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Indicate by check mark whether the registrant is a
COMPANY OVERVIEW
We
We manage and review the financial results of our business under three operating segments: U.S. Retail; International; and Convenience Stores and Foodservice. See Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in Item 7 of this report for a description of our segments. For financial information by segment and geographic area, see Note 16 to the Consolidated Financial Statements in Item 8 of this report.
We offer a variety of food products that provide great taste, nutrition, convenience and value for consumers around the world, with a focus on five large global categories:
Other significant product categories include:
Our Cereal Partners Worldwide (CPW) joint venture with Nestlé S.A. (Nestlé) competes in the ready-to-eat cereal category in markets outside North America, and our Häagen-Dazs Japan, Inc. (HDJ) joint venture competes in the super-premium ice cream category in Japan. For net sales contributed by each class of similar products, see Note 16 to the Consolidated Financial Statements in Item 8 of this report.
Customers. Our primary customers are grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, e-commerce grocery providers,
affiliates (Wal-Mart) (Walmart)
Competition.
RESEARCH AND DEVELOPMENT
Our research and development resources are focused on new product development, product improvement, process design and improvement, packaging, and exploratory research in new business and technology areas. Research and development expenditures were $222 million in fiscal 2016, $229 million in fiscal 2015, and $244 million in fiscal 2014.
third
partyTheYoplait trademark
formulations. We continue our focus on developing and marketing innovative, proprietary products. We
BACKLOG
Orders
WORKING CAPITAL
A description large
EMPLOYEES
As
FOOD QUALITY AND SAFETY REGULATION
The manufacture and sale of consumer food products is highly regulated. In the United States, our activities are subject to regulation by various federal government agencies, including the Food and Drug Administration, Department of Agriculture, Federal Trade Commission, Department of Commerce, and Environmental Protection Agency, as well as various state and local agencies. Our business is also regulated by similar agencies outside of the United States.
ENVIRONMENTAL MATTERS
As of May 29, 2016, we were involved with two active cleanup sites associatedintend.
Our operations are subject to the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act, and the Federal Insecticide, Fungicide, and Rodenticide Act, and all similar state, local, and foreign environmental laws and regulations applicable to the jurisdictions in which we operate.
Based on current facts and circumstances, we believe that neither the resultsquality of our environmental proceedings norproducts could cause consumers
EXECUTIVE OFFICERS
The section below provides information regarding our executive officers as of June 30, 2016:
Richard C. Allendorf, age 55, is Senior Vice President, General Counsel,to introduce new and Secretary. Mr. Allendorf joined General Mills in 2001 from The Pillsbury Company. He was promoted to Vice President, Deputy General Counsel in 2010, first overseeing the legal affairs of the U.S. Retail segment and Consumer Food Sales and then, in August 2012, overseeing the legal affairs of the International segment and Global Ethics and Compliance. He was named to his present position in February 2015. Prior to joining General Mills, he practiced law with the Shearman and Sterling and Mackall, Crounse and Moore law firms. He was in finance with General Electric prior to his legal career.
John R. Church, age 50, is Executive Vice President, Supply Chain. Mr. Church joined General Mills in 1988 as improved products on
Peter C. Erickson, age 55, is Executive Vice President, Innovation, Technology and Quality. Mr. Erickson joined General Mills in 1994 as part of the Colombo yogurt acquisition. He has held various positions in Research & Development and became Vice President, Innovation, Technology and Quality in 2003 and Senior Vice President, Innovation, Technology and Quality in 2006. He was named to his present position in July 2013.
Jeffrey L. Harmening, age 49, is Executive Vice President, Chief Operating Officer, U.S. Retail. Mr. Harmening joined General Mills in 1994 and served in various marketing roles in the Betty Crocker, Yoplait, and Big G cereal divisions. He was promoted to Marketing Director in 2000 and held leadership roles in Big G New Enterprises and Foodservice New Business. He was named Vice President, Marketing for CPW in 2003 and a Vice President of the Big G cereal division in 2007. In 2011, he was promoted to Senior Vice President for the Big G cereal division. Mr. Harmening was appointed Senior Vice President, Chief Executive Officer of CPW in July 2012, and he was named to his present position in May 2014. Mr. Harmening was appointed President, Chief Operating Officer effective July 1, 2016.
Donal L. Mulligan, age 55, is Executive Vice President, Chief Financial Officer. Mr. Mulligan joined General Mills in 2001 from The Pillsbury Company. He served as Vice President, Financial Operations
Kimberly A. Nelson, age 53, is Senior Vice President, External Relations, and President of the General Mills Foundation. Ms. Nelson joined General Mills in 1988 and has held marketing leadership roles in the Big G cereal, Snacks, and Meals divisions. She was elected Vice President, President, Snacks in 2004, Senior Vice President, President, Snacks in 2008, and Senior Vice President, External Relations in September 2010. She was named President of the General Mills Foundation in 2011.
Shawn P. O’Grady, age 52, is Senior Vice President, President, Sales & Channel Development. Mr. O’Grady joined General Mills in 1990 and held several marketing roles in the Snacks, Meals and Big G cereal divisions. He was promoted to Vice President in 1998 and held marketing positions in the Betty Crocker and Pillsbury USA divisions. In 2004, he moved into Consumer Foods Sales, becoming Vice President, President, U.S. Retail Sales in 2007, and Senior Vice President, President, Consumer Foods Sales Division in 2010. He was promoted to his current position in June 2012.
Christopher D. O’Leary, age 56, is Executive Vice President and Chief Operating Officer, International. Mr. O’Leary joined General Mills in 1997 as Vice President, Corporate Growth. He was elected a Senior Vice President in 1999 and President of the Meals division in 2001. Mr. O’Leary was named to his present position in 2006. Prior to joining General Mills, he spent 17 years at PepsiCo, Inc., last serving as President and Chief Executive Officer of the Hostess Frito-Lay business in Canada. Mr. O’Leary is a director of Telephone and Data Systems, Inc.
Kendall J. Powell, age 62, is Chairman of the Board and Chief Executive Officer of General Mills. Mr. Powell joined General Mills in 1979 and served in a variety of positions before becoming a Vice President in 1990. He became President of the Yoplait division in 1996, President of the Big G cereal division in 1997, and Senior Vice President of General Mills in 1998. From 1999 to 2004, he served as Chief Executive Officer of CPW. He returned from CPW in 2004 and was elected Executive Vice President. Mr. Powell was elected President and Chief Operating Officer of General Mills with overall global operating responsibility for the Company in 2006, Chief Executive Officer in 2007, and Chairman of the Board in 2008. He is a director of Medtronic, Inc.
Jacqueline Williams-Roll, age 47, is Senior Vice President, Human Resources. Ms. Williams-Roll joined General Mills in 1995. She held human resources leadership roles in Supply Chain, Finance, Marketing and Organization Effectiveness, and she also worked a large part of her career on businesses outside of the United States. She was named Vice President, Human Resources, International in 2010, and then promoted to Senior Vice President, Human Resources Operations in September 2013. She was named to her present position in September 2014. Prior to joining General Mills, she held sales and management roles with Jenny Craig International.
Jerald A. Young, age 59, is Vice President, Controller. Mr. Young joined General Mills in 2001 from The Pillsbury Company. He was appointed Vice President of Finance for the Bakeries and Foodservice Division while at Pillsbury in 2000. Mr. Young was subsequently appointed Vice President Internal Audit in 2005 and Vice President, Supply Chain in 2008. He was named to his present position in August 2011.
WEBSITE ACCESS
Our website is www.GeneralMills.com. We make available, free of charge in the “Investors” portion of this website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (1934 Act) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC). Reports of beneficial ownership filed pursuant to Section 16(a) of the 1934 Act are also available on our website.
Our business is subject to various risks and uncertainties. Any of the risks described below could materially, adversely affect our business, financial condition, and results of operations.
The food categories in which we participate are very competitive, and if we are not able to compete effectively, our results of operationsproducts could be adversely affected.
The affected by consumer concerns regarding
There has been significant consolidationmarkets
Price changes for the commodities we depend on for raw materials, packaging, and energy may adversely affect
business. The principal raw materials that we use are commodities that experience price volatility caused by external conditions such as weather, product scarcity, limited sources of supply, commodity market fluctuations, currency fluctuations, and changes in governmental agricultural and energy policies and regulations. Commodity price changes may result in unexpected increases in raw material, packaging, and energy costs. If we are unable to increase productivity to offset these increased costs or increase our prices, we may experience reduced margins and profitability. We do not fully hedge against changes in commodity prices, and the risk management procedures that we do use may not always work as we intend.
Volatility in the market
We utilize derivatives to manage price risk for some ofbrands,
If we are not efficient in our production, our profitability on
Concerns
Wethe
If our food products become adulterated, misbranded, or mislabeled, we might need to recall those items and may
We may be unable to anticipate changes in consumer preferences and trends, which may result in decreased demand for our products.
Our success depends in part on our ability to anticipate the tastes and eating habits of consumers and to offer products that appeal to their preferences. Consumer preferences and category-level consumption may change from time to time and can be affected by a number of different trends and other factors. If we fail to anticipate, identify or react to these changes and trends, or to introduce new and improved products on a timely basis, we may experience reduced demand for our products, which would in turn cause our revenues and profitability to suffer. Similarly, demand for our products could be affected by consumer concerns regarding the health effects of ingredients such as sodium, trans fats, genetically modified organisms, sugar, processed wheat, or other product ingredients or attributes.
We may be unable to grow our market share or add products that are in faster growing and more profitable categories.
The food industry’s growth potential is constrained by population growth. Our success depends in part on our ability to grow our business faster than populations are growing in the markets that we serve. One way to achieve that growth is to enhance our portfolio by adding innovative new products in faster growing and more profitable categories. Our future results will also depend on our ability to increase market share in our existing product categories. If we do not succeed in developing innovative products for new and existing categories, our growth may slow, which could adversely affect our profitability.
Economic downturns could limit consumer demand for our products.
The willingness of consumers to purchase our products depends in part on local economic conditions. In periods of economic uncertainty, consumers may purchase more generic, private label, and other economy brands and may forego certain purchases altogether. In those circumstances, we could experience a reduction in sales of higher margin products or a shift in our product mix to lower margin offerings. In addition, as a result of economic conditions or competitive actions, we may be unable to raise our prices sufficiently to protect margins. Consumers may also reduce the amount of food that they consume away from home at customers that purchase products from our Convenience Stores and Foodservice segment. Any of these events could have an adverse effect on our results of operations.
Our results may be negatively impacted if consumers do not maintain their favorable perception of our brands.
Maintaining and continually enhancing the value of our many iconic brands is critical to the success of our business. The value of our brands is based in large part on the degree to which consumers react and respond positively to these brands. Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products, our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences, concerns about food safety, or our products becoming unavailable to consumers. Consumer demand for our products may also be impacted by changes in the level of advertising or promotional support. The growing use of social and digital media by consumers, us, and third parties increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands, or our products on social or digital media could seriously damage our brands and reputation. If we do not maintain the favorable perception of our brands, our business results could be negatively impacted.
Our international operations are subject to political and economic risks.
In fiscal 2016, 28 percent of our consolidated net sales were generated outside of the United States. We are accordingly subject to a number of risks relating to doing business internationally, any of which could significantly harm our business. These risks include:
Our financial performance on a U.S. dollar denominated basis is subject to fluctuations in currency exchange rates. These fluctuations could cause material variations in our results of operations. Our principal exposures are to the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, Chinese renminbi, euro, Japanese yen, Mexican peso, and Swiss franc. From time to time, we enter into agreements that are intended to reduce the effects of our exposure to currency fluctuations, but these agreements may not be effective in significantly reducing our exposure.
New regulations or regulatory-based claims could adversely
affect our business.comply with such laws and regulations could subject us to lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our
We have these accounting
Global capital and credit market issues could negatively affect our liquidity, increase our costs of borrowing, and disrupt the operations of our suppliers and customers.
We depend on stable, liquid, and well-functioning capital and credit markets to fund our operations. Although we believe that our operating cash flows, financial assets, access to capital and credit markets, and revolving credit agreements will permit us to meet our financing needs for the foreseeable future, there can be no assurance that future volatility or disruption in the capital and credit markets will not impair our liquidity or increase our costs of borrowing. We also utilize interest rate derivatives to reduce the volatility of our financing costs. If we are not effective in hedging this volatility, we may experience an increase in our costs of borrowing. Our business could also be negatively impacted if our suppliers or customers experience disruptions resulting from tighter capital and credit markets or a slowdown in the general economy.
Volatility in the securities markets, interest rates, and other
securities and other investments. Changes in interest rates, mortality rates, health care costs, early retirement rates, investment returns, and the market value of plan assets can affect the funded status of our defined benefit
Our business operations
Information technology serves an important role in the efficient and effective operation of our business. We rely on information technology networks and systems, including the internet, to process, transmit, and store electronic information to manage a variety of business processes and to comply with regulatory, legal, and tax requirements. Our information technology systems and infrastructure are critical to effectively manage our key business processes including digital marketing, order entry and fulfillment, supply chain management, finance, administration, and other business processes. These technologies enable internal and external communication among our locations, employees, suppliers, customers, and others and include the receipt and storage of personal information about our employees, consumers, and proprietary business information. Our information technology systems, some of which are dependent on services provided by third parties, may be vulnerable to damage, interruption, or shutdown due to any number of causes such as catastrophic events, natural disasters, fires, power outages, systems failures, telecommunications failures, security breaches, computer viruses, hackers, employee error or malfeasance, and other causes. Increased cyber-security threats pose a potential risk to the security and viability of our information technology systems, as well as the confidentiality, integrity, and availability of the data stored on those systems. The failure of our information technology systems to perform as we anticipate could disrupt our business and result in transaction errors, processing inefficiencies, data loss, legal claims or proceedings, regulatory penalties, and the loss of sales and customers. Any interruption of our information technology systems could have operational, reputational, legal, and financial impacts that may have a material adverse effect on our business.
A change in the assumptions regarding the future performance of our businesses or a different weighted-average cost of capital used to value our reporting units or our indefinite-lived intangible assets could negatively affect our
performed a sensitivity analysis for certain brand intangible assets and determined that, while not impaired as of May 29, 2016, theProgresso andFood Should Taste Good
Our failure to successfully integrate acquisitions into
From time to time, we evaluate potential acquisitions or joint ventures that would further our strategic objectives. Our success depends, in part, upon our ability to integrate acquired
None.
We own our principal executive offices and
The following table sets forth information with respect to shares of our common stock that we purchased during the fiscal
| Period | Total Number of Shares | Average Price Paid Per Share | Total Number of Shares Purchased as | Maximum Number of Shares that may yet be Purchased Under the Program (b) | ||||||||||||
February 29, 2016- | ||||||||||||||||
April 3, 2016 | 1,930 | $ | 59.37 | 1,930 | 75,871,561 | |||||||||||
April 4, 2016- | ||||||||||||||||
May 1, 2016 | 13,035 | 64.96 | 13,035 | 75,858,526 | ||||||||||||
May 2, 2016- | ||||||||||||||||
May 29, 2016 | 63,197 | 61.75 | 63,197 | 75,795,329 | ||||||||||||
Total | 78,162 | $ | 62.23 | 78,162 | 75,795,329 | |||||||||||
28, 2023:
| Fiscal Year | ||||||||||||||||||||
| In Millions, Except Per Share Data, Percentages and Ratios | 2016 | 2015 (a) | 2014 | 2013 | 2012 | |||||||||||||||
Operating data: | ||||||||||||||||||||
Net sales | $ | 16,563.1 | $ | 17,630.3 | $ | 17,909.6 | $ | 17,774.1 | $ | 16,657.9 | ||||||||||
Gross margin (b) | 5,829.5 | 5,949.2 | 6,369.8 | 6,423.9 | 6,044.7 | |||||||||||||||
Selling, general, and administrative expenses | 3,118.9 | 3,328.0 | 3,474.3 | 3,552.3 | 3,380.7 | |||||||||||||||
Operating profit | 2,707.4 | 2,077.3 | 2,957.4 | 2,851.8 | 2,562.4 | |||||||||||||||
Total segment operating profit (c) | 2,999.5 | 3,035.0 | 3,153.9 | 3,222.9 | 3,011.6 | |||||||||||||||
Net earnings attributable to General Mills | 1,697.4 | 1,221.3 | 1,824.4 | 1,855.2 | 1,567.3 | |||||||||||||||
Advertising and media expense | 754.4 | 823.1 | 869.5 | 895.0 | 913.7 | |||||||||||||||
Research and development expense | 222.1 | 229.4 | 243.6 | 237.9 | 245.4 | |||||||||||||||
Average shares outstanding: | ||||||||||||||||||||
Diluted | 611.9 | 618.8 | 645.7 | 665.6 | 666.7 | |||||||||||||||
Earnings per share: | ||||||||||||||||||||
Diluted | $ | 2.77 | $ | 1.97 | $ | 2.83 | $ | 2.79 | $ | 2.35 | ||||||||||
Diluted, excluding certain items affecting comparability (c) | $ | 2.92 | $ | 2.86 | $ | 2.82 | $ | 2.72 | $ | 2.56 | ||||||||||
Operating ratios: | ||||||||||||||||||||
Gross margin as a percentage of net sales | 35.2 | % | 33.7 | % | 35.6 | % | 36.1 | % | 36.3 | % | ||||||||||
Selling, general, and administrative expenses as a percentage of net sales | 18.8 | % | 18.9 | % | 19.4 | % | 20.0 | % | 20.3 | % | ||||||||||
Operating profit as a percentage of net sales | 16.3 | % | 11.8 | % | 16.5 | % | 16.0 | % | 15.4 | % | ||||||||||
Adjusted operating profit as a percentage of net sales (b) (c) | 16.8 | % | 15.9 | % | 16.2 | % | 16.3 | % | 16.7 | % | ||||||||||
Total segment operating profit as a percentage of net sales (c) | 18.1 | % | 17.2 | % | 17.6 | % | 18.1 | % | 18.1 | % | ||||||||||
Effective income tax rate | 31.4 | % | 33.3 | % | 33.3 | % | 29.2 | % | 32.1 | % | ||||||||||
Return on average total capital (b) | 12.9 | % | 9.1 | % | 12.5 | % | 13.4 | % | 12.8 | % | ||||||||||
Adjusted return on average total capital (b) (c) | 11.3 | % | 11.2 | % | 11.6 | % | 12.0 | % | 12.7 | % | ||||||||||
Balance sheet data: | ||||||||||||||||||||
Land, buildings, and equipment | $ | 3,743.6 | $ | 3,783.3 | $ | 3,941.9 | $ | 3,878.1 | $ | 3,652.7 | ||||||||||
Total assets | 21,712.3 | 21,832.0 | 23,044.7 | 22,505.7 | 21,014.8 | |||||||||||||||
Long-term debt, excluding current portion | 7,057.7 | 7,575.3 | 6,396.6 | 5,901.8 | 6,139.5 | |||||||||||||||
Total debt (b) | 8,430.9 | 9,191.5 | 8,758.9 | 7,944.8 | 7,407.2 | |||||||||||||||
Cash flow data: | ||||||||||||||||||||
Net cash provided by operating activities | $ | 2,629.8 | $ | 2,542.8 | $ | 2,541.0 | $ | 2,926.0 | $ | 2,407.2 | ||||||||||
Capital expenditures | 729.3 | 712.4 | 663.5 | 613.9 | 675.9 | |||||||||||||||
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Free cash flow (b) (c) | 1,900.5 | 1,830.4 | 1,877.5 | 2,312.1 | 1,731.3 | |||||||||||||||
Fixed charge coverage ratio (b) | 7.40 | 5.54 | 8.04 | 7.62 | 6.26 | |||||||||||||||
Operating cash flow to debt ratio (b) | 31.2 | % | 27.7 | % | 29.0 | % | 36.8 | % | 32.5 | % | ||||||||||
Share data: | ||||||||||||||||||||
Low stock price | $ | 54.12 | $ | 48.86 | $ | 46.86 | $ | 37.55 | $ | 34.95 | ||||||||||
High stock price | 65.36 | 57.14 | 54.40 | 50.93 | 41.05 | |||||||||||||||
Closing stock price | 62.87 | 56.15 | 53.81 | 48.98 | 39.08 | |||||||||||||||
Cash dividends per common share | 1.78 | 1.67 | 1.55 | 1.32 | 1.22 | |||||||||||||||
repurchase
ofup to100,000,000shares ofourover time.
