Foreign currency exchange
Flat
Net sales growth
Flat
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
Pet
 
organic
 
net
 
sales
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
matched
 
the
 
same
 
period
 
in
 
fiscal
 
2023,
 
as
 
favorable
 
organic
 
net
 
price
realization and mix was offset by a decrease in contributions from
 
organic volume growth.
Segment operating profit decreased 10 percent
 
to $111 million in the
 
first quarter of fiscal 2024,
 
compared to $123 million in the same
period
 
in
 
fiscal
 
2023,
 
primarily
 
driven
 
by
 
higher
 
input
 
costs,
 
a
 
decrease
 
in
 
contributions
 
from
 
volume
 
growth,
 
and
 
an
 
increase
 
in
SG&A
 
expenses,
 
partially
 
offset
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix.
 
Segment
 
operating
 
profit
 
decreased
 
10
 
percent
 
on
 
a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
constant-currency basis in
 
the first quarter
 
of fiscal 2024
 
compared to the
 
same period in
 
fiscal 2023 (see
 
the “Non-GAAP Measures”
section below for our use of this measure not defined by GAAP).
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
 
Quarter Ended
Aug. 27,
2023
Aug. 27, 2023 vs
Aug. 28, 2022
Aug. 28,
2022
Net sales (in millions)
$
536.0
8
%
$
496.4
Contributions from volume growth (a)
7
pts
Net price realization and mix
1
pt
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
North America Foodservice net sales increased 8 percent in the first
 
quarter of fiscal 2024, compared to the same period in fiscal 2023,
driven by an increase in contributions from volume growth and favorable
 
net price realization and mix.
The components of North America Foodservice organic
 
net sales growth are shown in the following table:
 
Quarter Ended
Aug. 27, 2023
Contributions from organic volume growth (a)
4
pts
Organic net price realization and mix
Flat
Organic net sales growth
4
pts
Foreign currency exchange
Flat
Acquisition (b)
4
pts
Net sales growth
8
pts
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of TNT Crust in fiscal 2023. Please see Note 2 to the Consolidated Financial Statements
 
in Part I, Item 1 of this report.
North
 
America Foodservice
 
organic
 
net sales
 
increased 4
 
percent in
 
the first
 
quarter of
 
fiscal 2024,
 
compared to
 
the same
 
period in
fiscal 2023, driven by an increase in contributions from organic
 
volume growth.
Segment operating
 
profit increased
 
10 percent
 
to $59
 
million in
 
the first
 
quarter of
 
fiscal 2024,
 
compared to
 
$54 million in
 
the same
period
 
in
 
fiscal
 
2023,
 
primarily
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
higher
 
input
 
costs.
 
Segment
operating
 
profit increased
 
10 percent
 
on a
 
constant-currency
 
basis in
 
the first
 
quarter of
 
fiscal 2024
 
compared to
 
the same
 
period in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
 
not defined by GAAP).
UNALLOCATED
 
CORPORATE
 
ITEMS
Unallocated corporate
 
expenses totaled $87
 
million in the
 
first quarter of
 
fiscal 2024, compared
 
to $333 million
 
in the same
 
period in
fiscal
 
2023.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
we
 
recorded
 
a
 
$45 million
 
net
 
decrease
 
in
 
expense
 
related
 
to
 
the
 
mark-to-market
valuation of certain commodity positions
 
and grain inventories, compared to
 
a $175 million net increase in expense
 
in the same period
last year.
 
We
 
recorded $3 million
 
of net losses
 
related to valuation
 
adjustments on certain
 
corporate investments
 
in the first quarter
 
of
fiscal
 
2024,
 
compared
 
to
 
$26 million
 
of
 
net
 
losses
 
related
 
to
 
valuation
 
adjustments
 
and
 
the
 
loss
 
on
 
sale
 
of
 
certain
 
corporate
investments
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
recorded
 
a
 
$22
 
million
 
charge
 
related
 
to
 
a
voluntary
 
recall
 
on
 
certain
 
international
Häagen-Dazs
 
ice
 
cream
 
products.
 
We
 
recorded
 
$9
 
million
 
of
 
restructuring
 
charges
 
and
 
$1
million
 
of
 
restructuring
 
initiative
 
project-related
 
costs
 
in
 
cost
 
of
 
sales
 
in
 
the
 
first quarter
 
of
 
fiscal
 
2024,
 
compared
 
to
 
$1
 
million
 
of
restructuring
 
charges
 
in cost
 
of sales
 
in the
 
same period
 
last year.
 