Fiscal 2016 was an important step toward returning to our long-term growth objectives. Our U.S. Retail segment improved its operating profit performance cereal
Our consolidated net sales for fiscal 2016 declined 6 percent to $16.6 billion, primarily driven by unfavorable foreign exchange, a 53rd week in fiscal 2015, and the net impact of acquisitions and divestitures. On a constant-currency basis, net sales decreased 2 percent. Operating profit of $2.7 billion increased 30 percent. Total segment operating profit of $3.0 billion declined 1 percent and grew 1 percent on a constant-currency basis.
104 80 percent of adjusted
We recorded the following achievements related to our other key operating objectives for fiscal 2016:
A detailed review of our fiscal 2016 performance appears below in the section titled “Fiscal 2016 Consolidated Results of Operations.”
With strong savings in Fiscal 2016 and visibility to further savings over the next two years, we now expect our previously announced organizational restructuring and cost-reduction initiatives, including Projects Century, Catalyst, and Compass, as well as administrative cost reductions, to generate total annual savings of $600 million by fiscal 2018. We are also undertaking further efforts to prioritize investments, reduce complexity, and streamline our operations to drive profitable sales growth. As a result, we are increasing and accelerating our adjusted operating profit margin expansion target. We expect to achieve an adjusted operating profit margin of 20 percent by fiscal 2018, an increase of 400 basis points over fiscal 2015 levels. Key drivers of margin expansion over the next two years will include:
We will focus our fiscal 2017 and fiscal 2018 growth investments on our brands and platforms with the strongest profitable growth potential, including:
Net sales for these “growth” businesses, which comprise 75 percent of total company net sales and a similar proportion of operating profit, are expected to grow at a low single-digit organic rate in fiscal 2017. In our “foundation” businesses, which comprise the remainder of the portfolio, we will only pursue selective growth investments and will focus on reducing SKU complexity, optimizing commercial investments, and prioritizing profitable volume while making selective Consumer First investments. We expect organic net sales to decline mid single-digits for these businesses in fiscal 2017. With this focused approach, we expect:
Our fiscal 2017 plans call for continued strong cash returns to shareholders. The current annualized dividend rate of $1.92 per share is up 8 percent from the annual dividend paid in fiscal 2016. Share repurchases in fiscal 2017 are expected to result in a net reduction in average diluted shares outstanding of approximately 1 to 2 percent.
The foregoing non-GAAP forward-looking financial measures are not reconcilable to the equivalent GAAP measure because we cannot accurately predict the excluded variables that may impact these measures.
Certain terms used throughout this report are defined in a glossary in Item 8 of
this report.Fiscal 2016 had 52 weeks compared to 53 weeks in
Fiscal 2016 2023,
GAAP.
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Cost of salesdecreased $948 million in fiscal 2016 to $10,734 million. In fiscal 2016, product mix drove a $486 million decrease in
We also expect to incur approximately $109 million of restructuring initiative project-related cash costs and recorded $58 million of these costs in cost of sales in fiscal 2016 compared to $13 million in fiscal 2015
Selling, general and administrative (SG&A) expensesdecreased $209 2022.
During fiscal 2016, we recorded an $148
Restructuring, impairment, and other exit coststotaled $151 million
In fiscal 2015, we made a strategic decision to redirect certain resources supporting our Green Giant business in our U.S. Retail segment to other businesses within the segment. As a result, we recorded a $260 million impairment charge in fiscal 2015 related to theGreen Giant brand intangible asset.
Restructuring charges recorded in restructuring, impairment,interest costs, partially
| As Reported | Estimated | |||||||||||||||||||||||||||||||||||
| In Millions | Fiscal 2016 | Fiscal 2015 | Future | Total | Savings (b) | |||||||||||||||||||||||||||||||
| Charge | Cash | Charge | Cash | Charge | Cash | Charge | Cash | |||||||||||||||||||||||||||||
Compass | $ | 54.7 | $ | 36.1 | $ | — | $ | — | $ | 5 | $ | 24 | $ | 60 | $ | 60 | ||||||||||||||||||||
Total Century (a) | 182.6 | 34.1 | 181.8 | 12.0 | 75 | 120 | 439 | 166 | ||||||||||||||||||||||||||||
Catalyst | (7.5 | ) | 47.8 | 148.4 | 45.0 | — | 25 | 141 | 118 | |||||||||||||||||||||||||||
Combination of certain operational facilities | — | 4.5 | 13.9 | 6.5 | 1 | 2 | 15 | 12 | ||||||||||||||||||||||||||||
Other | — | 0.1 | (0.6 | ) | 0.1 | — | — | — | — | |||||||||||||||||||||||||||
Total restructuring charges (a) | 229.8 | 122.6 | 343.5 | 63.6 | 81 | 171 | 655 | 356 | ||||||||||||||||||||||||||||
Project-related costs | 57.5 | 54.5 | 13.2 | 9.7 | 38 | 45 | 109 | 109 | ||||||||||||||||||||||||||||
Restructuring charges and project-related costs | $ | 287.3 | $ | 177.1 | $ | 356.7 | $ | 73.3 | $ | 119 | $ | 216 | $ | 764 | $ | 465 | ||||||||||||||||||||
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Future cumulative annual savings | $ | 600 | ||||||||||||||||||||||||||||||||||
Please refer tohigher expected
additional information).
After-tax earnings
| As Reported | Constant-Currency Basis | |||||||
| Fiscal 2016 vs. 2015 | Fiscal 2016 vs. 2015 | |||||||
CPW | (12 | )% | Flat | |||||
HDJ | Flat | 5 | ||||||
Joint Ventures | (10 | )% | 1 | % | ||||
volume growth.
Fiscal 2023 vs. 2022 Percentage Change Contributions | ||||||||
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Average diluted shares outstandingdecreased by 7 million in fiscal 2016 from fiscal 2015organic volume growth (a)
FISCAL 2015 CONSOLIDATED RESULTS OF OPERATIONS
Fiscal 2015 had 53 weeks compared to 52 weeksrounding
Fiscal 2015 net sales declined 2 percent to $17,630 million and increased 1 percent on a constant-currency basis.Operating profit of $2,077 million was 30 percent lower than fiscal 2014. Total segment operating profit was $3,035 million, 4 percent lower than fiscal 2014 and 2 percent lower on a constant-currency basis. In fiscal 2015, net earnings attributable to General Mills were $1,221 million, down 33 percent from $1,824 million in fiscal 2014, and we reporteddiluted EPSof $1.97 in fiscal 2015, down 30 percent from $2.83 in fiscal 2014. Fiscal 2015 results include restructuring-related charges, an indefinite-lived intangible asset impairment charge, tax impacts from the repatriation of historical foreign earnings, losses from the mark-to-market valuation of certain commodity positions and grain inventories, integration costs resulting from the acquisition of Annie’s, and the impact of Venezuela currency devaluation. Fiscal 2014 results include the impact of Venezuela currency devaluation, a gaintons based on the divestiturestandard weight of certain grain elevators, losses from the mark-to-market valuation of certain commodity positions and grain inventories, and restructuring charges related to our product shipments.
Net salesdeclined 2 percent to $17,630 million in fiscal 2015 from $17,910 in fiscal 2014. The components of net sales growth are shown in the following table:
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The 53rd week in fiscal 2015 contributed approximately 1 percentage point of net sales growth, reflecting 1 percentage point of growth from volume.
Cost of salesincreased $141 million in fiscal 2015 to $11,681 million. In fiscal 2015, we recorded a $90 million net increase in cost of sales related to mark-to-market valuation of certain commodity positions and grain inventories, compared to a net decrease of $49 million in fiscal 2014. In fiscal 2015, we recorded $60 million of restructuring charges in cost of sales. Product mix drove a $17 million increase in cost of sales. We also recorded a $3 million foreign exchange loss in fiscal 2015 related to Venezuela currency devaluation compared to a $23 million loss in fiscal 2014. Lower volume drove a $68 million decrease in cost of sales in fiscal 2015. We recorded $13 million of restructuring initiative project-related cash costs in cost of sales in fiscal 2015.
Gross margindeclined 7 percent in fiscal 2015 versus fiscal 2014. Gross margin as a percent of net sales of 34 percent decreased 190 basis points compared to fiscal 2014.
SG&A expensesdecreased $146 million in fiscal 2015 versus fiscal 2014 primarily due to a 5 percent decrease in advertising and media expense, and savings from Project Catalyst and our other cost management initiatives. In fiscal 2015, we recorded a $5 million charge in SG&A expenses related to Venezuela currency devaluation compared to a $39 million charge in fiscal 2014. In addition, we recorded $16 million of integration costs in SG&A expenses in fiscal 2015 related to our acquisition of Annie’s. SG&A expenses as a percent of net sales decreased 50 basis points compared to fiscal 2014.
There were no divestitures in fiscal 2015. During fiscal 2014, we recorded adivestiture gainof $66 million related to the sale of certain grain elevators in our U.S. Retail segment.
Restructuring, impairment, and other exit coststotaled $544 million in fiscal 2015 compared to $4 million in fiscal 2014.
In fiscal 2015, we made a strategic decision to redirect certain resources supporting our Green Giant business in our U.S. Retail segment to other businesses within the segment. As a result, we recorded a $260 million impairment charge in fiscal 2015 related to theGreen Giant brand intangible asset.
Restructuring charges recorded in restructuring, impairment, and other exit costs were $284 million in fiscal 2015 compared to $4 million in fiscal 2014. Total charges associated with our restructuring initiatives recognized in fiscal 2015 and 2014 consisted of the following:
| As Reported | ||||||||||||||||
| In Millions | Fiscal 2015 | Fiscal 2014 | ||||||||||||||
| Charge | Cash | Charge | Cash | |||||||||||||
Total Century (a) | $ | 181.8 | $ | 12.0 | $ | — | $ | — | ||||||||
Catalyst | 148.4 | 45.0 | — | — | ||||||||||||
International | 13.9 | 6.5 | 1.0 | 6.0 | ||||||||||||
Other | (0.6 | ) | 0.1 | 2.6 | 16.4 | |||||||||||
Total restructuring charges (a) | 343.5 | 63.6 | 3.6 | 22.4 | ||||||||||||
Project-related costs recorded in costs of sales | 13.2 | 9.7 | — | — | ||||||||||||
Restructuring charges and project-related costs | $ | 356.7 | $ | 73.3 | $ | 3.6 | $ | 22.4 | ||||||||
| ||||||||||||||||
Please refer to Note 4 to the Consolidated Financial Statements in Item 8 of this report for more information regarding our restructuring activities.
Interest, netfor fiscal 2015 totaled $315 million, $13 million higher than fiscal 2014, primarily driven by higher average debt balances, partially offset by changes in the mix of debt.
Our consolidatedeffective tax ratefor fiscal 2015 of 33.3 percent was consistent with fiscal 2014. The 4.5 percentage point impact resulting from the repatriation of $606 million of historical foreign earnings in fiscal 2015 was offset by changes in earnings mix by country, certain favorable discrete items, and favorable state tax rate changes. Our effective tax rate excluding certain items affecting comparability was 30.5 percent in fiscal 2015 compared to 32.2 percent in fiscal 2014 (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP).
After-tax earnings from joint venturesfor fiscal 2015 decreased to $84 million compared to $90 million in fiscal 2014 primarily driven by unfavorable foreign currency exchange and an asset impairment charge of $3 million at CPW in South Africa. On a constant-currency basis, after-tax earnings from joint ventures were flat (see the “Non-GAAP Measures” section below for a description of our use of this measure not defined by GAAP). The change
| As Reported | Constant Currency Basis | |||||||
| Fiscal 2015 vs. 2014 | Fiscal 2015 vs. 2014 | |||||||
CPW | (10 | )% | (2 | )% | ||||
HDJ | (4 | ) | 6 | |||||
Joint Ventures | (9 | )% | (1 | )% | ||||
The components of our joint ventures’ net sales growth order to maximize efficiency
| ||||||||
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| ||||||||
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Average diluted shares outstandingdecreased
RESULTS OF SEGMENT OPERATIONS
Our businesses are organized into three operating segments: U.S. Retail; International;
the sale of corporate investments in fiscal 2023,
compared to $15 million of net losses in fiscal 2022.In fiscalThe following tables provide the dollar amount and percentage$22 million of net sales and operating profit from each segment for integration
| Fiscal Year | ||||||||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||||||||
In Millions | Dollars | | Percent of Total | | Dollars | | Percent of Total | | Dollars | | Percent of Total | | ||||||||||||
Net Sales | ||||||||||||||||||||||||
U.S. Retail | $ | 10,007.1 | 60 | % | $ | 10,507.0 | 60 | % | $ | 10,604.9 | 59 | % | ||||||||||||
International | 4,632.2 | 28 | 5,128.2 | 29 | 5,385.9 | 30 | ||||||||||||||||||
Convenience Stores and Foodservice | 1,923.8 | 12 | 1,995.1 | 11 | 1,918.8 | 11 | ||||||||||||||||||
Total | $ | 16,563.1 | 100 | % | $ | 17,630.3 | 100 | % | $ | 17,909.6 | 100 | % | ||||||||||||
Segment Operating Profit | ||||||||||||||||||||||||
U.S. Retail | $ | 2,179.0 | 72 | % | $ | 2,159.3 | 71 | % | $ | 2,311.5 | 73 | % | ||||||||||||
International | 441.6 | 15 | 522.6 | 17 | 535.1 | 17 | ||||||||||||||||||
Convenience Stores and Foodservice | 378.9 | 13 | 353.1 | 12 | 307.3 | 10 | ||||||||||||||||||
Total | $ | 2,999.5 | 100 | % | $ | 3,035.0 | 100 | % | $ | 3,153.9 | 100 | % | ||||||||||||
Segment operating profit excludes unallocated corporate items, net gain on divestitures, and restructuring, impairment, and other exit
U.S. RETAIL SEGMENT
In fiscal 2015, we realigned certain operating units within our U.S. Retail operating segment. We also changed the name of our Yoplait operating unit to Yogurt and our Big G operating unit to Cereal. Frozen Foods transitioned into Meals and Baking Products. Small Planet Foods transitioned into Snacks, Cereal, and Meals. The Yogurt operating unit was unchanged. We revised the amounts previously reported in the net sales and net sales percentage change by operating unit within our U.S. Retail segment to conformprimarily related to the new operating unit structure. These realignments had no effect on previously reported consolidated net sales, operating segments’ net sales, operating profit, segment operating profit, net earnings attributable to General Mills, or EPS. In addition, results fromsale of our
Our U.S. Retail segment reflects business with a wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar
U.S. Retail net sales were as follows:
Fiscal 2016 | Fiscal 2016 vs. 2015 Percentage Change | Fiscal 2015 | Fiscal 2015 vs. 2014 Percentage Change | Fiscal 2014 | ||||||||||||||||
Net sales (in millions) | $ | 10,007.1 | (5)% | $ | 10,507.0 | (1)% | $ | 10,604.9 | ||||||||||||
Contributions from volume growth (a) | (7) pts | (1) pt | ||||||||||||||||||
Net price realization and mix | 2 pts | Flat | ||||||||||||||||||
The net impact of acquisitions and divestitures, primarily Green Giant and Annie’s, decreased net sales growth by 2 percentage points
Net sales for our U.S. retail operating units are shown in the following table:
| Fiscal Year | ||||||||||||
In Millions | 2016 | 2015 | 2014 | |||||||||
Meals (a) | $ | 2,393.9 | $ | 2,674.3 | $ | 2,772.4 | ||||||
Cereal | 2,312.8 | 2,330.1 | 2,410.2 | |||||||||
Snacks (a) | 2,094.3 | 2,134.4 | 1,997.8 | |||||||||
Baking Products | 1,903.4 | 1,969.8 | 2,096.1 | |||||||||
Yogurt and other | 1,302.7 | 1,398.4 | 1,328.4 | |||||||||
Total | $ | 10,007.1 | $ | 10,507.0 | $ | 10,604.9 | ||||||
U.S. Retail net sales percentage change by operating unit are shown in the following table:
Fiscal 2016 vs. 2015 | Fiscal 2015 vs. 2014 | |||||||
Meals (a) | (10 | )% | (4 | )% | ||||
Yogurt | (7 | ) | 5 | |||||
Baking Products | (3 | ) | (6 | ) | ||||
Snacks (a) | (2 | ) | 7 | |||||
Cereal | (1 | ) | (3 | ) | ||||
Total | (5 | )% | (1 | )% | ||||
Segment operating profit of $2,179 million in fiscal 2016 increased $20 million, or 1 percent, from fiscal 2015. The increase was primarily driven by high levels of promotional expense in fiscal 2015, cost savings from Project Catalyst and other cost management initiatives, a decrease in media and advertising expenses, and lower supply chain costs, partially offset by the net impact of the Green Giant divestiture and Annie’s acquisition.
Segment operating profit of $2,159 million in fiscal 2015 declined $152 million, or 7 percent, from fiscal 2014. The decrease was primarily driven by lower volume and an increase in supply chain costs, partially offset by a 6 percent reduction in media and advertising expenses.
INTERNATIONAL SEGMENT
Our International segment consists of retail and foodservice businesses outside of the United States. Our product categories include ready-to-eat cereals, shelf stable and frozen vegetables, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza snacks, refrigerated yogurt, grain and fruit snacks, and super-premium ice cream and frozen desserts. 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 and franchise fees are reported in the region or country where the end customer is located.
International net sales were as follows:
| Fiscal 2016 | Fiscal 2016 vs. 2015 | Fiscal 2015 | Fiscal 2015 vs. 2014 | Fiscal 2014 | ||||||||||||||||
Net sales (in millions) | $ | 4,632.2 | (10)% | $ | 5,128.2 | (5)% | $ | 5,385.9 | ||||||||||||
Contributions from volume growth (a) | 3 pts | Flat | ||||||||||||||||||
Net price realization and mix | Flat | 6 pts | ||||||||||||||||||
Foreign currency exchange | (13) pts | (11) pts | ||||||||||||||||||
The impact of acquisition and divestitures, primarily Green Giant, decreased net sales growth by 1 percentage point in fiscal 2016. The 53rd week in fiscal 2015 contributed approximately 1 percentage point of net sales decline in fiscal 2016, reflecting 1 percentage point of decline from volume. The 53rd week contributed approximately 1 percentage point of net sales growth in fiscal 2015, reflecting 1 percentage point of growth from volume.
Net sales for our International segment by geographic region are shown in the following table:
| Fiscal Year | ||||||||||||
In Millions | 2016 | 2015 | 2014 | |||||||||
Europe (a) | $ | 1,998.0 | $ | 2,126.5 | $ | 2,188.8 | ||||||
Canada | 929.5 | 1,105.1 | 1,195.3 | |||||||||
Asia/Pacific | 995.7 | 1,023.5 | 981.8 | |||||||||
Latin America | 709.0 | 873.1 | 1,020.0 | |||||||||
Total | $ | 4,632.2 | $ | 5,128.2 | $ | 5,385.9 | ||||||
International percentage change in net sales by geographic region are shown in the following table:
| Percentage Change in Net Sales as Reported | Percentage Change in Net Sales on Constant Currency Basis (a) | |||||||||||||||
| | Fiscal 2016 vs. 2015 | | | Fiscal 2015 vs. 2014 | | | Fiscal 2016 vs. 2015 | | | Fiscal 2015 vs. 2014 | | |||||
Europe (b) | (6 | )% | (3 | )% | 3 | % | 5 | % | ||||||||
Canada | (16 | ) | (8 | ) | (4 | ) | Flat | |||||||||
Asia/Pacific | (3 | ) | 4 | 1 | 5 | |||||||||||
Latin America | (19 | ) | (14 | ) | 12 | 17 | ||||||||||
Total | (10 | )% | (5 | )% | 3 | % | 6 | % | ||||||||
Segment operating profit for fiscal 2016 declined 15 percent to $442 million from $523 million in fiscal 2015, primarily driven by unfavorable foreign currency exchange, an increase in SG&A expenses, and the impact of the Green Giant divestiture. International segment operating profit decreased 3 percent on a constant-currency basis in fiscal 20162023 compared to fiscal 2015 (see the “Non-GAAP Measures” section below for our use of this measure).
Segment operating profit for fiscal 2015 declined 2 percent to $523 million from $535 million in fiscal 2014, primarily driven by unfavorable foreign currency exchange and higher input costs, partially offset by favorable net price realization and mix. International segment operating profit increased 9 percent on a constant-currency basis in fiscal 2015 compared to fiscal 2014 (see the “Non-GAAP Measures” section below for our use of this measure).
CONVENIENCE STORES AND FOODSERVICE SEGMENT
In our Convenience Stores and Foodservice segment our major product categories are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes. Many products we sell are branded to the consumer and nearly all are branded to our customers. We sell to distributors and operators in many customer channels including foodservice, convenience stores, vending, and supermarket bakeries. Substantially all of this segment’s operations are located in the United States.
Convenience Stores and Foodservice net sales were as follows:
| Fiscal 2016 | Fiscal 2016 vs. 2015 | 2015 | Fiscal 2015 vs. 2014 | Fiscal 2014 | ||||||||||||||||
Net sales (in millions) | $ | 1,923.8 | (4)% | $ | 1,995.1 | 4% | $ | 1,918.8 | ||||||||||||
Contributions from volume growth (a) | (3) pts | 1 pt | ||||||||||||||||||
Net price realization and mix | (1) pt | 3 pts | ||||||||||||||||||
Foreign currency exchange | NM | NM | ||||||||||||||||||
The 53rd week in fiscal 2015 contributed approximately 2 percentage points of net sales decline in fiscal 2016, reflecting 2 percentage points of decline from volume. In fiscal 2015, the 53rd week contributed approximately 2 percentage points of net sales growth, reflecting 2 percentage points of growth from volume.
In fiscal 2016, segment operating profit was $379 million, up 7 percent from $353 million in fiscal 2015 primarily driven by favorable product mix and cost savings from Project Catalyst and other cost management initiatives. In fiscal 2015, segment operating profit was up 15 percent from $307 million in fiscal 2014 primarily driven by favorable net price realization and mix and higher volume.
UNALLOCATED CORPORATE ITEMS
Unallocated corporate items include corporate overhead expenses, variances to planned domestic employee benefits and incentives, contributions to the General Mills Foundation, asset and liability remeasurement impact of hyperinflationary economies, restructuring initiative project-related costs, and other items that are not part of our measurement of segment operating performance. This includes gains and losses from the mark-to-market valuation of certain commodity positions until passed back to our operating segments in accordance with our policy as discussed in Note 7 to the Consolidated Financial Statements in Item 8 of this report.
For fiscal 2016, unallocated corporate expense totaled $289 million compared to $414 million last year. In fiscal 2016, we recorded a $63 million net decrease in expense related to mark-to-market valuation of certain commodity positions and grain inventories compared to a $90 million net increase in expense in the prior year. In addition, we recorded $78 million of restructuring charges, and $58 million of restructuring initiative project-related costs in cost of sales in fiscal 2016, compared to $60 million of restructuring charges and $13 million of restructuring initiative project-related costs in cost of sales in fiscal 2015. We recorded an $8 million foreign exchange loss related to the remeasurement of assets and liabilities of our Venezuelan subsidiary in fiscal 2015. We also recorded $16 million of integration costs resulting from the acquisition of Annie’s in fiscal 2015. The decrease in unallocated corporate expense also reflects cost savings from Project Catalyst and other cost management initiatives.
For fiscal 2015, unallocated corporate expense totaled $414 million compared to $258 million in fiscal 2014. In fiscal 2015, we recorded a $90 million net increase in expense related to mark-to-market valuation of certain commodity positions and grain inventories compared to a $49 million net decrease in fiscal 2014. In addition, we recorded $60 million of restructuring charges and $13 million of restructuring initiative project-related costs in cost of sales in fiscal 2015. In fiscal 2015, we recorded an $8 million foreign exchange loss related to the remeasurement of assets and liabilities of our Venezuelan subsidiary compared to $62 million in fiscal 2014. We also recorded $16 million of integration costs resulting from the acquisition of Annie’s in fiscal 2015.
Venezuela is a highly inflationary economy and as such, we remeasured the value of the assets and liabilities of our former Venezuelan subsidiary based on the exchange rate at which we expected to remit dividends in U.S. dollars from the SIMADI market. In fiscal 2015, we recorded an $8 million foreign currency exchange loss related to remeasurement. In fiscal 2016, we sold our General Mills de Venezuela CA subsidiary to a third party and exited our business in Venezuela. As a result of this transaction, we recorded a loss on the sale of $38 million pre-tax.
In fiscal 2015, we changed how we assess segment operating performance to exclude the asset and liability remeasurement impact from hyperinflationary economies. This impact is now included in unallocated corporate items. All periods presented have been changed to conform to this presentation.
2022.
Our gross margin performance
AND CAPITAL
RESOURCESAs
those jurisdictions.
| Fiscal Year | ||||||||||||
In Millions | 2016 | 2015 | 2014 | |||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,736.8 | $ | 1,259.4 | $ | 1,861.3 | ||||||
Depreciation and amortization | 608.1 | 588.3 | 585.4 | |||||||||
After-tax earnings from joint ventures | (88.4 | ) | (84.3 | ) | (89.6 | ) | ||||||
Distributions of earnings from joint ventures | 75.1 | 72.6 | 90.5 | |||||||||
Stock-based compensation | 89.8 | 106.4 | 108.5 | |||||||||
Deferred income taxes | 120.6 | 25.3 | 172.5 | |||||||||
Tax benefit on exercised options | (94.1 | ) | (74.6 | ) | (69.3 | ) | ||||||
Pension and other postretirement benefit plan contributions | (47.8 | ) | (49.5 | ) | (49.7 | ) | ||||||
Pension and other postretirement benefit plan costs | 118.1 | 91.3 | 124.1 | |||||||||
Divestitures (gain) | (148.2 | ) | — | (65.5 | ) | |||||||
Restructuring, impairment, and other exit costs | 107.2 | 531.1 | (18.8 | ) | ||||||||
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures | 258.2 | 214.7 | (32.2 | ) | ||||||||
Other, net | (105.6 | ) | (137.9 | ) | (76.2 | ) | ||||||
Net cash provided by operating activities | $ | 2,629.8 | $ | 2,542.8 | $ | 2,541.0 | ||||||
We strive to grow core working capital at or below the rate of growth
In fiscal 2015, our operations generated $2.5 billion of cash, flat compared to fiscal 2014. The $247 million change in current assets and liabilities was primarily driven by the timing of trade and promotion accruals, changes in tax accruals, and changes in derivative positions. This was largely offset by lower net earnings, which included a $260 million non-cash impairment charge, $271 million of non-cash restructuring charges, and a $147 million change in net deferred income taxes.
2023.
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Purchases of land, buildings, and equipment | $ | (729.3 | ) | $ | (712.4 | ) | $ | (663.5 | ) | |||
Acquisitions, net of cash acquired | (84.0 | ) | (822.3 | ) | — | |||||||
Investments in affiliates, net | 63.9 | (102.4 | ) | (54.9 | ) | |||||||
Proceeds from disposal of land, buildings, and equipment | 4.4 | 11.0 | 6.6 | |||||||||
Proceeds from divestitures | 828.5 | — | 121.6 | |||||||||
Exchangeable note | 21.1 | 27.9 | 29.3 | |||||||||
Other, net | (11.2 | ) | (4.0 | ) | (0.9 | ) | ||||||
Net cash provided (used) by investing activities | $ | 93.4 | $ | (1,602.2 | ) | $ | (561.8 | ) | ||||
In fiscal 2015, cash used by investing activities increased by $1.0 billion from fiscal 2014.the sale. We invested $712 million in land, buildings, and equipmentalso completed
We expect capital
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Change in notes payable | $ | (323.8 | ) | $ | (509.8 | ) | $ | 572.9 | ||||
Issuance of long-term debt | 542.5 | 2,253.2 | 1,673.0 | |||||||||
Payment of long-term debt | (1,000.4 | ) | (1,145.8 | ) | (1,444.8 | ) | ||||||
Proceeds from common stock issued on exercised options | 171.9 | 163.7 | 108.1 | |||||||||
Tax benefit on exercised options | 94.1 | 74.6 | 69.3 | |||||||||
Purchases of common stock for treasury | (606.7 | ) | (1,161.9 | ) | (1,745.3 | ) | ||||||
Dividends paid | (1,071.7 | ) | (1,017.7 | ) | (983.3 | ) | ||||||
Addition of noncontrolling interest | — | — | 17.6 | |||||||||
Distributions to noncontrolling and redeemable interest holders | (84.3 | ) | (25.0 | ) | (77.4 | ) | ||||||
Other, net | (7.2 | ) | (16.1 | ) | (14.2 | ) | ||||||
Net cash used by financing activities | $ | (2,285.6 | ) | $ | (1,384.8 | ) | $ | (1,824.1 | ) | |||
Net cash used by financing activities increased by $901 million
During fiscal 2016, we received $172 million in proceeds
In May 2014, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock. Purchases under the authorization 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 authorization has no specified termination date.
During fiscal 2016, 2022,
| Fiscal Year | ||||||||||||
| Inflow (Outflow), in Millions | 2016 | 2015 | 2014 | |||||||||
Repayments from (advances to) joint ventures, net | $ | 63.9 | $ | (102.4 | ) | $ | (54.9 | ) | ||||
Dividends received | 75.1 | 72.6 | 90.5 | |||||||||
CAPITAL RESOURCES
Total capital consisted of the following:
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Notes payable | $ | 269.8 | $ | 615.8 | ||||
Current portion of long-term debt | 1,103.4 | 1,000.4 | ||||||
Long-term debt | 7,057.7 | 7,575.3 | ||||||
Total debt | 8,430.9 | 9,191.5 | ||||||
Redeemable interest | 845.6 | 778.9 | ||||||
Noncontrolling interests | 376.9 | 396.0 | ||||||
Stockholders’ equity | 4,930.2 | 4,996.7 | ||||||
Total capital | $ | 14,583.6 | $ | 15,363.1 | ||||
| In Billions | Facility Amount | Borrowed Amount | ||||||
Credit facility expiring: | ||||||||
May 2021 | $ | 2.7 | $ | — | ||||
June 2019 | 0.2 | 0.1 | ||||||
Total committed credit facilities | 2.9 | 0.1 | ||||||
Uncommitted credit facilities | 0.4 | 0.1 | ||||||
Total committed and uncommitted credit facilities | $ | 3.3 | $ | 0.2 | ||||
28, 2023:
In June 2014, our subsidiary, Yoplait S.A.S. entered into a €200.0 million fee-paid committed credit facility that is scheduled to expire in June 2019.
facilities
Certain of our long-term debt agreements, our credit facilities, and our noncontrolling interests contain restrictive covenants. As of May 29, 2016, we were in compliance with all of these covenants.
We have $1,103 million of long-term debt maturing arise
Return on average total capital was 12.9 percent in fiscal 2016 compared to 9.1 percent in fiscal 2015. Improvement in return on adjusted average total capital is one of our key performance measures (see the “Non-GAAP Measures” section below for our discussion of this measure, which is not defined by GAAP). Adjusted return on average total capital increased 10 basis points from 11.2 percent in fiscal 2015 to 11.3 percent in fiscal 2016 as fiscal 2016 earnings increased. On a constant-currency basis, adjusted return on average total capital increased 40 basis points.
We also believe that our fixed charge coverage ratio and the ratio of operating cash flow to debt are important measures of our financial strength. Our fixed charge coverage ratio in fiscal 2016 was 7.40 compared to 5.54 in fiscal 2015. The measure increased from fiscal 2015 as earnings before income taxes and after-tax earnings from joint ventures increased by $642 million in fiscal 2016. Our operating cash flow to debt ratio increased 3.5 percentage points to 31.2 percent in fiscal 2016, driven by a decrease in total debt.
We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal holds the remaining interests in each of these entities. We consolidate these entities into our consolidated financial statements. We record Sodiaal’s 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl as noncontrolling interests, and its 49 percent interest in Yoplait SAS as a redeemable interest on our Consolidated Balance Sheets. These euro- and Canadian dollar-denominated interests are reported in U.S. dollars on our Consolidated Balance Sheets. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. As of May
The third-party holder of the
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
As of May 29, 2016, we have issued guarantees and comfort letters of $383 million for the debt and other obligations of consolidated subsidiaries, and guarantees and comfort letters of $239 million for the debt and other obligations of non-consolidated affiliates, mainly CPW. In addition, off-balance sheet arrangements are generally limited to the future payments under non-cancelable operating leases, which totaled $398 million as of May 29, 2016.