In addition,
 
we recorded
 
$2 million
 
of integration
 
costs primarily
related to our acquisition of TNT Crust in the first quarter of fiscal 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26
LIQUIDITY
 
AND CAPITAL
 
RESOURCES
During the first quarter of
 
fiscal 2024, cash provided by operations
 
was $378 million compared to $389
 
million in the same period last
year.
 
The $11 million
 
decrease was mainly
 
driven by
 
a $248 million
 
change in
 
current assets and
 
liabilities and
 
a $46
 
million change
in
 
other
 
non-cash
 
items
 
in
 
net
 
earnings,
 
including
 
changes
 
in
 
the
 
valuation
 
of
 
certain
 
corporate
 
investments.
 
These
 
were
 
partially
offset
 
by a
 
$288 million
 
increase
 
in
 
net
 
earnings,
 
excluding
 
the
 
$431 million
 
net
 
divestitures
 
gain
 
in fiscal
 
2023.
 
The $248
 
million
change in current assets and liabilities is primarily driven by a $313 million
 
change in the timing of accounts payable.
Cash
 
used
 
by
 
investing
 
activities
 
during
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
was
 
$136
 
million
 
compared
 
to
 
cash
 
provided
 
by
 
investing
activities
 
of
 
$266 million
 
for
 
the
 
same
 
period
 
in
 
fiscal
 
2023.
 
During
 
the
 
first
 
quarter
 
of
 
the
 
2023,
 
we
 
completed
 
the
 
sale
 
of
 
the
Helper main meals and Suddenly Salad side dishes
 
business for $607 million cash. In the
 
first quarter of fiscal 2023, we acquired
 
TNT
Crust for $252
 
million cash, net of cash acquired. In addition, we spent $142 million
 
on purchases of land, buildings, and equipment in
the first quarter of fiscal 2024 compared to $91 million in the same period
 
last year.
Cash used
 
by financing
 
activities during
 
the first
 
quarter of
 
fiscal 2024
 
was $334 million
 
compared
 
to $609 million
 
of cash
 
used by
financing activities
 
in the
 
same period
 
in fiscal 202
 
3. We
 
paid $348 million
 
of dividends
 
in the
 
first quarter
 
of fiscal
 
2024, compared
to $325 million
 
in the
 
same period
 
last year.
 
We
 
paid $500
 
million for
 
purchases of
 
common stock
 
for treasury
 
in the first
 
quarter of
fiscal 2024, consistent with the same period in fiscal 2023
 
.
 
In addition, we had $552 million of net debt issuances in the first
 
quarter of
fiscal 2024 compared to $188 million of net debt issuances in the first quarter
 
of fiscal 2023.
 
As of August
 
27, 2023, we had
 
$425 million of cash
 
and cash equivalents
 
in foreign jurisdictions. In
 
anticipation of repatriating
 
funds
from
 
foreign
 
jurisdictions,
 
we
 
record
 
local
 
country
 
withholding
 
taxes
 
on
 
our
 
international
 
earnings,
 
as
 
applicable.
 
Furthermore,
 
we
may repatriate our
 
cash and cash equivalents
 
held by our
 
foreign subsidiaries without
 
such funds being
 
subject to further
 
U.S. income
tax liability. Earnings prior
 
to fiscal 2018 from our foreign subsidiaries remain permanently reinvested
 
in those jurisdictions.
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of August 27, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
 
and uncommitted credit facilities
$
3.3
$
-
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
 
Cereals,
 
LLC
 
(GMC)
 
Class A
 
Interests
 
receives
 
quarterly
 
preferred
 
distributions
 
from
available net
 
income based
 
on the application
 
of a
 
floating preferred
 
return rate
 
to the
 
holder’s capital
 
account balance
 
established in
the most
 
recent mark
 
-to-market valuation
 
(currently
 
$252 million). The
 
floating preferred
 
return rate
 
on GMC’s
 
Class A Interests
 
is
the sum of three
 
-month Term
 
SOFR plus 186
 
basis points. The preferred
 
return rate is adjusted
 
every three years
 
through a negotiated
agreement with the Class A Interest holder or through a remarketing auction.
 
We
 
have an option
 
to purchase the
 
Class A Interests for
 
consideration equal to
 
the then current
 
capital account value,
 
plus any unpaid
preferred return
 
and the
 
prescribed make-whole
 
amount. If
 
we purchase
 
these interests,
 
any change
 
in the
 
third-party holder’s
 
capital
account
 
from
 
its
 
original
 
value
 
will
 
be
 
charged
 
directly
 
to
 
retained
 
earnings
 
and
 
will
 
increase
 
or
 
decrease
 
the
 
net
 
earnings
 
used
 
to
calculate EPS in that period.
 