As of May 29, 2016, we had invested in five variable interest entities (VIEs). None of our VIEs are material to our results of operations, financial condition, or liquidity as of and for the fiscal year ended May 29, 2016.
Our defined benefit plans in the United States are subject to the requirements of the Pension Protection Act (PPA). In the future, the PPA may require us to make additional contributions to our domestic plans. We do not expect to be required to make any contributions in fiscal 2017.
The following table summarizes our future estimated cash payments under existing contractual obligations, including payments due by period:
| Payments Due by Fiscal Year | ||||||||||||||||||||
| In Millions | Total | 2017 | 2018 -19 | 2020 -21 | 2022 and Thereafter | |||||||||||||||
Long-term debt (a) | $ | 8,190.2 | $ | 1,103.0 | $ | 1,754.2 | $ | 1,611.6 | $3,721.4 | |||||||||||
Accrued interest | 90.4 | 90.4 | — | — | — | |||||||||||||||
Operating leases (b) | 397.6 | 107.9 | 150.7 | 89.2 | 49.8 | |||||||||||||||
Capital leases | 2.7 | 0.9 | 1.3 | 0.4 | 0.1 | |||||||||||||||
Purchase obligations (c) | 3,082.1 | 1,955.9 | 603.7 | 497.4 | 25.1 | |||||||||||||||
Total contractual obligations | 11,763.0 | 3,258.1 | 2,509.9 | 2,198.6 | 3,796.4 | |||||||||||||||
Other long-term obligations (d) | 1,957.0 | — | — | — | — | |||||||||||||||
Total long-term obligations | $ | 13,720.0 | $ | 3,258.1 | $ | 2,509.9 | $ | 2,198.6 | $3,796.4 | |||||||||||
SIGNIFICANT
Promotional Expenditures
plans
.| In Millions | Carrying Value | Excess Above | ||||||
Mountain High | $ | 35.4 | 20 | % | ||||
Uncle Toby’s | $ | 52.2 | 11 | % | ||||
OurMountain HighandUncle Toby’s brands have experienced declining business performance, and we will continue to monitor these businesses.
Our strategies for fiscal 2017 and fiscal 2018 will focus our growth investments on our brands and platforms with the strongest profitable growth potential. As a result, certain parts of our U.S. Retail segment could experience reduced future sales projections. We performed a sensitivity analysis for certain brand intangible assets and determined that, while not impaired as of May 29, 2016, theProgresso andFood Should Taste Good brands had risk of
Redeemable Interest
In fiscal 2016, we adjusted the redemption value of Sodiaal’s redeemable interest in Yoplait SAS based on a discounted cash flow model. The significant assumptions used to estimate the redemption value include projected revenue growth and profitability from our long-range plan, capital spending, depreciation and taxes, foreign currency exchange rates, and a discount rate. As of May 29, 2016, the redemption value of the redeemable interest was $846 million.
businesses for potential impairment.
| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Estimated fair values of stock options granted | $7.24 | $7.22 | $6.03 | |||||||||
Assumptions: | ||||||||||||
Risk-free interest rate | 2.4% | 2.6% | 2.6% | |||||||||
Expected term | 8.5 years | 8.5 years | 9.0 years | |||||||||
Expected volatility | 17.6% | 17.5% | 17.4% | |||||||||
Dividend yield | 3.2% | 3.1% | 3.1% | |||||||||
28, 2023.
Lowering the expected long-term rate of returnreturns primarily on fixed income investments.
Defined Benefit Pension Plans | Other Benefit Plans | Postemployment Benefit Plans | ||||||||||
Obligations as of May 29, 2016, and fiscal 2017 expense | 4.19 | % | 3.97 | % | 2.94 | % | ||||||
Obligations as of May 31, 2015, and fiscal 2016 expense | 4.38 | % | 4.20 | % | 3.55 | % | ||||||
Fiscal 2015 expense | 4.54 | % | 4.51 | % | 3.82 | % | ||||||
A one percentage point change
| In Millions | One Percentage Point Increase | One Percentage Point Decrease | ||||||
Effect on the aggregate of the service and interest cost components in fiscal 2017 | $ 3.1 | $ (2.7) | ||||||
Effect on the other postretirement accumulated benefit obligation as of May 29, 2016 | 71.2 | (63.8 | ) | |||||
Any arising health care claims cost-related experience gain or loss is recognized in the
average remaining
service period of activeAssumed mortality rates of
improved longevity. In fiscal 2015, we adopted the change to the mortality assumptions to remeasure our defined benefit pension plans and other postretirement benefit plans obligations, which increased the total of these obligations by $437 million in fiscal 2015. In addition, these assumptions increased the fiscal 2016 expense associated with these plans by $72 million.
Actual future net defined benefit pension, other postretirement benefit, and postemployment benefit plan income or expense will
In February 2016, the FASB issued new accounting requirements for accounting, presentation and classification of leases. This will result in most leases being capitalized as a right of use asset with a related liability on our Consolidated Balance Sheets. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for us is the first quarter of fiscal 2020. We are in the process of analyzing the impact on our results of operations and financial position.
In May 2015, the FASB issued new accounting requirements for the presentation of certain investments using the net asset value, providing a practical expedient to exclude such investments from categorization within the fair value hierarchy and separate disclosure. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, which for us is the first quarter of fiscal 2017. We do not expect this guidance to have a material impact on our results of operations or financial position.
In April 2015, the FASB issued new accounting requirements which permits reporting entities with a fiscal year-end that does not coincide with a month-end to apply a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply such practical expedient consistently to all plans. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods, which for us is the first quarter of fiscal 2017. We do not expect this guidance to have a material impact on our results of operations or financial position.
In May 2014, the FASB issued new accounting requirements for the recognition of revenue from contracts with customers. The requirements of the new standard and its subsequent amendments are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, which for us is the first quarter of fiscal 2019. We do not expect this guidance to have a material impact on our results of operations or financial position.
disclosures.
Constant-currency Net Sales Growth Rates
This measure is used in reporting to our executive management and as a component of the Board of Directors’ measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it provides transparency to underlying performance in our consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on the year-to-year comparability given volatility in foreign currency exchange markets.
Net sales growth rates on a constant-currency basis are calculated as follows:
| Fiscal | ||||||||
| 2016 | 2015 | |||||||
Percentage change in total net sales | (6)% | (2)% | ||||||
Impact of foreign currency exchange | (4) pts | (3) pts | ||||||
Percentage change in total net sales on a constant-currency basis | (2)% | 1% | ||||||
Diluted EPS Excluding Certain
This measure is used in reporting to our executive management and as a component of the Board of Directors’ measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate earnings performance
| Fiscal Year | ||||||||||||||||||||||||
| Per Share Data | 2016 | 2015 | Change | 2014 | 2013 | 2012 | ||||||||||||||||||
Diluted earnings per share, as reported | $ | 2.77 | $ | 1.97 | 41 | % | $ | 2.83 | $ | 2.79 | $ | 2.35 | ||||||||||||
Mark-to-market effects (a) | (0.07 | ) | 0.09 | (0.05 | ) | — | 0.10 | |||||||||||||||||
Divestitures gain, net (b) | (0.10 | ) | — | (0.06 | ) | — | — | |||||||||||||||||
Tax items (c) | — | 0.13 | — | (0.13 | ) | — | ||||||||||||||||||
Acquisition integration costs (d) | — | 0.02 | — | 0.01 | 0.01 | |||||||||||||||||||
Venezuela currency devaluation (e) | — | 0.01 | 0.09 | 0.03 | — | |||||||||||||||||||
Restructuring costs (f) | 0.26 | 0.35 | 0.01 | 0.02 | 0.10 | |||||||||||||||||||
Project-related costs (f) | 0.06 | 0.01 | — | — | — | |||||||||||||||||||
Indefinite-lived intangible asset impairment (g) | — | 0.28 | — | — | — | |||||||||||||||||||
Diluted earnings per share, excluding certain items affecting comparability | $ | 2.92 | $ | 2.86 | 2 | % | $ | 2.82 | $ | 2.72 | $ | 2.56 | ||||||||||||
Foreign currency exchange impact | (3 | ) | ||||||||||||||||||||||
Diluted earnings per share growth, excluding certain items affecting comparability, on a constant-currency basis | 5 | % | ||||||||||||||||||||||
our European dough businesses in fiscal 2022.Please see Note 3 |
See our reconciliation below of the effective income tax rate as reported to the effective income tax rate excluding certain items affecting comparability for the tax impact of each item affecting comparability.
Total Segment Operating Profit and Related Constant-currency Growth Rate
This measure is used in reporting to our executive management and as a component of the Board of Directors’ measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate segment performance. A reconciliation of total segment operating profit to operating profit, the relevant GAAP measure, is included in Note 16 to the Consolidated Financial Statements in Item 8 of this report.
Total
| Fiscal | ||||||||
| 2016 | 2015 | |||||||
Percentage change in total segment operating profit as reported | (1 | ) % | (4 | ) % | ||||
Impact of foreign currency exchange | (2) pts | (2 | ) pts | |||||
Percentage change in total segment operating profit on a constant-currency basis | 1 | % | (2 | ) % | ||||
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
After-tax earnings from joint venturesimpact
| Fiscal | ||||||||
| 2016 | 2015 | |||||||
Percentage change in after-tax earnings from joint ventures as reported | 5 % | (6) % | ||||||
Impact of foreign currency exchange | (7)pts | (6)pts | ||||||
Percentage change in after-tax earnings from joint ventures on a constant-currency basis | 12 % | Flat | ||||||
Net Sales
Rate
| Fiscal 2016 | ||||||||||||
Percentage as Reported | Impact of Foreign Currency Exchange | Percentage Change in Net Sales on Constant- Currency Basis | ||||||||||
Europe | (6 | )% | (9 | )pts | 3 | % | ||||||
Canada | (16 | ) | (12 | ) | (4 | ) | ||||||
Asia/Pacific | (3 | ) | (4 | ) | 1 | |||||||
Latin America | (19 | ) | (31 | ) | 12 | |||||||
Total International | (10 | )% | (13 | )pts | 3 | % | ||||||
| Fiscal 2015 | ||||||||||||
Percentage as Reported | Impact of Foreign Currency Exchange | Percentage Change in Net Sales on Constant- Currency Basis | ||||||||||
Europe | (3 | )% | (8 | )pts | 5 | % | ||||||
Canada | (8 | ) | (8 | ) | Flat | |||||||
Asia/Pacific | 4 | (1 | ) | 5 | ||||||||
Latin America | (14 | ) | (31 | ) | 17 | |||||||
Total International | (5 | )% | (11 | )pts | 6 | % | ||||||
Constant-currency International Segment Operating Profit Growth Rates
We believe that this measure provides useful information to investors because it provides transparency to underlying performance of the International segment by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.
International segment operating profitimpact
Fiscal | ||||||
| 2016 | 2015 | |||||
Percentage change in International segment operating profit as reported | (15)% | (2)% | ||||
Impact of foreign currency exchange | (12)pts | (11)pts | ||||
Percentage change in International segment operating profit on a constant-currency basis | (3)% | 9 % | ||||
Adjusted Return
Change in adjusted return on average total capital is a measure used in reportingthe reconciling items, please refer to the Significant Items Impacting Comparability section above.
| Fiscal Year | ||||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,736.8 | $ | 1,259.4 | $ | 1,861.3 | $ | 1,892.5 | $ | 1,589.1 | ||||||||||||||
Interest, net, after-tax | 193.1 | 199.8 | 190.9 | 201.2 | 238.9 | |||||||||||||||||||
Earnings before interest, after-tax | 1,929.9 | 1,459.2 | 2,052.2 | 2,093.7 | 1,828.0 | |||||||||||||||||||
Adjustments, after-tax (a): | ||||||||||||||||||||||||
Mark-to-market effects | (39.6) | 56.5 | (30.5 | ) | (2.8 | ) | 65.6 | |||||||||||||||||
Divestitures gain, net | (66.0) | — | (36.0 | ) | — | — | ||||||||||||||||||
Tax items | — | 78.6 | — | (85.4 | ) | — | ||||||||||||||||||
Acquisition integration costs | — | 10.4 | — | 8.8 | 9.7 | |||||||||||||||||||
Venezuela currency devaluation | — | 8.0 | 57.8 | 20.8 | — | |||||||||||||||||||
Restructuring costs | 160.8 | 217.7 | 3.6 | 15.9 | 64.3 | |||||||||||||||||||
Project-related costs | 36.8 | 8.3 | — | — | — | |||||||||||||||||||
Indefinite-lived intangible impairment | — | 176.9 | — | — | — | |||||||||||||||||||
Adjusted earnings before interest, after-tax for adjusted return on capital calculation | $ | 2,021.9 | $ | 2,015.6 | $ | 2,047.1 | $ | 2,051.0 | $ | 1,967.6 | ||||||||||||||
Current portion of long-term debt | $ | 1,103.4 | $ | 1,000.4 | $ | 1,250.6 | $ | 1,443.3 | $ | 741.2 | $ | 1,031.3 | ||||||||||||
Notes payable | 269.8 | 615.8 | 1,111.7 | 599.7 | 526.5 | 311.3 | ||||||||||||||||||
Long-term debt | 7,057.7 | 7,575.3 | 6,396.6 | 5,901.8 | 6,139.5 | 5,524.1 | ||||||||||||||||||
Total debt | 8,430.9 | 9,191.5 | 8,758.9 | 7,944.8 | 7,407.2 | 6,866.7 | ||||||||||||||||||
Redeemable interest | 845.6 | 778.9 | 984.1 | 967.5 | 847.8 | — | ||||||||||||||||||
Noncontrolling interests | 376.9 | 396.0 | 470.6 | 456.3 | 461.0 | 246.7 | ||||||||||||||||||
Stockholders’ equity | 4,930.2 | 4,996.7 | 6,534.8 | 6,672.2 | 6,421.7 | 6,365.5 | ||||||||||||||||||
Total capital | 14,583.6 | 15,363.1 | 16,748.4 | 16,040.8 | 15,137.7 | 13,478.9 | ||||||||||||||||||
Accumulated other comprehensive loss | 2,612.2 | 2,310.7 | 1,340.3 | 1,585.3 | 1,743.7 | 1,010.8 | ||||||||||||||||||
After-tax earnings adjustments (b) | 439.1 | 347.1 | (209.3 | ) | (204.2 | ) | (161.5) | (301.1 | ) | |||||||||||||||
Adjusted total capital | $ | 17,634.9 | $ | 18,020.9 | $ | 17,879.4 | $ | 17,421.9 | $ | 16,719.9 | $ | 14,188.6 | ||||||||||||
Average total capital (c) | $ | 14,973.4 | $ | 16,055.8 | $ | 16,394.6 | $ | 15,589.2 | $ | 14,308.3 | ||||||||||||||
Return on average total capital (c) | 12.9% | 9.1 | % | 12.5 | % | 13.4 | % | 12.8% | ||||||||||||||||
Adjusted average total capital (c) | $ | 17,827.9 | $ | 17,950.1 | $ | 17,650.6 | $ | 17,070.8 | $ | 15,454.3 | ||||||||||||||
Adjusted return on average total capital (c) | 11.3% | 11.2 | % | 11.6 | % | 12.0 | % | 12.7% | ||||||||||||||||
Change in adjusted return on average total capital | 10 bps | |||||||||||||||||||||||
Foreign currency exchange impact | (30)bps | |||||||||||||||||||||||
Change in adjusted return on average total capital on a constant-currency basis | 40 bps | |||||||||||||||||||||||
Effective Income Tax Rate Excluding Certain Items Affecting Comparability
We believe this measure provides useful information to investors because it is important for assessing the effective tax rate excluding certain itemsas
Effective income tax rates excluding certain items affecting comparability are calculated as follows:
| Fiscal Year Ended | ||||||||||||||||||||||||||||||||||||||||
| May 29, 2016 | May 31, 2015 | May 25, 2014 | May 26, 2013 | May 27, 2012 | ||||||||||||||||||||||||||||||||||||
| In Millions | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | ||||||||||||||||||||||||||||||
As reported | $ | 2,403.6 | $ | 755.2 | $ | 1,761.9 | $ | 586.8 | $ | 2,655.0 | $ | 883.3 | $ | 2,534.9 | $ | 741.2 | $ | 2,210.5 | $ | 709.6 | ||||||||||||||||||||
Mark-to-market effects (b) | (62.8 | ) | (23.2 | ) | 89.7 | 33.2 | (48.5 | ) | (18.0 | ) | (4.4 | ) | (1.6 | ) | 104.2 | 38.6 | ||||||||||||||||||||||||
Divestitures (gain) (c) | (148.2 | ) | (82.2 | ) | — | — | (65.5 | ) | (29.5 | ) | — | — | — | — | ||||||||||||||||||||||||||
Tax items (d) | — | — | — | (78.6 | ) | — | — | — | 85.4 | — | — | |||||||||||||||||||||||||||||
Acquisition integration costs (e) | — | — | 16.0 | 5.6 | — | — | 12.3 | 3.5 | 11.2 | 1.5 | ||||||||||||||||||||||||||||||
Venezuela currency devaluation (b) | — | — | 8.0 | — | 62.2 | 4.4 | 25.2 | 4.4 | — | — | ||||||||||||||||||||||||||||||
Restructuring costs (f) | 229.8 | 69.0 | 343.5 | 125.8 | 3.6 | — | 18.6 | 2.7 | 100.6 | 36.3 | ||||||||||||||||||||||||||||||
Project-related costs (f) | 57.5 | 20.7 | 13.2 | 4.9 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Intangible asset impairment (f) | — | — | 260.0 | 83.1 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
As adjusted | $ | 2,479.9 | $ | 739.5 | $ | 2,492.3 | $ | 760.8 | $ | 2,606.8 | $ | 840.2 | $ | 2,586.6 | $ | 835.6 | $ | 2,426.5 | $ | 786.0 | ||||||||||||||||||||
Effective tax rate: | ||||||||||||||||||||||||||||||||||||||||
As reported | 31.4 | % | 33.3 | % | 33.3 | % | 29.2 | % | 32.1 | % | ||||||||||||||||||||||||||||||
As adjusted | 29.8 | % | 30.5 | % | 32.2 | % | 32.3 | % | 32.4 | % | ||||||||||||||||||||||||||||||
Sum of adjustments to income taxes | $ | (15.7 | ) | $ | 174.0 | $ | (43.1 | ) | $ | 94.4 | $ | 76.4 | ||||||||||||||||||||||||||||
Average number of commonshares - diluted EPS | 611.9 | 618.8 | 645.7 | 665.6 | 666.7 | |||||||||||||||||||||||||||||||||||
Impact of income tax adjustments on diluted EPS excluding certain items affecting comparability | $ | 0.03 | $ | (0.28 | ) | $ | 0.07 | $ | (0.14 | ) | $ | (0.11 | ) | |||||||||||||||||||||||||||
We believe these measures provide useful information to investors because they are important for assessing our efficiency in converting earnings to
| In Millions | Fiscal 2016 | |||
Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported | $ | 1,736.8 | ||
Mark-to-market effects, net of tax (a) | (39.6) | |||
Divestitures (gain), net of tax (b) | (66.0) | |||
Restructuring costs, net of tax (c) | 160.8 | |||
Project-related costs, net of tax (c) | 36.8 | |||
Adjusted net earnings, including earnings attributable to redeemable and noncontrolling interests | 1,828.8 | |||
Net cash provided by operating activities | 2,629.8 | |||
Purchases of land, buildings, and equipment | (729.3) | |||
Free cash flow | $ | 1,900.5 | ||
Net cash provided by operating activities conversion rate | 151% | |||
Free cash flow conversion rate | 104% | |||
The calculation
Dividends paid | $ | 1,071.7 | ||
Purchases of common stock for treasury | 606.7 | |||
Proceeds from common stock issued on exercised options | (171.9) | |||
Total cash returned to shareholders | $ | 1,506.5 | ||
Total cash returned to shareholders as a percentage of free cash flow | 79% | |||
conversion rate
(Adjusted Operating Profit
Margin)| Fiscal Year | ||||||||||||||||||||||||||||||||||||||||
| Percent of Net Sales | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||
Operating profit as reported | $ | 2,707.4 | 16.3 | % | $ | 2,077.3 | 11.8 | % | $ | 2,957.4 | 16.5 | % | $ | 2,851.8 | 16.0 | % | $ | 2,562.4 | 15.4% | |||||||||||||||||||||
Mark-to-market effects (a) | (62.8 | ) | (0.4 | )% | 89.7 | 0.5 | % | (48.5 | ) | (0.3 | )% | (4.4 | ) | — | % | 104.2 | 0.6% | |||||||||||||||||||||||
Divestitures (gain), (b) | (148.2 | ) | (0.9 | )% | — | — | % | (65.5 | ) | (0.4 | )% | — | — | % | — | — % | ||||||||||||||||||||||||
Acquisition integration costs (c) | — | — | % | 16.0 | 0.1 | % | — | — | % | 12.3 | 0.1 | % | 11.2 | 0.1% | ||||||||||||||||||||||||||
Venezuela currency devaluation (d) | — | — | % | 8.0 | — | % | 62.2 | 0.4 | % | 25.2 | 0.1 | % | — | — % | ||||||||||||||||||||||||||
Restructuring costs (e) | 229.8 | 1.4 | % | 343.5 | 1.9 | % | 3.6 | — | % | 18.6 | 0.1 | % | 100.6 | 0.6% | ||||||||||||||||||||||||||
Project-related costs (e) | 57.5 | 0.4 | % | 13.2 | 0.1 | % | — | — | % | — | — | % | — | — % | ||||||||||||||||||||||||||
Intangible asset impairment (f) | — | — | % | 260.0 | 1.5 | % | — | — | % | — | — | % | — | — % | ||||||||||||||||||||||||||
Adjusted operating profit | $ | 2,783.7 | 16.8 | % | $ | 2,807.7 | 15.9 | % | $ | 2,909.2 | 16.2 | % | $ | 2,903.5 | 16.3 | % | $ | 2,778.4 | 16.7% | |||||||||||||||||||||
please refer to the Significant Items Impacting Comparability section above.