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
Certain
 
of
 
our
 
long-term
 
debt
 
agreements,
 
our
 
credit
 
facilities,
 
and
 
our
 
noncontrolling
 
interests
 
contain
 
restrictive
 
covenants.
 
As
 
of
August 27, 2023, we were in compliance with all of these covenants.
 
We
 
have
 
$1,175
 
million
 
of
 
long-term
 
debt
 
maturing
 
in
 
the
 
next
 
12
 
months
 
that
 
is
 
classified
 
as
 
current,
 
including
 
$400
 
million
 
of
floating-rate
 
notes
 
due
 
October
 
17,
 
2023,
 
€250
 
million
 
of
 
floating-rate
 
notes
 
due
 
November
 
10,
 
2023,
 
and
 
$500
 
million
 
of
 
3.65
percent fixed-rate
 
notes due
 
February 15,
 
2024. 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
 
for at least the next 12 months.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
 
to the Consolidated Financial Statements included
 
in our Annual Report on
Form
 
10-K for
 
the fiscal
 
year ended
 
May 28,
 
2023. The
 
accounting policies
 
used in
 
preparing our
 
interim fiscal
 
2024
Consolidated
Financial
 
Statements
 
are
 
the
 
same
 
as
 
those
 
described
 
in
 
our
 
Form
 
10-K
 
with
 
the
 
exception
 
of
 
the
 
new
 
accounting
 
requirements
 
 
 
 
 
 
 
 
27
adopted in the first quarter of fiscal 2024. Please see Note 1
 
to the Consolidated Financial Statements in Part I, Item 1
 
of this report for
additional information.
Our
 
critical
 
accounting
 
estimates
 
are
 
those
 
that
 
have
 
meaningful
 
impact
 
on
 
the
 
reporting
 
of
 
our
 
financial
 
condition
 
and
 
results
 
of
operations.
 
These
 
estimates
 
include
 
our
 
accounting
 
for
 
revenue
 
recognition,
 
valuation
 
of
 
long-lived
 
assets,
 
intangible
 
assets,
 
stock-
based compensation,
 
income taxes,
 
and defined
 
benefit pension,
 
other postretirement
 
benefit, and
 
postemployment benefit
 
plans. The
assumptions and methodologies used
 
in the determination of
 
those estimates as of August
 
27, 2023, are the
 
same as those described in
our Annual Report on Form 10-K for the fiscal year ended May 28, 2023.
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
 
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
brand intangible assets had
 
risk of decreasing coverage.
 
We
 
will continue to
monitor these businesses for potential impairment.
NON-GAAP MEASURES
We
 
have
 
included
 
in
 
this
 
report
 
measures
 
of
 
financial
 
performance
 
that
 
are not
 
defined
 
by
 
GAAP.
 
We
 
believe
 
that
 
these
 
measures
provide useful information to investors, and include these measures in other
 
communications to investors.
 
For each
 
of these
 
non-GAAP financial
 
measures, we
 
are providing
 
below a
 
reconciliation of
 
the differences
 
between the
 
non-GAAP
measure and the most
 
directly comparable GAAP measure,
 
an explanation of why
 
we believe the non-GAAP
 
measure provides useful
information to
 
investors, and
 
any additional
 
material purposes
 
for which
 
our management
 
or Board
 
of Directors
 
uses the
 
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
 
in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several
 
measures
 
below
 
are
 
presented
 
on
 
an
 
adjusted
 
basis.
 
The
 
adjustments
 
are
 
either
 
items
 
resulting
 
from
 
infrequently
 
occurring
events or items that, in management’s
 
judgment, significantly affect the year-to-year
 
assessment of operating results.
 
The following are descriptions of significant items impacting comparability
 
of our results.
 
Mark-to-market effects
Net
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
recognized
 
in
 
unallocated
 
corporate
 
items.
 
Please
 
see
 
Note
 
6
 
to
 
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Restructuring charges and project-related costs
Restructuring
 
charges and
 
project-related
 
costs for
 
previously announced
 
restructuring actions
 
recorded in
 
fiscal 2024.
 
Restructuring
charges
 
for
 
previously
 
announced
 
restructuring
 
actions
 
recorded
 
in
 
fiscal
 
2023.
 
Please
 
see
 
Note
 
3
 
to
 
the
 
Consolidated
 
Financial
Statements in Part I, Item 1 of this report.
Investment activity, net
Valuation
 
adjustments of
 
certain corporate
 
investments in
 
fiscal 2024. Valuation
 
adjustments and
 
the loss on
 
sale of certain
 
corporate
investments in fiscal 2023.
 
Acquisition integration costs
Integration
 
costs
 
primarily
 
resulting
 
from
 
the
 
acquisition
 
of
 
TNT
 
Crust
 
in
 
fiscal
 
2024
 
and
 
fiscal
 
2023.
 
Please
 
see
 
Note
 
2
 
to
 
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Product recall
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
 
ice cream products.
 
Divestitures gain, net
Net divestitures
 
gain primarily
 
related to
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly Salad
 
side dishes
 
business in
 
fiscal 2023.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Transaction costs
Transaction costs primarily related
 
to the sale of our Helper main meals and Suddenly
 
Salad side dishes business in fiscal 2023.
 
Please
see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
Organic Net Sales Growth Rates
We
 
provide organic
 
net sales
 
growth rates
 
for our
 
consolidated net
 
sales and
 
segment net
 
sales. This
 
measure is
 
used in
 
reporting to
our
 
Board
 
of
 
Directors
 
and
 
executive
 
management
 
and
 
as
 
a
 
component
 
of
 
the
 
measurement
 
of
 
our
 
performance
 
for
 
incentive
compensation purposes.
 
We
 
believe that
 
organic net
 
sales growth
 
rates provide
 
useful information
 
to investors
 
because they
 
provide
transparency
 
to
 
underlying
 
performance
 
in
 
our
 
net
 
sales
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations,
acquisitions, divestitures,
 
and a 53
rd
 
week, when applicable,
 
have on year-to-year comparability.
 
A reconciliation of
 
these measures to
reported net
 
sales growth
 
rates, the
 
relevant GAAP
 
measures, are
 
included in
 
our Consolidated
 
Results of
 
Operations and
 
Results of
Segment Operations discussions in the MD&A above.
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
 
Margin)
We believe
 
this measure provides useful information
 
to investors because it is important
 
for assessing our operating profit margin
 
on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
In Millions
Value
Percent of
Net Sales
Value
 
Percent of
Net Sales
Operating profit as reported
$
930.0
19.0
%
$
1,085.6
23.0
%
Mark-to-market effects
(44.9)
(0.9)
%
174.7
3.7
%
Restructuring charges
9.8
0.2
%
2.3
-
%
Investment activity, net
2.9
0.1
%
26.3
0.6
%
Project-related costs
0.8
-
%
-
-
%
Acquisition integration costs
0.2
-
%
1.5
-
%
Product recall
0.2
-
%
21.5
0.5
%
Divestitures gain, net
-
-
%
(430.9)
(9.1)
%
Transaction costs
-
-
%
0.2
-
%
Adjusted operating profit
$
899.0
18.3
%
$
881.2
18.7
%
Note: Table may not foot due to rounding.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
Adjusted Operating Profit Growth on a Constant-currency Basis
This measure is used in reporting
 
to our Board of Directors and
 
executive management and as a
 
component of the measurement of
 
our
performance for
 
incentive compensation purposes.
 
We
 
believe that
 
this measure provides
 
useful information
 
to investors because
 
it is
the
 
operating
 
profit
 
measure
 
we
 
use
 
to
 
evaluate
 
operating
 
profit
 
performance
 
on
 
a
 
comparable
 
year-to-year
 
basis.
 
The
 
measure
 
is
evaluated on
 
a constant-currency
 
basis by
 
excluding the
 
effect that
 
foreign currency
 
exchange rate
 
fluctuations have
 
on year-to-year
comparability given the volatility in foreign currency exchange rates.
 
Our adjusted operating profit growth on a constant-currency basis is calculated
 
as follows:
 
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
Change
Operating profit as reported
$
930.0
$
1,085.6
(14)
%
Mark-to-market effects
(44.9)
174.7
Restructuring charges
9.8
2.3
Investment activity, net
2.9
26.3
Project-related costs
0.8
-
Acquisition integration costs
0.2
1.5
Product recall
0.2
21.5
Divestitures gain, net
-
(430.9)
Transaction costs
-
0.2
Adjusted operating profit
$
899.0
$
881.2
2
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
2
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rates
This measure
 
is used in
 
reporting to
 
our Board of
 
Directors and executive
 
management. We
 
believe that
 
this measure provides
 
useful
information to
 
investors because it
 
is the profitability
 
measure we use
 
to evaluate earnings
 
performance on
 
a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
 
EPS and the related constant-currency growth rates follows:
 
Quarter Ended
Per Share Data
Aug. 27, 2023
Aug. 28, 2022
Change
Diluted earnings per share, as reported
$
1.14
$
1.35
(16)
%
Mark-to-market effects
(0.06)
0.22
Restructuring charges
0.01
-
Investment activity, net
-
0.04
Product recall
 