environment;
changes in purchasingItem 7A Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk stemming from changes in interest and foreign exchange rates and commodity and equity prices. Changes in these factors could cause fluctuations in our earnings and cash flows. In the normal course of business, we actively manage our exposure to these market risks by entering into various hedging transactions, authorized under established policies that place clear controls on these activities. The counterparties in these transactions are generally highly rated institutions. We establish credit limits for each counterparty. Our hedging transactions include but are not limited to a variety of derivative financial instruments. For information on interest rate, foreign exchange, commodity price, and equity instrument risk, please see Note 7 to the Consolidated
VALUE AT RISK
The estimates in the table below are intended to measure the maximum potential fair value we could lose in one day from adverse changes in market interest rates, foreign exchange rates, commodity prices, and equity prices under normal market conditions. A Monte Carlo value-at-risk (VAR) methodology was used to quantify the market risk for our exposures. The models assumed normal market conditions and used a 95 percent confidence level.
The VAR calculation used historical interest and foreign exchange rates, and commodity and equity prices from the past year to estimate the potential volatility and correlation of these rates in the future. The market data were drawn from the RiskMetrics™ data set. The calculations are not intended to represent actual losses in fair value that we expect to incur. Further, since the hedging instrument (the derivative) inversely correlates with the underlying exposure, we would expect that any loss or gain in the fair value of our derivatives would be generally offset by an increase or decrease in the fair value of the underlying exposure. The positions included in the calculations were: debt; investments; interest rate swaps; foreign exchange forwards; commodity swaps, futures and options; and equity instruments. The calculations do not include the underlying foreign exchange and commodities or equity-related positions that are offset by these market-risk-sensitive instruments.
The table below presents the estimated maximum potential VAR arising from a one-day loss in fair value for our interest rate, foreign currency, commodity, and equity market-risk-sensitive instruments outstanding as of May 29, 2016, and May 31, 2015, and the average fair value impact during the year ended May 29, 2016.
| Fair Value Impact | ||||||||||||
| In Millions | May 29, 2016 | Average during fiscal 2016 | May 31, 2015 | |||||||||
Interest rate instruments | $ | 33.3 | $ | 30.7 | $ | 25.1 | ||||||
Foreign currency instruments | 27.6 | 24.4 | 17.9 | |||||||||
Commodity instruments | 3.3 | 3.7 | 3.7 | |||||||||
Equity instruments | 1.7 | 1.6 | 1.2 | |||||||||
Supplementary Data
2024.
28, 2023
The
We have audited
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are apublic accountingfirm registeredwith thePublic CompanyAccounting OversightBoard (UnitedStates) (PCAOB)In
Company’s
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| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Net sales | $ | 16,563.1 | $ | 17,630.3 | $ | 17,909.6 | ||||||
Cost of sales | 10,733.6 | 11,681.1 | 11,539.8 | |||||||||
Selling, general, and administrative expenses | 3,118.9 | 3,328.0 | 3,474.3 | |||||||||
Divestitures (gain) | (148.2 | ) | — | (65.5 | ) | |||||||
Restructuring, impairment, and other exit costs | 151.4 | 543.9 | 3.6 | |||||||||
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Operating profit | 2,707.4 | 2,077.3 | 2,957.4 | |||||||||
Interest, net | 303.8 | 315.4 | 302.4 | |||||||||
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Earnings before income taxes and after-tax earnings from joint ventures | 2,403.6 | 1,761.9 | 2,655.0 | |||||||||
Income taxes | 755.2 | 586.8 | 883.3 | |||||||||
After-tax earnings from joint ventures | 88.4 | 84.3 | 89.6 | |||||||||
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Net earnings, including earnings attributable to redeemable and noncontrolling interests | 1,736.8 | 1,259.4 | 1,861.3 | |||||||||
Net earnings attributable to redeemable and noncontrolling interests | 39.4 | 38.1 | 36.9 | |||||||||
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Net earnings attributable to General Mills | $ | 1,697.4 | $ | 1,221.3 | $ | 1,824.4 | ||||||
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Earnings per share - basic | $ | 2.83 | $ | 2.02 | $ | 2.90 | ||||||
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Earnings per share - diluted | $ | 2.77 | $ | 1.97 | $ | 2.83 | ||||||
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Dividends per share | $ | 1.78 | $ | 1.67 | $ | 1.55 | ||||||
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| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,736.8 | $ | 1,259.4 | $ | 1,861.3 | ||||||
Other comprehensive income (loss), net of tax: | ||||||||||||
Foreign currency translation | (108.7 | ) | (957.9 | ) | (11.3 | ) | ||||||
Net actuarial income (loss) | (325.9 | ) | (358.4 | ) | 206.0 | |||||||
Other fair value changes: | ||||||||||||
Securities | 0.1 | 0.8 | 0.3 | |||||||||
Hedge derivatives | 16.0 | 4.1 | 5.0 | |||||||||
Reclassification to earnings: | ||||||||||||
Hedge derivatives | (9.5 | ) | 4.9 | (4.6 | ) | |||||||
Amortization of losses and prior service costs | 128.6 | 105.1 | 107.6 | |||||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | (299.4 | ) | (1,201.4 | ) | 303.0 | |||||||
|
|
|
|
|
| |||||||
Total comprehensive income | 1,437.4 | 58.0 | 2,164.3 | |||||||||
Comprehensive income (loss) attributable to redeemable and noncontrolling interests | 41.5 | (192.9 | ) | 94.9 | ||||||||
|
|
|
|
|
| |||||||
Comprehensive income attributable to General Mills | $ | 1,395.9 | $ | 250.9 | $ | 2,069.4 | ||||||
|
|
|
|
|
| |||||||
| May 29, 2016 | May 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 763.7 | $ | 334.2 | ||||
Receivables | 1,360.8 | 1,386.7 | ||||||
Inventories | 1,413.7 | 1,540.9 | ||||||
Prepaid expenses and other current assets | 399.0 | 423.8 | ||||||
|
|
|
| |||||
Total current assets | 3,937.2 | 3,685.6 | ||||||
Land, buildings, and equipment | 3,743.6 | 3,783.3 | ||||||
Goodwill | 8,741.2 | 8,874.9 | ||||||
Other intangible assets | 4,538.6 | 4,677.0 | ||||||
Other assets | 751.7 | 811.2 | ||||||
|
|
|
| |||||
Total assets | $ | 21,712.3 | $ | 21,832.0 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,046.5 | $ | 1,684.0 | ||||
Current portion of long-term debt | 1,103.4 | 1,000.4 | ||||||
Notes payable | 269.8 | 615.8 | ||||||
Other current liabilities | 1,595.0 | 1,589.9 | ||||||
|
|
|
| |||||
Total current liabilities | 5,014.7 | 4,890.1 | ||||||
Long-term debt | 7,057.7 | 7,575.3 | ||||||
Deferred income taxes | 1,399.6 | 1,450.2 | ||||||
Other liabilities | 2,087.6 | 1,744.8 | ||||||
|
|
|
| |||||
Total liabilities | 15,559.6 | 15,660.4 | ||||||
|
|
|
| |||||
Redeemable interest | 845.6 | 778.9 | ||||||
Stockholders’ equity: | ||||||||
Common stock, 754.6 shares issued, $0.10 par value | 75.5 | 75.5 | ||||||
Additional paid-in capital | 1,177.0 | 1,296.7 | ||||||
Retained earnings | 12,616.5 | 11,990.8 | ||||||
Common stock in treasury, at cost, shares of 157.8 and 155.9 | (6,326.6 | ) | (6,055.6 | ) | ||||
Accumulated other comprehensive loss | (2,612.2 | ) | (2,310.7 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 4,930.2 | 4,996.7 | ||||||
Noncontrolling interests | 376.9 | 396.0 | ||||||
|
|
|
| |||||
Total equity | 5,307.1 | 5,392.7 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 21,712.3 | $ | 21,832.0 | ||||
|
|
|
| |||||
|
| |||||||||||||||||||||||||||||||||||||||
$.10 Par Value Common Stock (One Billion Shares Authorized) | ||||||||||||||||||||||||||||||||||||||||
| Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Shares | Par Amount | Additional Paid-In Capital | Shares | Amount | Retained Earnings | Accumulated Other | Non- controlling | Total Equity | Redeemable Interest | |||||||||||||||||||||||||||||||
Balance as of May 26, 2013 | 754.6 | $ | 75.5 | $ | 1,166.6 | (113.8 | ) | $ | (3,687.2 | ) | $ | 10,702.6 | $ | (1,585.3 | ) | $ | 456.3 | $ | 7,128.5 | $ | 967.5 | |||||||||||||||||||
Total comprehensive income | 1,824.4 | 245.0 | 24.9 | 2,094.3 | 70.0 | |||||||||||||||||||||||||||||||||||
Cash dividends declared ($1.17 per share) | (739.8 | ) | (739.8 | ) | ||||||||||||||||||||||||||||||||||||
Shares purchased | 30.0 | (35.6 | ) | (1,775.3 | ) | (1,745.3 | ) | |||||||||||||||||||||||||||||||||
Stock compensation plans (includes income tax benefits of $69.3) | 13.8 | 7.1 | 243.1 | 256.9 | ||||||||||||||||||||||||||||||||||||
Unearned compensation related to restricted stock unit awards | (91.3 | ) | (91.3 | ) | �� | |||||||||||||||||||||||||||||||||||
Earned compensation | 108.5 | 108.5 | ||||||||||||||||||||||||||||||||||||||
Decrease in redemption value of redeemable interest | 4.2 | 4.2 | (4.2 | ) | ||||||||||||||||||||||||||||||||||||
Addition of noncontrolling interest | 17.6 | 17.6 | ||||||||||||||||||||||||||||||||||||||
Distributions to redeemable and noncontrolling interest holders | (28.2 | ) | (28.2 | ) | (49.2 | ) | ||||||||||||||||||||||||||||||||||
Balance as of May 25, 2014 | 754.6 | 75.5 | 1,231.8 | (142.3 | ) | (5,219.4 | ) | 11,787.2 | (1,340.3 | ) | 470.6 | 7,005.4 | 984.1 | |||||||||||||||||||||||||||
Total comprehensive income (loss) | 1,221.3 | (970.4 | ) | (70.0 | ) | 180.9 | (122.9 | ) | ||||||||||||||||||||||||||||||||
Cash dividends declared ($1.67 per share) | (1,017.7 | ) | (1,017.7 | ) | ||||||||||||||||||||||||||||||||||||
Shares purchased | (22.3 | ) | (1,161.9 | ) | (1,161.9 | ) | ||||||||||||||||||||||||||||||||||
Stock compensation plans (includes income tax benefits of $74.6) | (38.1 | ) | 8.7 | 325.7 | 287.6 | |||||||||||||||||||||||||||||||||||
Unearned compensation related to stock unit awards | (80.8 | ) | (80.8 | ) | ||||||||||||||||||||||||||||||||||||
Earned compensation | 111.1 | 111.1 | ||||||||||||||||||||||||||||||||||||||
Decrease in redemption value of redeemable interest | 83.2 | 83.2 | (83.2 | ) | ||||||||||||||||||||||||||||||||||||
Addition of noncontrolling interest | 20.7 | 20.7 | ||||||||||||||||||||||||||||||||||||||
Acquisition of interest in subsidiary | (10.5 | ) | 0.6 | (9.9 | ) | |||||||||||||||||||||||||||||||||||
Distributions to redeemable and noncontrolling interest holders | (25.9 | ) | (25.9 | ) | 0.9 | |||||||||||||||||||||||||||||||||||
Balance as of May 31, 2015 | 754.6 | 75.5 | 1,296.7 | (155.9 | ) | (6,055.6 | ) | 11,990.8 | (2,310.7 | ) | 396.0 | 5,392.7 | 778.9 | |||||||||||||||||||||||||||
Total comprehensive income (loss) | 1,697.4 | (301.5 | ) | 11.2 | 1,407.1 | 30.3 | ||||||||||||||||||||||||||||||||||
Cash dividends declared (1.78 per share) | (1,071.7 | ) | (1,071.7 | ) | ||||||||||||||||||||||||||||||||||||
Shares purchased | (10.7 | ) | (606.7 | ) | (606.7 | ) | ||||||||||||||||||||||||||||||||||
Stock compensation plans (includes income tax benefits of $94.1) | (46.3 | ) | 8.8 | 335.7 | 289.4 | |||||||||||||||||||||||||||||||||||
Unearned compensation related to stock unit awards | (63.3 | ) | (63.3 | ) | ||||||||||||||||||||||||||||||||||||
Earned compensation | 84.8 | 84.8 | ||||||||||||||||||||||||||||||||||||||
Increase in redemption value of redeemable interest | (91.5 | ) | (91.5 | ) | 91.5 | |||||||||||||||||||||||||||||||||||
Acquisition of interest in subsidiary | (3.4 | ) | (1.1 | ) | (4.5 | ) | ||||||||||||||||||||||||||||||||||
Distributions to redeemable and noncontrolling interest holders | (29.2 | ) | (29.2 | ) | (55.1 | ) | ||||||||||||||||||||||||||||||||||
Balance as of May 29, 2016 | 754.6 | $75.5 | $1,177.0 | (157.8 | ) | $ | (6,326.6 | ) | $12,616.5 | $ | (2,612.2 | ) | $376.9 | $5,307.1 | $845.6 | |||||||||||||||||||||||||
| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Cash Flows - Operating Activities | ||||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,736.8 | $ | 1,259.4 | $ | 1,861.3 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 608.1 | 588.3 | 585.4 | |||||||||
After-tax earnings from joint ventures | (88.4 | ) | (84.3 | ) | (89.6 | ) | ||||||
Distributions of earnings from joint ventures | 75.1 | 72.6 | 90.5 | |||||||||
Stock-based compensation | 89.8 | 106.4 | 108.5 | |||||||||
Deferred income taxes | 120.6 | 25.3 | 172.5 | |||||||||
Tax benefit on exercised options | (94.1 | ) | (74.6 | ) | (69.3 | ) | ||||||
Pension and other postretirement benefit plan contributions | (47.8 | ) | (49.5 | ) | (49.7 | ) | ||||||
Pension and other postretirement benefit plan costs | 118.1 | 91.3 | 124.1 | |||||||||
Divestitures (gain), net | (148.2 | ) | — | (65.5 | ) | |||||||
Restructuring, impairment, and other exit costs | 107.2 | 531.1 | (18.8 | ) | ||||||||
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures | 258.2 | 214.7 | (32.2 | ) | ||||||||
Other, net | (105.6 | ) | (137.9 | ) | (76.2 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 2,629.8 | 2,542.8 | 2,541.0 | |||||||||
|
|
|
|
|
| |||||||
Cash Flows - Investing Activities | ||||||||||||
Purchases of land, buildings, and equipment | (729.3 | ) | (712.4 | ) | (663.5 | ) | ||||||
Acquisitions, net of cash acquired | (84.0 | ) | (822.3 | ) | — | |||||||
Investments in affiliates, net | 63.9 | (102.4 | ) | (54.9 | ) | |||||||
Proceeds from disposal of land, buildings, and equipment | 4.4 | 11.0 | 6.6 | |||||||||
Proceeds from divestitures | 828.5 | — | 121.6 | |||||||||
Exchangeable note | 21.1 | 27.9 | 29.3 | |||||||||
Other, net | (11.2 | ) | (4.0 | ) | (0.9 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided (used) by investing activities | 93.4 | (1,602.2 | ) | (561.8 | ) | |||||||
|
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|
|
|
| |||||||
Cash Flows - Financing Activities | ||||||||||||
Change in notes payable | (323.8 | ) | (509.8 | ) | 572.9 | |||||||
Issuance of long-term debt | 542.5 | 2,253.2 | 1,673.0 | |||||||||
Payment of long-term debt | (1,000.4 | ) | (1,145.8 | ) | (1,444.8 | ) | ||||||
Proceeds from common stock issued on exercised options | 171.9 | 163.7 | 108.1 | |||||||||
Tax benefit on exercised options | 94.1 | 74.6 | 69.3 | |||||||||
Purchases of common stock for treasury | (606.7 | ) | (1,161.9 | ) | (1,745.3 | ) | ||||||
Dividends paid | (1,071.7 | ) | (1,017.7 | ) | (983.3 | ) | ||||||
Addition of noncontrolling interest | — | — | 17.6 | |||||||||
Distributions to noncontrolling and redeemable interest holders | (84.3 | ) | (25.0 | ) | (77.4 | ) | ||||||
Other, net | (7.2 | ) | (16.1 | ) | (14.2 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash used by financing activities | (2,285.6 | ) | (1,384.8 | ) | (1,824.1 | ) | ||||||
|
|
|
|
|
| |||||||
Effect of exchange rate changes on cash and cash equivalents | (8.1 | ) | (88.9 | ) | (29.2 | ) | ||||||
|
|
|
|
|
| |||||||
Increase (decrease) in cash and cash equivalents | 429.5 | (533.1 | ) | 125.9 | ||||||||
Cash and cash equivalents - beginning of year | 334.2 | 867.3 | 741.4 | |||||||||
|
|
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|