-
0.03
Divestitures gain, net
-
(0.54)
Adjusted diluted earnings per share
$
1.09
$
1.11
(2)
%
Foreign currency exchange impact
(1)
pt
Adjusted diluted earnings per share growth, on a constant-currency basis
(1)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
 
below of the effective
 
income tax rate as
 
reported to the adjusted
 
effective income tax
 
rate for the tax
 
impact of
each item affecting comparability.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
Constant-currency After-tax Earnings from Joint Ventures
 
Growth Rates
 
We
 
believe that
 
this measure
 
provides useful
 
information to
 
investors because
 
it provides
 
transparency to
 
underlying performance
 
of
our joint
 
ventures by
 
excluding the
 
effect
 
that foreign
 
currency exchange
 
rate fluctuations
 
have on
 
year-to-year
 
comparability given
volatility in foreign currency exchange markets.
 
After-tax earnings from joint ventures growth rates on a constant-currency
 
basis are calculated as follows:
 
Percentage Change in
After-Tax
 
Earnings from Joint
Ventures
 
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in After-Tax
Earnings from Joint Ventures
on Constant-Currency Basis
Quarter Ended Aug. 27, 2023
19
%
(7)
pts
26
%
Note: Table may
 
not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency
 
Basis
 
We
 
believe
 
that
 
this
 
measure
 
of
 
our
 
Canada
 
operating
 
unit
 
net
 
sales
 
provides
 
useful
 
information
 
to
 
investors
 
because
 
it
 
provides
transparency to
 
the underlying
 
performance for
 
the Canada operating
 
unit within our
 
North America Retail
 
segment by
 
excluding the
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
 
year-to-year
 
comparability
 
given
 
volatility
 
in
 
foreign
 
currency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currency
 
basis are calculated as follows:
 
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Aug. 27, 2023
Flat
(4)
pts
4
%
Note: Table may
 
not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
 
We
 
believe that
 
this measure
 
provides useful
 
information to
 
investors because
 
it provides
 
transparency to
 
underlying performance
 
of
our
 
segments
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
 
year-to-year
 
comparability
 
given
volatility in foreign currency exchange markets.
 
Our segments’ operating profit growth rates on a constant-currency
 
basis are calculated as follows:
 
Quarter Ended Aug. 27, 2023
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
3
%
Flat
3
%
International
44
%
(8)
pts
52
%
Pet
(10)
%
Flat
(10)
%
North America Foodservice
10
%
Flat
10
%
Note: Table may
 
not foot due to rounding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31
Adjusted Effective Income Tax
 
Rates
 
We
 
believe
 
this
 
measure
 
provides
 
useful
 
information
 
to
 
investors
 
because
 
it
 
presents
 
the
 
adjusted
 
effective
 
income
 
tax
 
rate
 
on
 
a
comparable year-to-year basis.
 
Adjusted effective income tax rates are calculated as follows:
 
 
Quarter Ended
 
Aug. 27, 2023
Aug. 28, 2022
In Millions
(Except Per Share Data)
Pretax
Earnings (a)
Income
Taxes
Pretax
Earnings (a)
Income
Taxes
As reported
$
830.0
$
173.2
$
1,019.6
$
216.1
Mark-to-market effects
(44.9)
(10.3)
174.7
40.2
Restructuring charges
9.8
4.7
2.3
0.6
Investment activity, net
2.9
1.0
26.3
0.5
Project-related costs
0.8
0.3
-
-
Acquisition integration costs
0.2
0.1
1.5
0.3
Product recall
 
0.2
0.1
21.5
4.9
Divestitures gain, net
-
-
(430.9)
(101.9)
Transaction costs
-
-
0.2
-
As adjusted
$
799.1
$
169.0
$
815.2
$
160.8
Effective tax rate:
As reported
20.9%
21.2%
As adjusted
21.1%
19.7%
Sum of adjustment to income taxes
$
(4.3)
$
(55.3)
Average number
 
of common shares - diluted EPS
591.4
606.0
Impact of income tax adjustments on adjusted diluted EPS
$
0.01
$
0.09
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
32
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
 
Diluted EPS adjusted for certain items affecting year-to-year
 
comparability.
Adjusted operating profit.
 
Operating profit adjusted for certain items affecting year-to-year
 
comparability.
Adjusted operating profit
 
margin.
Operating profit adjusted
 
for certain items
 
affecting year-over-year
 
comparability,
 
divided by net
sales.
Constant currency.
 
Financial results
 
translated to
 
United States
 
dollars using
 
constant foreign
 
currency exchange
 
rates based
 
on the
rates
 
in
 
effect
 
for
 
the
 
comparable
 
prior-year
 
period.
 
To
 
present
 
this
 
information,
 
current
 
period
 
results
 
for
 
entities
 
reporting
 
in
currencies other
 
than United
 
States dollars
 
are translated
 
into United
 
States dollars
 
at the
 
average exchange
 
rates in
 
effect during
 
the
corresponding
 
period
 
of
 
the
 
prior
 
fiscal
 
year,
 
rather
 
than
 
the
 
actual
 
average
 
exchange
 
rates
 
in
 
effect
 
during
 
the
 
current
 
fiscal
 
year.
Therefore,
 
the
 
foreign
 
currency
 
impact
 
is
 
equal
 
to
 
current
 
year
 
results
 
in
 
local
 
currencies
 
multiplied
 
by
 
the
 
change
 
in
 
the
 
average
foreign currency exchange rate between the current fiscal period and the corresponding
 
period of the prior fiscal year.
 
Core working capital.
 
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments such
 
as futures, swaps,
 
options, and forward
 
contracts that we
 
use to manage
 
our risk arising
 
from
changes in commodity prices, interest rates, foreign exchange rates, and stock
 
prices.
Euribor.
 
Euro Interbank Offered Rate.
Fair value
 
hierarchy.
For purposes
 
of fair
 
value measurement,
 
we categorize
 
assets and
 
liabilities into
 
one of
 
three levels
 
based on
the assumptions
 
(inputs) used
 
in valuing
 
the asset or
 
liability.
 
Level 1 provides
 
the most reliable
 
measure of
 
fair value, while
 
Level 3
generally requires significant management judgment. The three levels are
 
defined as follows:
 
Level 1:
 
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
 
Observable inputs other than quoted prices included in
 
Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:
 
Unobservable inputs reflecting management’s
 
assumptions about the inputs used in pricing the asset or liability.
Free cash flow.
 
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted
 
Accounting Principles
 
(GAAP).
Guidelines, procedures,
 
and practices
 
that we
 
are required
 
to use
 
in recording
and reporting accounting information in our financial statements.
Goodwill.
The difference
 
between the purchase
 
price of acquired
 
companies plus the fair
 
value of any noncontrolling
 
and redeemable
interests and the related fair values of net assets acquired.
 
Gross margin.
 
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
 
hedges that allows changes in
 
a hedging instrument’s
 
fair value to offset
 
corresponding
changes in
 
the hedged
 
item in
 
the same
 
reporting period.
 
Hedge accounting
 
is permitted
 
for certain
 
hedging instruments
 
and hedged
items
 
only
 
if
 
the
 
hedging
 
relationship
 
is
 
highly
 
effective,
 
and
 
only
 
prospectively
 
from
 
the
 
date
 
a
 
hedging
 
relationship
 
is
 
formally
documented.
Holistic Margin Management
 
(HMM).
 
Company-wide initiative to
 
use productivity savings, mix
 
management, and price realization
to offset input cost inflation, protect margins,
 
and generate funds to reinvest in sales-generating activities.
Interest
 
bearing
 
instruments.
Notes
 
payable,
 
long-term
 
debt,
 
including
 
current
 
portion,
 
cash
 
and
 
cash
 
equivalents,
 
and
 
certain
interest bearing investments classified within prepaid expenses and other current
 
assets and other assets.
 
Mark-to-market.
The act of determining a value for
 
financial instruments, commodity contracts, and
 
related assets or liabilities based
on the current market price for that item.
 
 
33
Net
 
mark-to-market
 
valuation of
 
certain
 
commodity
 
positions.
Realized
 
and
 
unrealized
 
gains
 
and
 
losses on
 
derivative
 
contracts
that will be allocated to segment operating profit when the exposure we are hedging
 
affects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other price
 
promotion costs.
Net realizable
 
value.
The estimated
 
selling price
 
in the
 
ordinary course
 
of business,
 
less reasonably
 
predictable costs
 
of completion,
disposal, and transportation.
 
Noncontrolling interests.
Interests of subsidiaries held by third parties.
 
Notional
 
amount.
The
 
amount
 
of
 
a
 
position
 
or
 
an
 
agreed
 
upon
 
amount
 
in
 
a
 
derivative
 
contract
 
on
 
which
 
the
 
value
 
of
 
financial
instruments are calculated.
OCI.
Other Comprehensive Income.
 
Organic net sales growth
. Net sales growth adjusted
 
for foreign currency translation,
 
acquisitions, divestitures and a
 
53
rd
 
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
 
charges.
Reporting unit
. An operating segment or a business one level below an operating
 
segment.
SOFR.
 
Secured Overnight Financing Rate.
Strategic
 
Revenue
 
Management
 
(SRM).
 