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| |||||||
Cash and cash equivalents - end of year | $ | 763.7 | $ | 334.2 | $ | 867.3 | ||||||
|
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| |||||||
Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions and divestitures: | ||||||||||||
Receivables | $ | (6.9 | ) | $ | 6.8 | $ | (41.0 | ) | ||||
Inventories | (146.1 | ) | (24.2 | ) | (88.3 | ) | ||||||
Prepaid expenses and other current assets | (0.1 | ) | (50.5 | ) | 10.5 | |||||||
Accounts payable | 318.7 | 145.8 | 191.5 | |||||||||
Other current liabilities | 92.6 | 136.8 | (104.9 | ) | ||||||||
|
|
|
|
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| |||||||
Changes in current assets and liabilities | $ | 258.2 | $ | 214.7 | $ | (32.2 | ) | |||||
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| |||||||
Change in Reporting Period
As part of a long-term plan to conform the fiscal year ends of all our operations, in fiscal 2016 we changed the reporting period of Yoplait SAS and Yoplait Marques SNC within our International segment and Annie’s, Inc. (Annie’s) within our U.S. Retail segment from an April fiscal year-end to a May fiscal year-end to match our fiscal calendar. Accordingly, in fiscal 2016, our results included 13 months of results from the affected operations. The impact of these changes was not material to our consolidated results of operations.
net
Redeemable Interest
We
Revenue Recognition
We recognize sales revenuegenerally occurs when the shipment
Please seeNote 17for adisaggregation ofour revenue
Costs
flow.
Other
In the second quarter of fiscal 2015, we adopted new accounting requirements for share-based payment awards issued based upon specific performance targets. The adoption of this guidance did not have a material impact on our results of operations or financial position.
In the first quarter of fiscal 2016, we adopted new accounting requirements for the classification of debt issuance costs presented in the balance sheet as a direct reduction from the carrying amount of the debt liability. This presentation change has been implemented retroactively. The adoption of this guidance did not have a material impact on our financial position.
In the fourth quarter of fiscal 2016, we adopted new accounting requirements for the presentation of deferred tax assets and liabilities, requiring noncurrent classification for all deferred tax assets and liabilities on the statement of financial position. This presentation change has been implemented retroactively. The adoption of this guidance did not have a material impact on our financial position.
$
Duringthese items.
During
INTANGIBLE ASSET IMPAIRMENT
In fiscal 2015, we recorded a $260.0 million charge related to the impairment of ourGreen Giant brand intangible asset in restructuring, impairment, and other exit costs. See Note 6 for additional information.
RESTRUCTURING INITIATIVES
We are currently pursuing several multi-year restructuring initiatives designed to increase our efficiency and focus our business behind our key growth strategies. Charges
| Fiscal 2016 | Fiscal 2015 | |||||||||||||||||||||||||||||||||||||||||||||||
| In Millions | Severance | Asset Write-offs | Pension Related | Accelerated Depreciation | Other | Total | Severance | Asset Write-offs | Pension Related | Accelerated Depreciation | Other | Total | ||||||||||||||||||||||||||||||||||||
Project Compass | $ | 45.4 | $ | — | $ | 1.4 | $ | — | $ | 7.9 | $ | 54.7 | $ | — | $ | — | $ | — | $ | — | $ | — | �� | $ | — | |||||||||||||||||||||||
Project Catalyst | (8.7 | ) | 1.2 | — | — | — | (7.5 | ) | 121.5 | 12.3 | 6.6 | — | 8.0 | 148.4 | ||||||||||||||||||||||||||||||||||
Project Century | 30.9 | 30.7 | 19.1 | 76.5 | 25.4 | 182.6 | 44.3 | 42.3 | 31.2 | 53.1 | 10.9 | 181.8 | ||||||||||||||||||||||||||||||||||||
Combination of certain operational facilities | — | — | — | — | — | — | 13.0 | 0.7 | — | — | 0.2 | 13.9 | ||||||||||||||||||||||||||||||||||||
Charges associated with restructuring actions previously announced | — | — | — | — | — | — | (0.6 | ) | — | — | — | — | (0.6 | ) | ||||||||||||||||||||||||||||||||||
Total | $ | 67.6 | $ | 31.9 | $ | 20.5 | $ | 76.5 | $ | 33.3 | $ | 229.8 | $ | 178.2 | $ | 55.3 | $ | 37.8 | $ | 53.1 | $ | 19.1 | $ | 343.5 | ||||||||||||||||||||||||
Project Century (Century) began in fiscal 2015 as a review of our North American manufacturing and distribution network to streamline operations and identify potential capacity reductions. In the second quarter of fiscal 2016, we broadened the scope of Project Century to identify opportunities to streamline our supply chain outside of North America. As part of the expanded project, we approved a restructuring plan to close manufacturing facilities in our International segment supply chain located in Berwick, United Kingdom and East Tamaki, New Zealand. These actions affected approximately 285 positions. We expect to incur total restructuring charges of approximately $41 million relating to these actions, of which approximately $20 million will be cash. We recorded $30.0 million of restructuring charges relating to these actions in fiscal 2016. We
As part of Century, in the first quarter of2025.
As part of Century, in the first quarter of fiscal 2016, we approved a restructuring plan to close our Joplin, Missouri snacks plant in our U.S. Retail segment supply chain. This action affected approximately 120 positions, and we incurred $6.3 million of net expenses relating to this action, of which less than $1 million was cash. We recorded $6.3 million of restructuring charges relating to this action in fiscal 2016. This action was completed in fiscal 2016.
As part of Century, in the third quarter of fiscal 2015, we approved a restructuring plan to reduce our refrigerated dough capacity and exit our Midland, Ontario, Canada and New Albany, Indiana facilities, which support our U.S. Retail, International, and Convenience Stores and Foodservice supply chains. The Midland action will affect approximately 100 positions, and we expect to incur approximately $23 million of net expenses relating to this action, of which approximately $16 million will be cash. We recorded $2.7 million of restructuring charges relating to this action in fiscal 2016. We recorded $6.5 million of restructuring charges relating to this action in fiscal 2015. The New Albany action will affect approximately 400 positions, and we expect to incur approximately $82 million of net expenses relating to this action of which approximately $40 million will be cash. We recorded $17.1 million of restructuring charges relating to this action in fiscal 2016 and $51.3 million in fiscal 2015. We expect these actions to be completed by the end of fiscal 2018.
As part of Century, in the second quarter of fiscal 2015, we approved a restructuring plan to consolidate yogurt manufacturing capacity and exit our Methuen, Massachusetts facility in our U.S. Retail segment and Convenience Stores and Foodservice segment supply chains. This action affected approximately 175 positions. We expect to incur approximately $58 million of net expenses relating to this action of which approximately $12 million will be cash. We recorded $15.6 million of restructuring charges relating to this action in fiscal 2016 and $43.6 million in fiscal 2015. This action was largely completed in fiscal 2016.
As part of Century, in the second quarter of fiscal 2015, we approved a restructuring plan to eliminate excess cereal and dry mix capacity and exit our Lodi, California facility in our U.S. Retail supply chain. This action affected approximately 430 positions. We incurred $93.8 million of net expenses relating to this action of which $20 million was cash. We recorded $30.6 million of restructuring charges relating to this action in fiscal 2016 and $63.2 million in fiscal 2015. This action was completed in fiscal 2016.
In addition to the actions taken at certain facilities described above, we incurred $1.1 million of restructuring charges in fiscal 2016, relating to Century, and $17.2 million in fiscal 2015, of which $6 million was cash.
During the second quarter of fiscal 2015, we approved Project Catalyst, a restructuring plan to increase organizational effectiveness and reduce overhead expense. In connection with this project, we eliminated approximately 750 positions primarily in the United States. We incurred $140.9 million of net expenses relating to these actions of which $118 million will be cash. In fiscal 2016, we reduced the estimate of charges related to this action by $7.5 million. We recorded $148.4 million of restructuring charges relating to this action in fiscal 2015. These actions were largely completed in fiscal 2015.
During the first quarter of fiscal 2015, we approved a plan to combine certain Yoplait and General Mills operational facilities within
In fiscal 2014, we recorded $3.6 severance
In fiscal 2016, weare subject to union negotiations and works counsel consultations,
In addition to restructuring charges, we expect to incur approximately $109 million of additional project-related costs, which will be recorded in cost of sales, all of which will be cash. We recorded project-related costs in cost of sales of $57.5 millionactions in fiscal 2016 and $13.2 2023. We
2022 were
as follows:| Fiscal | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Cost of sales | $ | 78.4 | $ | 59.6 | $ | — | ||||||
Restructuring, impairment, and other exit costs | 151.4 | 283.9 | 3.6 | |||||||||
Total restructuring charges | 229.8 | 343.5 | 3.6 | |||||||||
Project-related costs classified in cost of sales | $ | 57.5 | $ | 13.2 | $ | — | ||||||
| In Millions | Severance | Contract Termination | Other Exit Costs | Total | ||||||||||||
Reserve balance as of May 26, 2013 | $ | 19.5 | $ | — | $ | — | $ | 19.5 | ||||||||
2014 charges, including foreign | 6.4 | — | — | 6.4 | ||||||||||||
Utilized in 2014 | (22.4 | ) | — | — | (22.4 | ) | ||||||||||
Reserve balance as of May 25, 2014 | 3.5 | — | — | 3.5 | ||||||||||||
2015 charges, including foreign | 176.4 | 0.6 | 8.1 | 185.1 | ||||||||||||
Utilized in 2015 | (61.3 | ) | — | (6.5 | ) | (67.8 | ) | |||||||||
Reserve balance as of May 31, 2015 | 118.6 | 0.6 | 1.6 | 120.8 | ||||||||||||
2016 charges, including foreign | 64.3 | 1.6 | 4.3 | 70.2 | ||||||||||||
Utilized in 2016 | (109.3 | ) | (0.7 | ) | (4.4 | ) | (114.4 | ) | ||||||||
Reserve balance as of May 29, 2016 | $ | 73.6 | $ | 1.5 | $ | 1.5 | $ | 76.6 | ||||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Cumulative investments | $ | 518.9 | $ | 530.6 | ||||
Goodwill and other intangibles | 469.2 | 465.1 | ||||||
Aggregate advances included in cumulative investments | 300.3 | 390.3 | ||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Sales to joint ventures | $ | 10.5 | $ | 11.6 | $ | 12.1 | ||||||
Net advances (repayments) | (63.9 | ) | 102.4 | 54.9 | ||||||||
Dividends received | 75.1 | 72.6 | 90.5 | |||||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Net sales: | ||||||||||||
CPW | $ | 1,674.8 | $ | 1,894.5 | $ | 2,107.9 | ||||||
HDJ | 369.4 | 370.2 | 386.9 | |||||||||
Total net sales | 2,044.2 | 2,264.7 | 2,494.8 | |||||||||
Gross margin | 867.6 | 925.4 | 1,030.3 | |||||||||
Earnings before income taxes | 234.8 | 220.9 | 219.1 | |||||||||
Earnings after income taxes | 186.7 | 170.7 | 168.8 | |||||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Current assets | $ | 814.1 | $ | 800.1 | ||||
Noncurrent assets | 959.9 | 962.1 | ||||||
Current liabilities | 1,457.3 | 1,484.8 | ||||||
Noncurrent liabilities | 81.7 | 118.2 | ||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Goodwill | $ | 8,741.2 | $ | 8,874.9 | ||||
Other intangible assets: | ||||||||
Intangible assets not subject to amortization: | ||||||||
Brands and other indefinite-lived intangibles | 4,147.5 | 4,262.1 | ||||||
Intangible assets subject to amortization: | ||||||||
Franchise agreements, customer relationships, and other finite-lived intangibles | 536.9 | 544.0 | ||||||
Less accumulated amortization | (145.8 | ) | (129.1 | ) | ||||
Intangible assets subject to amortization | 391.1 | 414.9 | ||||||
Other intangible assets | 4,538.6 | 4,677.0 | ||||||
Total | $ | 13,279.8 | $ | 13,551.9 | ||||
| In Millions | U.S. Retail | International | Convenience Stores and Foodservice | Joint Ventures | Total | |||||||||||||||
Balance as of May 26, 2013 | $ | 5,841.4 | $ | 1,387.0 | $ | 921.1 | $ | 472.7 | $ | 8,622.2 | ||||||||||
Divestiture | (12.2 | ) | — | — | — | (12.2 | ) | |||||||||||||
Other activity, primarily foreign currency translation | — | 15.0 | — | 25.5 | 40.5 | |||||||||||||||
Balance as of May 25, 2014 | 5,829.2 | 1,402.0 | 921.1 | 498.2 | 8,650.5 | |||||||||||||||
Acquisition | 589.8 | — | — | — | 589.8 | |||||||||||||||
Other activity, primarily foreign currency translation | — | (268.7 | ) | — | (96.7 | ) | (365.4 | ) | ||||||||||||
Balance as of May 31, 2015 | 6,419.0 | 1,133.3 | 921.1 | 401.5 | 8,874.9 | |||||||||||||||
Acquisitions | 54.1 | 29.4 | — | — | 83.5 | |||||||||||||||
Divestitures | (180.2 | ) | (6.2 | ) | — | — | (186.4 | ) | ||||||||||||
Other activity, primarily foreign currency translation | — | (35.5 | ) | — | 4.7 | (30.8 | ) | |||||||||||||
Balance as of May 29, 2016 | $ | 6,292.9 | $ | 1,121.0 | $ | 921.1 | $ | 406.2 | $ | 8,741.2 | ||||||||||
We performed our fiscal 2016 impairment assessment
May 28, 2023
| In Millions | U.S. Retail | International | Joint Ventures | Total | ||||||||||||
Balance as of May 26, 2013 | $ | 3,312.4 | $ | 1,638.2 | $ | 64.5 | $ | 5,015.1 | ||||||||
Other activity, primarily foreign currency translation | (4.9 | ) | 3.6 | 0.5 | (0.8 | ) | ||||||||||
Balance as of May 25, 2014 | 3,307.5 | 1,641.8 | 65.0 | 5,014.3 | ||||||||||||
Acquisition | 268.4 | — | — | 268.4 | ||||||||||||
Impairment charge | (260.0 | ) | — | — | (260.0 | ) | ||||||||||
Other activity, primarily foreign currency translation | (4.0 | ) | (340.3 | ) | (1.4 | ) | (345.7 | ) | ||||||||
Balance as of May 31, 2015 | 3,311.9 | 1,301.5 | 63.6 | 4,677.0 | ||||||||||||
Acquisitions | 23.1 | 7.0 | — | 30.1 | ||||||||||||
Divestiture | (119.6 | ) | — | — | (119.6 | ) | ||||||||||
Other activity, primarily amortization and foreign currency translation | (3.7 | ) | (44.6 | ) | (0.6 | ) | (48.9 | ) | ||||||||
Balance as of May 29, 2016 | $ | 3,211.7 | $ | 1,263.9 | $ | 63.0 | $ | 4,538.6 | ||||||||
As
| In Millions | Carrying Value | Excess Fair Value Above Carrying Value | ||||||
Mountain High | $ | 35.4 | 20 | % | ||||
Uncle Toby’s | $ | 52.2 | 11 | % | ||||
Our strategies for fiscal 2017 and fiscal 2018 will focus our growth investments on our brands and platforms with the strongest profitable growth potential. As a result, certain parts of our U.S. Retail segment could experience reduced future sales projections. We performed a sensitivity analysis for certain brand intangible assets and determined that, while not impaired foreign currency translation
In fiscal 2015, we made a strategic decision to redirect certain resources supporting our Green Giant business in our U.S. Retail segment to other businesses within the segment. Therefore, future sales and profitability projections in our long-range plan for this business declined. As a resultpotential impairment.