A
 
company-wide
 
capability
 
focused
 
on
 
generating
 
sustainable
 
benefits
 
from
 
net
 
price
realization
 
and
 
mix
 
by
 
identifying
 
and
 
executing
 
against
 
specific
 
opportunities
 
to
 
apply
 
tools
 
including
 
pricing,
 
sizing,
 
mix
management, and promotion optimization across each of our businesses.
Supply chain
 
input costs.
 
Costs incurred
 
to produce
 
and deliver
 
product,
 
including costs
 
for
 
ingredients
 
and
 
conversion, inventory
management, logistics, and warehousing.
Translation
 
adjustments.
The impact
 
of the conversion
 
of our foreign
 
affiliates’ financial
 
statements to United
 
States dollars
 
for the
purpose of consolidating our financial statements.
Working capital
. Current assets and current liabilities, all as of the last day of our fiscal year.
 
 
 
 
 
 
 
 
 
 
34
CAUTIONARY STATEMENT
 
RELEVANT
 
TO FORWARD
 
-LOOKING INFORMATION
 
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
 
SECURITIES LITIGATION
 
REFORM ACT OF 1995
This report
 
contains or
 
incorporates by
 
reference
 
forward-looking
 
statements within
 
the meaning
 
of the
 
Private Securities
 
Litigation
Reform Act
 
of 1995
 
that are
 
based on
 
our current
 
expectations and
 
assumptions. We
 
also may
 
make written
 
or oral
 
forward-looking
statements,
 
including
 
statements
 
contained
 
in
 
our
 
filings
 
with
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
and
 
in
 
our
 
reports
 
to
stockholders.
The words or
 
phrases “will likely
 
result,” “are expected
 
to,” “will continue,”
 
“is anticipated,” “estimate,”
 
“plan,” “project,” or
 
similar
expressions identify
 
“forward-looking statements”
 
within the
 
meaning of
 
the Private
 
Securities Litigation
 
Reform Act
 
of 1995.
 
Such
statements are
 
subject to
 
certain risks
 
and uncertainties
 
that could
 
cause actual
 
results to
 
differ
 
materially from
 
historical results
 
and
those currently anticipated or projected. We
 
caution you not to place undue reliance on any such forward-looking statements.
In connection
 
with the “safe
 
harbor” provisions
 
of the Private
 
Securities Litigation
 
Reform Act of
 
1995, we are
 
identifying important
factors
 
that could
 
affect
 
our financial
 
performance
 
and could
 
cause our
 
actual results
 
in future
 
periods
 
to differ
 
materially from
 
any
current opinions or statements.
Our
 
future
 
results
 
could
 
be
 
affected
 
by
 
a
 
variety
 
of
 
factors,
 
such
 
as:
 
disruptions
 
or
 
inefficiencies
 
in
 
the
 
supply
 
chain;
 
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;
 
economic conditions, including
 
changes in inflation rates,
 
interest rates,
tax
 
rates,
 
or
 
the
 
availability
 
of
 
capital;
 
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 the legal and regulatory
 
environment, including tax legislation, labeling
 
and advertising
regulations, and litigation; impairments in the carrying
 
value of goodwill, other intangible assets, or other long
 
-lived assets, or changes
in the
 
useful lives
 
of other
 
intangible assets;
 
changes in
 
accounting standards
 
and the impact
 
of critical
 
accounting estimates;
 
product
quality
 
and
 
safety
 
issues,
 
including
 
recalls
 
and
 
product
 
liability;
 
changes
 
in
 
consumer
 
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; consolidation
 
in the retail environment;
 
changes in purchasing
and
 
inventory
 
levels
 
of
 
significant
 
customers;
 
fluctuations
 
in
 
the
 
cost
 
and
 
availability
 
of
 
supply
 
chain
 
resources,
 
including
 
raw
materials,
 
packaging,
 
energy,
 
and
 
transportation;
 
effectiveness
 
of
 
restructuring
 
and
 
cost
 
saving
 
initiatives;
 
volatility
 
in
 
the
 
market
value of
 
derivatives used to
 
manage price
 
risk for certain
 
commodities; benefit
 
plan expenses due
 
to changes
 
in plan asset
 
values and
discount rates used to determine plan liabilities; failure
 
or breach of our information technology systems;
 
foreign economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
 
and economic uncertainty due to terrorism or war.
You
 
should also
 
consider the risk
 
factors that we
 
identify in Item
 
1A of Part
 
I of our
 
Annual Report on
 
Form 10-K for
 
the fiscal year
ended May 28, 2023, which could also affect our future results.
We undertake
 
no obligation to publicly revise any forward-looking
 
statements to reflect events or circumstances
 
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated
 
events.
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk.
 