exchange for new lease liabilities
| Cost | Fair Value | Gross Gains | Gross Losses | |||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | |||||||||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||
Available for sale: | ||||||||||||||||||||||||||||||||
Debt securities | $ | 165.7 | $ | 2.6 | $ | 165.8 | $ | 2.6 | $ | 0.1 | $ | — | $ | — | $ | — | ||||||||||||||||
Equity securities | 1.8 | 1.8 | 8.4 | 8.3 | 6.6 | 6.5 | — | — | ||||||||||||||||||||||||
Total | $ | 167.5 | $ | 4.4 | $ | 174.2 | $ | 10.9 | $ | 6.7 | $ | 6.5 | $ | — | $ | — | ||||||||||||||||
| Available for Sale | ||||||||
| In Millions | Cost | Fair Value | ||||||
Under 1 year (current) | $ | 165.7 | $ | 165.8 | ||||
Equity securities | 1.8 | 8.4 | ||||||
Total | $ | 167.5 | $ | 174.2 | ||||
The fair value and carrying amounts of long-term debt, including the current portion, were $8,629.0 million and $8,161.1 million, respectively, as of May 29, 2016. The fair value of long-term debt was estimated using market quotations and discounted cash 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.
cost.
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Net loss on mark-to-market valuation of commodity positions | $ | (69.1 | ) | $ | (163.7 | ) | $ | (4.9 | ) | |||
Net loss on commodity positions reclassified from unallocated corporate items to segment operating profit | 127.9 | 84.4 | 51.2 | |||||||||
Net mark-to-market revaluation of certain grain inventories | 4.0 | (10.4 | ) | 2.2 | ||||||||
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items | $ | 62.8 | $ | (89.7 | ) | $ | 48.5 | |||||
As of May 29, 2016, the net notional value
Fixed Interest Rate Exposures — Fixed-to-floating interest rate swaps are accounted for as fair value hedges with effectiveness assessed based on changes in the fair value of the underlying debt and
In fiscal 2016,2023, in advance of planned debt financing,
In
In fiscal 2015, we entered into swaps to convert $500.0 million of 1.4 percent fixed-rate notes due October 20, 2017, and $500.0 million of 2.2 percent fixed-rate notes due October 21, 2019, to floating rates.
In advance of planned debt financing, we entered into $250.0 $
| In Millions | Gain/(Loss) | |||
5.7% notes due February 15, 2017 | $ | (1.6 | ) | |
5.65% notes due February 15, 2019 | 1.4 | |||
3.15% notes due December 15, 2021 | (54.9 | ) | ||
1.0% notes due April 27, 2023 | (1.7 | ) | ||
3.65% notes due February 15, 2024 | 13.8 | |||
1.5% notes due April 27, 2027 | (3.6 | ) | ||
5.4% notes due June 15, 2040 | (13.4 | ) | ||
4.15% notes due February 15, 2043 | 10.5 | |||
Net pre-tax hedge loss in AOCI | $ | (49.5 | ) | |
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Pay-floating swaps—notional amount | $ | 1,000.0 | $ | 1,250.0 | ||||
Average receive rate | 1.8 | % | 1.6 | % | ||||
Average pay rate | 1.1 | % | 0.7 | % | ||||
| In Millions | Pay Floating | |||
2018 | $ | 500.0 | ||
2020 | 500.0 | |||
Total | $ | 1,000.0 | ||
of May 28, 2023, mature
in fiscal| May 29, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Amounts Not Offset in the Balance Sheet (e) | Gross Amounts Not Offset in the Balance Sheet (e) | |||||||||||||||||||||||||||||||||||||||||||||||
| In Millions | Gross Amounts of Recognized Assets | Gross Liabilities Offset in the Balance Sheet (a) | Net Amounts of Assets (b) | Financial Instruments | Cash Collateral Received | Net Amount (c) | Gross Amounts of Recognized Liabilities | Gross Assets Offset in the Balance Sheet (a) | Net Amounts of Liabilities (b) | Financial Instruments | Cash Collateral Pledged | Net Amount (d) | ||||||||||||||||||||||||||||||||||||
Commodity contracts | $4.4 | $ — | $ 4.4 | $ (3.9 | ) | $ — | $ 0.5 | $(22.2 | ) | $ — | $(22.2 | ) | $ 3.9 | $7.5 | $(10.8 | ) | ||||||||||||||||||||||||||||||||
Interest rate contracts | 8.5 | — | 8.5 | — | — | 8.5 | (3.0 | ) | — | (3.0 | ) | — | — | (3.0 | ) | |||||||||||||||||||||||||||||||||
Foreign exchange contracts | 25.4 | — | 25.4 | (8.7 | ) | — | 16.7 | (13.7 | ) | — | (13.7 | ) | 8.7 | — | (5.0 | ) | ||||||||||||||||||||||||||||||||
Equity contracts | 2.4 | — | 2.4 | — | — | 2.4 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | $40.7 | $ — | $40.7 | $(12.6 | ) | $ — | $28.1 | $(38.9 | ) | $ — | $(38.9 | ) | $12.6 | $7.5 | $(18.8 | ) | ||||||||||||||||||||||||||||||||
May 28, 2023 Assets Liabilities Gross Amounts Not Offset in the Balance Sheet (e) Gross Amounts Not Offset in the Balance Sheet (e) In Millions Gross Amounts of Recognized Assets Gross Liabilities Offset in the Balance Sheet (a) Net Amounts of Assets(b) Financial Instruments Cash Collateral Received Net Amount (c) Gross Amounts of Recognized Liabilities Gross Assets Offset in the Balance Sheet (a) Net Amounts of Liabilities (b) Financial Instruments Cash Collateral Pledged Net Amount (d) Commodity contracts $ 0.5 $ - $ 0.5 $ (0.5) $ - $ - $ (29.3) $ - $ (29.3) $ 0.5 $ 16.2 $ (12.6) Interest rate contracts - - - - - - (69.2) - (69.2) - 44.3 (24.9) Foreign exchange contracts 10.4 - 10.4 (4.2) - 6.2 (8.2) - (8.2) 4.2 - (4.0) Equity contracts 2.8 - 2.8 (1.0) - 1.8 (1.5) - (1.5) 1.0 - (0.5) Total $ 13.7 $ - $ 13.7 $ (5.7) $ - $ 8.0 $ (108.2) $ - $ (108.2) $ 5.7 $ 60.5 $ (42.0) (a)Includes related collateral offset in our Consolidated Balance Sheets. (b)Net fair value as recorded in our Consolidated Balance Sheets. (c)Fair value of assets that could be reported net in our Consolidated Balance Sheets. (d)Fair value of liabilities that could be reported net in our Consolidated Balance Sheets. (e)Fair value of |
Commodity contracts Interest rate contracts Foreign exchange contracts Total May 31, 2015 Assets Liabilities Gross Amounts Not
Offset in the
Balance Sheet (e) Gross Amounts Not
Offset in the
Balance Sheet (e) In Millions Gross
Amounts
of
Recognized
Assets Gross
Liabilities
Offset in
the
Balance
Sheet (a) Net
Amounts
of Assets
(b) Financial
Instruments Cash
Collateral
Received Net
Amount
(c) Gross
Amounts
of
Recognized
Liabilities Gross
Assets
Offset in
the
Balance
Sheet (a) Net
Amounts
of
Liabilities
(b) Financial
Instruments Cash
Collateral
Pledged Net
Amount
(d) $ 10.1 $ — $ 10.1 $ (1.3 ) $ — $ 8.8 $ (59.4 ) $ — $ (59.4 ) $ 1.3 $ 40.1 $ (18.0 ) 4.0 — 4.0 — — 4.0 — — — — — — 25.9 — 25.9 (12.5 ) — 13.4 (65.3 ) — (65.3 ) 12.5 — (52.8 ) $ 40.0 $ — $ 40.0 $ (13.8 ) $ — $ 26.2 $ (124.7 ) $ — $ (124.7 ) $ 13.8 $ 40.1 $ (70.8 )
FOREIGN EXCHANGE RISK
Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency cash flows related to third party purchases, intercompany loans, product shipments, and foreign-denominated debt. We are also exposed to the translation of foreign currency earnings to the U.S. dollar. Our principal exposures are to the Australian dollar, Brazilian real, British pound sterling, Canadian dollar, Chinese renminbi, euro, Japanese yen, Mexican peso, and Swiss franc. We primarily use foreign currency forward contracts to selectively hedge our foreign currency cash flow exposures. We also generally swap our foreign-denominated commercial paper borrowings and nonfunctional currency intercompany loans back to U.S. dollars or the functional currency of the entity with foreign exchange exposure. The gains or losses on these derivatives offset the foreign currency revaluation gains or losses recorded in earnings on the associated borrowings. We generally do not hedge more than 18 months in advance.
As of May 29, 2016, the net notional value of foreign exchange derivatives was $997.7 million. The amount of hedge ineffectiveness was less than $1 million in each of fiscal 2016, 2015, and 2014.
We also have many net investments in foreign subsidiaries that are denominated in euros. We previously hedged a portion of these net investments by issuing euro-denominated commercial paper and foreign exchange forward contracts. In fiscal 2016, we entered into a net investment hedge for a portion of our net investment in foreign operations denominated in euros by issuing €500.0 million of euro-denominated bonds. In fiscal 2015, we entered into a net investment hedge for a portion of our net investment in foreign operations denominated in euros by issuing €900.0 million of euro-denominated bonds. In fiscal 2014, we entered into a net investment hedge for a portion of our net investment in foreign operations denominated in euros by issuing €500.0 million of euro-denominated bonds. As of May 29, 2016, we had deferred net foreign currency transaction losses of $20.1 million in AOCI associated with hedging activity.
Venezuela is a highly inflationary economy and as such, we remeasured the value of the assets and liabilities of our former Venezuelan subsidiary basedreported on the exchange rate at which we expected to remit dividends in U.S. dollars
from the SIMADI market. In fiscal 2015, we recorded an $8 million foreign exchange loss. In the fourth quarter of fiscal 2016, we sold our General Mills de Venezuela CA subsidiary to a third party and exited our business in Venezuela.
EQUITY INSTRUMENTS
Equity price movements affect our compensation expense as certain investments made by our employeesgross basis in our deferred compensation plan are revalued. We use equity swaps to manage this risk. As of Consolidated Balance Sheets.
FAIR VALUE MEASUREMENTS AND FINANCIAL STATEMENT PRESENTATION
The fair values of our assets, liabilities, and derivative positions recorded atConsolidated Balance Sheets.
| May 29, 2016 | May 29, 2016 | |||||||||||||||||||||||||||||||
| Fair Values of Assets | Fair Values of Liabilities | |||||||||||||||||||||||||||||||
| In Millions | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||||||||
Interest rate contracts (a) (b) | $ | — | $ | 7.7 | $ | — | $ | 7.7 | $ | — | $ | (3.0 | ) | $ | — | $ | (3.0 | ) | ||||||||||||||
Foreign exchange contracts (c) (d) | — | 12.2 | — | 12.2 | — | (12.2 | ) | — | (12.2 | ) | ||||||||||||||||||||||
Total | — | 19.9 | — | 19.9 | — | (15.2 | ) | — | (15.2 | ) | ||||||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||||||||
Foreign exchange contracts (c) (d) | — | 13.2 | — | 13.2 | — | (1.5 | ) | — | (1.5 | ) | ||||||||||||||||||||||
Commodity contracts (c) (e) | 2.6 | 1.7 | — | 4.3 | (0.6 | ) | (21.6 | ) | — | (22.2 | ) | |||||||||||||||||||||
Grain contracts (c) (e) | — | 1.8 | — | 1.8 | — | (5.5 | ) | — | (5.5 | ) | ||||||||||||||||||||||
Total | 2.6 | 16.7 | — | 19.3 | (0.6 | ) | (28.6 | ) | — | (29.2 | ) | |||||||||||||||||||||
Other assets and liabilities reported at fair value: | ||||||||||||||||||||||||||||||||
Marketable investments (a) (f) | 8.4 | 165.8 | — | 174.2 | — | — | — | — | ||||||||||||||||||||||||
Long-lived assets (g) | — | 26.0 | — | 26.0 | — | — | — | — | ||||||||||||||||||||||||
Total | 8.4 | 191.8 | — | 200.2 | — | — | — | — | ||||||||||||||||||||||||
Total assets, liabilities, and derivative positions recorded at fair value | $ | 11.0 | $ | 228.4 | $ | — | $ | 239.4 | $ | (0.6 | ) | $ | (43.8 | ) | $ | — | $ | (44.4 | ) | |||||||||||||
Derivatives designated as hedging instruments: Interest rate contracts (a) (b) Foreign exchange contracts (c) (d) Total Derivatives not designated as hedging instruments: Foreign exchange contracts (c) (d) Commodity contracts (c) (e) Grain contracts (c) (e) Total Other assets and liabilities reported at fair value: Marketable investments (a) (f) Long-lived assets (g) Indefinite-lived intangible assets (h) Total Total assets, liabilities, and derivative positions recorded at fair value May 31, 2015 May 31, 2015 Fair Values of Assets Fair Values of Liabilities In Millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total $ — $ 4.0 $ — $ 4.0 $ — $ — $ — $ — — 25.5 — 25.5 — (23.3 ) — (23.3 ) — 29.5 — 29.5 — (23.3 ) — (23.3 ) — 0.4 — 0.4 — (42.0 ) — (42.0 ) 7.2 2.9 — 10.1 — (59.4 ) — (59.4 ) — 3.3 — 3.3 — (7.8 ) — (7.8 ) 7.2 6.6 — 13.8 — (109.2 ) — (109.2 ) 8.3 2.6 — 10.9 — — — — — 37.8 — 37.8 — — — — — — 154.3 154.3 — — — — 8.3 40.4 154.3 203.0 — — — — $ 15.5 $ 76.5 $ 154.3 $ 246.3 $ — $ (132.5 ) $ — $ (132.5 )
We did not significantly change our valuation techniques from prior periods.