The
 
estimated
 
maximum
 
potential
 
value-at-risk
 
arising
 
from
 
a
 
one-day
 
loss
 
in
 
fair
 
value
 
for
 
our
 
interest
 
rate,
 
foreign
 
exchange,
commodity, and equity
 
market-risk-sensitive instruments outstanding as of August 27, 2023,
 
was as follows:
 
In Millions
One-day Risk
of Loss
Change During
Quarter Ended
Aug. 27, 2023
Analysis of Change
Interest rate instruments
$
59
$
(6)
Lower interest rate volatility
Foreign currency instruments
36
(1)
Immaterial
Commodity instruments
5
(3)
Decrease in commodity prices
Equity instruments
3
-
Immaterial
For additional information, see Item 7A of Part II of our Annual Report on Form 10-K
 
for the fiscal year ended May 28, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35
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
 
our
 
evaluation,
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
Officer have
 
concluded that,
 
as of
 
August 27,
 
2023, 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 (1)
 
recorded, processed,
summarized,
 
and
 
reported
 
within
 
the
 
time
 
periods
 
specified
 
in
 
Securities
 
and
 
Exchange
 
Commission
 
rules
 
and
 
forms,
 
and
 
(2)
accumulated and
 
communicated to
 
our management,
 
including our
 
Chief Executive
 
Officer and
 
Chief Financial
 
Officer,
 
in a
 
manner
that allows timely decisions regarding required disclosure.
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 the
 
quarter ended
 
August 27,
 
2023, that
 
materially affected,
 
or are reasonably
 
likely to
 
materially affect,
 
our internal
control
 
over financial reporting.
PART
 
II.
 
OTHER INFORMATION
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds.
 
The
 
following
 
table
 
sets forth
 
information
 
with
 
respect
 
to
 
shares
 
of
 
our
 
common
 
stock
 
that we
 
purchased
 
during
 
the quarter
 
ended
August 27, 2023:
Period
Total
 
Number
 
of Shares
Purchased (a)
Average
Price Paid
Per Share
Total
 
Number of Shares
Purchased as Part of a Publicly
Announced Program (b)
Maximum Number of Shares
that may yet be Purchased
Under the Program (b)
May 29, 2023 -
July 2, 2023
3,648,025
$
80.40
3,648,025
81,214,844
July 3, 2023 -
July 30, 2023
2,739,485
77.18
2,739,485
78,475,359
July 31, 2023 -
 
August 27, 2023
-
-
-
78,475,359
Total
6,387,510
$
79.02
6,387,510
78,475,359
(a)
 
The total number
 
of shares purchased
 
includes shares of
 
common stock withheld
 
for the payment
 
of withholding taxes
 
upon the distribution
 
of
deferred option units.
(b)
 
On June
 
27, 2022,
 
our Board
 
of Directors approved
 
an authorization
 
for the
 
repurchase of
 
up to
 
100,000,000 shares of
 
our common stock
 
and
terminated the
 
prior authorization.
 
Purchases can
 
be made
 
in the
 
open market
 
or in
 
privately negotiated
 
transactions, including
 
the use
 
of call
options
 
and
 
other
 
derivative
 
instruments,
 
Rule
 
10b5-1
 
trading
 
plans,
 
and
 
accelerated
 
repurchase
 
programs.
 
The
 
Board
 
did
 
not
 
specify
 
an
expiration date for the authorization.
Item 5.
 
Other Information.
 
None.
 
 
36
PART
 
II. OTHER INFORMATION
Item 6.
Exhibits.
 
10.1
 
10.2
 
10.3
 
31.1
 
31.2
 
32.1
 
32.2
 
101
Financial
 
Statements
 
from
 
the Quarterly
 
Report
 
on Form
 
10-Q
 
of the
 
Company
 
for
 
the quarter
 
ended
 
August
 
27,
2023,
 
formatted
 
in
 
Inline
 
Extensible
 
Business
 
Reporting
 
Language:
 
(i)
 
Consolidated
 
Statements
 
of
 
Earnings;
 
(ii)
Consolidated
 
Statements
 
of
 
Comprehensive
 
Income,
 
(iii)
 
Consolidated
 
Balance
 
Sheets;
 
(iv)
 
Consolidated
Statements of
 
Total
 
Equity; (v)
 
Consolidated Statements
 
of Cash
 
Flows; and
 
(vi) Notes
 
to Consolidated
 
Financial
Statements.
 
104
Cover Page, formatted in Inline Extensible Business Reporting Language
 
and contained in Exhibit 101.
 
 
37
SIGNATURES
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.
 
GENERAL MILLS, INC.
(Registrant)
Date: September 20, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
 
Officer
(Principal Accounting Officer and Duly Authorized
 
Officer)

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