Information related to our cash flow hedges, fair value hedges, and other derivatives not designated as hedging instruments for the fiscal years ended May 29, 2016 and May 31, 2015, follows:
| Interest Rate Contracts | Foreign Exchange Contracts | Equity Contracts | Commodity Contracts | Total | ||||||||||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships: | ||||||||||||||||||||||||||||||||||||||||
Amount of gain (loss) recognized in other comprehensive income (OCI) (a) | $ | (2.6 | ) | $ | (5.9 | ) | $ | 21.2 | $ | 13.3 | $ | — | $ | — | $ | — | $ | — | $ | 18.6 | $ | 7.4 | ||||||||||||||||||
Amount of net gain (loss) reclassified from AOCI into earnings (a) (b) | (10.6 | ) | (10.6 | ) | 22.1 | 5.0 | — | — | — | — | 11.5 | (5.6 | ) | |||||||||||||||||||||||||||
Amount of net gain (loss) recognized in earnings (c) | (0.1 | ) | (0.6 | ) | (0.7 | ) | 0.1 | — | — | — | — | (0.8 | ) | (0.5 | ) | |||||||||||||||||||||||||
Derivatives in Fair Value Hedging Relationships: Amount of net gain recognized in earnings (d) | 0.1 | 1.6 | — | — | — | — | — | 0.1 | 1.6 | |||||||||||||||||||||||||||||||
Derivatives in Net Investment Hedging Relationships: Amount of loss recognized in OCI (a) | — | — | (0.2 | ) | (6.9 | ) | — | — | — | — | (0.2 | ) | (6.9 | ) | ||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: Amount of net gain (loss) recognized in earnings (d) | — | — | 1.1 | (54.3 | ) | (4.5 | ) | 9.6 | (56.1 | ) | (163.7 | ) | (59.5 | ) | (208.4 | ) | ||||||||||||||||||||||||
Consolidated Balance Sheets.
| ||||
| ||||
| ||||
net gain.
| Percent of total | Consolidated | U.S. Retail | International | Convenience Stores and Foodservice | ||||||||||||
Wal-Mart (a): | ||||||||||||||||
Net sales | 20 | % | 30 | % | 5 | % | 8 | % | ||||||||
Accounts receivable | 26 | % | 4 | % | 8 | % | ||||||||||
Five largest customers: | ||||||||||||||||
Net sales | 53 | % | 22 | % | 45 | % | ||||||||||
these
third-partyNotes Payable
| May 29, 2016 | May 31, 2015 | |||||||||||||||
| In Millions | Notes Payable | Weighted- Average Interest Rate | Notes Payable | Weighted- Average Interest Rate | ||||||||||||
U.S. commercial paper | $ | — | — | % | $ | 432.0 | 0.3 | % | ||||||||
Financial institutions | 269.8 | 8.6 | 183.8 | 9.5 | ||||||||||||
Total | $ | 269.8 | 8.6 | % | $ | 615.8 | 3.0 | % | ||||||||
| In Billions | Facility Amount | Borrowed Amount | ||||||
Credit facility expiring: | ||||||||
May 2021 | $2.7 | $ — | ||||||
June 2019 | 0.2 | 0.1 | ||||||
Total committed credit facilities | 2.9 | 0.1 | ||||||
Uncommitted credit facilities | 0.4 | 0.1 | ||||||
Total committed and uncommitted credit facilities | $3.3 | $0.2 | ||||||
28, 2023:
In fiscal 2015, our subsidiary, Yoplait S.A.S., entered into a €200.0 million fee-paid committed credit facility that is scheduled to expire in June 2019.
Theuncommitted credit facilities
Long-Term Debt
28, 2023.
outstanding commercial paper and for general
corporate purposes.In April 2015, we issued €500.0 million principal amount of 1.0
In March 2015, we repaid $750.0 €
In October 2014, we issued $500.0 million aggregate principal amount of 1.4
In June 2014, our subsidiary, Yoplait S.A.S., issued €200.0 million principal amount of 2.2
repay
$notes due
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
5.65% notes due February 15, 2019 | $ | 1,150.0 | $ | 1,150.0 | ||||
5.7% notes due February 15, 2017 | 1,000.0 | 1,000.0 | ||||||
3.15% notes due December 15, 2021 | 1,000.0 | 1,000.0 | ||||||
Euro-denominated 2.1% notes due November 16, 2020 | 555.8 | 549.4 | ||||||
Euro-denominated 1.0% notes due April 27, 2023 | 555.8 | 549.4 | ||||||
Floating-rate euro-denominated notes due January 15, 2020 | 555.8 | — | ||||||
1.4% notes due October 20, 2017 | 500.0 | 500.0 | ||||||
5.4% notes due June 15, 2040 | 500.0 | 500.0 | ||||||
4.15% notes due February 15, 2043 | 500.0 | 500.0 | ||||||
3.65% notes due February 15, 2024 | 500.0 | 500.0 | ||||||
2.2% notes due October 21, 2019 | 500.0 | 500.0 | ||||||
Floating-rate notes due January 29, 2016 | — | 500.0 | ||||||
Euro-denominated 1.5% notes due April 27, 2027 | 444.6 | 439.5 | ||||||
0.875% notes due January 29, 2016 | — | 250.0 | ||||||
Floating-rate notes due January 28, 2016 | — | 250.0 | ||||||
Euro-denominated 2.2% notes due June 24, 2021 | 221.0 | 219.7 | ||||||
Medium-term notes, 0.02% to 6.44%, due fiscal 2017 or later | 204.2 | 204.2 | ||||||
Other, including debt issuance costs and capital leases | (26.1 | ) | (36.5 | ) | ||||
| 8,161.1 | 8,575.7 | |||||||
Less amount due within one year | (1,103.4 | ) | (1,000.4 | ) | ||||
Total long-term debt | $ | 7,057.7 | $ | 7,575.3 | ||||
Certain
As of May 29, 2016, the $49.5 million pre-tax loss recorded in AOCI associated with our previously designated interest rate swaps will be reclassified to net interest over the remaining lives of the hedged transactions. The amount expected to be reclassified from AOCI to net interest in fiscal 2017 is a $10.0 million pre-tax loss.
Our principal redeemable and noncontrolling interests relate to our Yoplait SAS, Yoplait Marques SNC, Liberté Marques Sàrl, and General Mills Cereals, LLC (GMC) subsidiaries. In addition, we have six foreign subsidiaries that have noncontrolling interests totaling $7.0 million as of May 29, 2016.
We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal holds the remaining interests in each of the entities. On the acquisition date, we
recorded the $904.4 million fair value of Sodiaal’s 49 percent euro-denominated interest in Yoplait SAS as a redeemable interest on our Consolidated Balance Sheets. Sodiaal has the ability to put all or a portion of its redeemable interest to us at fair value once per year, up to three times before December 2024. We adjust the value of the redeemable interest through additional paid-in capital on our Consolidated Balance Sheets quarterly to the redeemable interest’s redemption value, which approximates its fair value. Yoplait SAS pays dividends annually if it meets certain financial metrics set forth in its shareholders agreement. As of May 29, 2016, the redemption value of the euro-denominated redeemable interest was $845.6 million.
On the acquisition dates, we recorded the $281.4 million fair value of Sodiaal’s 50 percent euro-denominated interest in Yoplait Marques SNC and 50 percent Canadian dollar-denominated interest in Liberté Marques Sàrl as noncontrolling interests on our Consolidated Balance Sheets. Yoplait Marques SNC earns a royalty stream through a licensing agreement with Yoplait SAS for the rights to Yoplait and related trademarks. Liberté Marques Sàrl earns a royalty stream through licensing agreements with certain Yoplait group companies for the rights to Liberté and related trademarks. These entities pay dividends annually based on their available cash as of their fiscal year end.
During fiscal 2016, we paid $74.5 million of dividends to Sodiaal under the terms of the Yoplait SAS and Yoplait Marques SNC shareholder agreements.
A subsidiary of Yoplait SAS has entered into an exclusive milk supply agreement for its European operations with Sodiaal at market-determined prices through July 1, 2021. Net purchases totaled $321.0 million for fiscal 2016 and $271.3 million for fiscal 2015.
The holder of the 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). On June 1, 2015, the floating preferred return rate on GMC’s Class A interests was reset to the sum of three-month LIBOR plus 125 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.
For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of our non-wholly owned subsidiaries are included in our Consolidated Financial Statements. The third-party investor’s share of the net earnings of these subsidiaries is reflected in net earnings attributable to redeemable and noncontrolling interests in our Consolidated Statements of Earnings.
Our noncontrolling interests contain restrictive covenants. As of May 29, 2016, we were in compliance with all of these covenants.
NOTE 10.11. STOCKHOLDERS’
| Fiscal Year | ||||||||||||
In Millions | 2016 | 2015 | 2014 | |||||||||
Shares of common stock | 10.7 | 22.3 | 35.6 | |||||||||
Aggregate purchase price | $ | 606.7 | $ | 1,161.9 | $ | 1,774.4 | ||||||
| Fiscal 2016 | ||||||||||||||||||||
| General Mills | Noncontrolling Interests | Redeemable Interest | ||||||||||||||||||
| In Millions | Pretax | Tax | Net | Net | Net | |||||||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,697.4 | $ 8.4 | $31.0 | ||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation | $ | (107.6 | ) | $ — | (107.6 | ) | 2.8 | (3.9 | ) | |||||||||||
Net actuarial loss | (514.2 | ) | 188.3 | (325.9 | ) | — | — | |||||||||||||
Other fair value changes: | ||||||||||||||||||||
Securities | 0.2 | (0.1 | ) | 0.1 | — | — | ||||||||||||||
Hedge derivatives | 16.5 | (2.2 | ) | 14.3 | — | 1.7 | ||||||||||||||
Reclassification to earnings: | ||||||||||||||||||||
Hedge derivatives (a) | (13.5 | ) | 2.5 | (11.0 | ) | — | 1.5 | |||||||||||||
Amortization of losses and prior service costs (b) | 206.8 | (78.2 | ) | 128.6 | — | — | ||||||||||||||
Other comprehensive income (loss) | (411.8 | ) | 110.3 | (301.5 | ) | 2.8 | (0.7 | ) | ||||||||||||
Total comprehensive income | $ | 1,395.9 | $ | 11.2 | $30.3 | |||||||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests Other comprehensive loss: Foreign currency translation Net actuarial income Other fair value changes: Securities Hedge derivatives Reclassification to earnings: Hedge derivatives (a) Amortization of losses and prior service costs (b) Other comprehensive loss Total comprehensive income (loss) Fiscal 2015 General Mills Noncontrolling
Interests Redeemable
Interest In Millions Pretax Tax Net Net Net $ 1,221.3 $ 8.2 $ 29.9 $ (727.9 ) $ — (727.9 ) (78.2 ) (151.8 ) (561.1 ) 202.7 (358.4 ) — — 1.3 (0.5 ) 0.8 — — 13.6 (4.8 ) 8.8 — (4.7 ) 0.7 0.5 1.2 — 3.7 170.2 (65.1 ) 105.1 — — (1,103.2 ) 132.8 (970.4 ) (78.2 ) (152.8 ) $ 250.9 $(70.0 ) $(122.9 )
| Fiscal 2014 | ||||||||||||||||||||
| General Mills | Noncontrolling Interests | Redeemable Interest | ||||||||||||||||||
| In Millions | Pretax | Tax | Net | Net | Net | |||||||||||||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests | $ | 1,824.4 | $ 5.8 | $31.1 | ||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||
Foreign currency translation | $ (71.8 | ) | $ — | (71.8 | ) | 19.1 | 41.4 | |||||||||||||
Net actuarial income | 327.2 | (121.2 | ) | 206.0 | — | — | ||||||||||||||
Other fair value changes: | ||||||||||||||||||||
Securities | 0.5 | (0.2 | ) | 0.3 | — | — | ||||||||||||||
Hedge derivatives | 14.4 | (7.0 | ) | 7.4 | — | (2.4 | ) | |||||||||||||
Reclassification to earnings: | ||||||||||||||||||||
Hedge derivatives (a) | (4.7 | ) | 0.2 | (4.5 | ) | — | (0.1 | ) | ||||||||||||
Amortization of losses and prior service costs (b) | 172.7 | (65.1 | ) | 107.6 | — | — | ||||||||||||||
Other comprehensive income | 438.3 | (193.3 | ) | 245.0 | 19.1 | 38.9 | ||||||||||||||
Total comprehensive income | $ | 2,069.4 | $24.9 | $70.0 | ||||||||||||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Foreign currency translation adjustments | $ | (644.2 | ) | $ | (536.6 | ) | ||
Unrealized gain (loss) from: | ||||||||
Securities | 3.8 | 3.7 | ||||||
Hedge derivatives | (25.5 | ) | (28.8 | ) | ||||
Pension, other postretirement, and postemployment benefits: | ||||||||
Net actuarial loss | (1,958.2 | ) | (1,756.1 | ) | ||||
Prior service credits | 11.9 | 7.1 | ||||||
Accumulated other comprehensive loss | $ | (2,612.2 | ) | $ | (2,310.7 | ) | ||
| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Estimated fair values of stock options granted | $ 7.24 | $ 7.22 | $ 6.03 | |||||||||
Assumptions: | ||||||||||||
Risk-free interest rate | 2.4% | 2.6% | 2.6% | |||||||||
Expected term | 8.5 years | 8.5 years | 9.0 years | |||||||||
Expected volatility | 17.6% | 17.5% | 17.4% | |||||||||
Dividend yield | 3.2% | 3.1% | 3.1% | |||||||||
Realized windfallfollows:
Options may be priced at 100 percent or more of the fair market value on the date of grant, and
| Options Exercisable (Thousands) | Weighted- Price Per | Options Outstanding (Thousands) | Weighted- Price Per | |||||||||||||
Balance as of May 26, 2013 | 29,290.3 | $27.69 | 47,672.1 | $30.22 | ||||||||||||
Granted | 2,789.8 | 48.33 | ||||||||||||||
Exercised | (6,181.3 | ) | 24.78 | |||||||||||||
Forfeited or expired | (111.6 | ) | 38.74 | |||||||||||||
Balance as of May 25, 2014 | 29,452.8 | 28.37 | 44,169.0 | 32.10 | ||||||||||||
Granted | 2,253.1 | 53.70 | ||||||||||||||
Exercised | (7,297.2 | ) | 26.68 | |||||||||||||
Forfeited or expired | (47.7 | ) | 43.73 | |||||||||||||
Balance as of May 31, 2015 | 26,991.5 | 30.44 | 39,077.2 | 34.35 | ||||||||||||
Granted | 1,930.2 | 55.72 | ||||||||||||||
Exercised | (8,471.0 | ) | 28.49 | |||||||||||||
Forfeited or expired | (134.8 | ) | 48.16 | |||||||||||||
Balance as of May 29, 2016 | 22,385.1 | $32.38 | 32,401.6 | $37.09 | ||||||||||||
Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows:
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Net cash proceeds | $ | 171.9 | $ | 163.7 | $ | 108.1 | ||||||
Intrinsic value of options exercised | $ | 268.4 | $ | 201.9 | $ | 166.6 | ||||||
Restricted Stock, Restricted Stock Units, and Performance Share Units
Stock and units settled in stock subject to a restricted period and a purchase price, if any (as determined by the Compensation Committee of the Board of Directors), may be granted to key employees under the 2011 Plan. Restricted stock and restricted stock units generally vest and become unrestricted four years after the date of grant. Performance share units are earned based on our future achievement of three-year goals for average organic net sales growth and cumulative free cash flow. Performance share units are settled in common stock and are generally
subject to a three year performance and vesting period. The sale or transfer of these awards is restricted during the vesting period. Participants holding restricted stock, but not restricted stock units or performance share units, are entitled to vote on matters submitted to holders of common stock for a vote. These awards accumulate dividends from the date of grant, but participants only receive payment if the awards vest.
Information on restricted stock unit and performance share units activity follows:
| Equity Classified | Liability Classified | |||||||||||||||
| Share-Settled Units (Thousands) | Weighted- Grant-Date Fair Value | Share-Settled Units (Thousands) | Weighted- Grant-Date Fair Value | |||||||||||||
Non-vested as of May 31, 2015 | 6,235.6 | $ | 46.44 | 237.0 | $ | 44.84 | ||||||||||
Granted | 1,287.7 | 56.01 | 63.8 | 55.82 | ||||||||||||
Vested | (2,119.9 | ) | 46.65 | (69.5 | ) | 40.55 | ||||||||||
Forfeited, expired, or reclassified | (303.0 | ) | 49.45 | (19.9 | ) | 51.45 | ||||||||||
Non-vested as of May 29, 2016 | 5,100.4 | $ | 48.60 | 211.4 | $ | 48.37 | ||||||||||
| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
Number of units granted (thousands) | 1,351.5 | 1,708.2 | 2,144.1 | |||||||||
Weighted average price per unit | $ | 56.00 | $ | 53.45 | $ | 48.49 | ||||||
The total grant-date fair value of restricted stock unit awards that vested during fiscal 2016 was $101.8 million and $133.7 million vested during fiscal 2015.
As of May 29, 2016, unrecognized compensation expense related to non-vested stock options, restricted stock units, and performance share units was $93.9 million. This expense will be recognized over 18 months, on average.
Stock-based compensation expense related to restricted stock units and performance share units was $76.8 million for fiscal 2016, $96.6 million for fiscal 2015, and $107.0 million for fiscal 2014. Compensation expense related to stock-based payments recognized in our Consolidated Statements of Earnings includes amounts recognized in restructuring, impairment, and other exit costs for fiscal 2016 and 2015.
2022.
| Fiscal Year | ||||||||||||
| In Millions, Except per Share Data | 2016 | 2015 | 2014 | |||||||||
Net earnings attributable to General Mills | $ | 1,697.4 | $ | 1,221.3 | $ | 1,824.4 | ||||||
Average number of common shares—basic EPS | 598.9 | 603.3 | 628.6 | |||||||||
Incremental share effect from: (a) | ||||||||||||
Stock options | 9.8 | 11.3 | 12.3 | |||||||||
Restricted stock units, performance share units, and other | 3.2 | 4.2 | 4.8 | |||||||||
Average number of common shares—diluted EPS | 611.9 | 618.8 | 645.7 | |||||||||
Earnings per share—basic | $ | 2.83 | $ | 2.02 | $ | 2.90 | ||||||
Earnings per share—diluted | $ | 2.77 | $ | 1.97 | $ | 2.83 | ||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Anti-dilutive stock options, restricted stock units, and performance share units | 1.1 | 2.1 | 1.7 | |||||||||
choosing health care coverage
that best fits their needs.| Fiscal Year | ||||||||
| 2016 | 2015 | |||||||
Health care cost trend rate for next year | 7.3% and 7.5% | 6.5% and 7.3% | ||||||
Rate to which the cost trend rate is assumed to decline (ultimate rate) | 5.0% | 5.0% | ||||||
Year that the rate reaches the ultimate trend rate | 2024 | 2025 | ||||||
We review our health care cost trend rates annually. Our review is based on data we collect about our health care claims experience and information provided by our actuaries. This information includes recent plan experience, plan design, overall industry experience and projections, and assumptions used by other similar organizations. Our initial health
A one percentage point change in the health care cost trend rate would have the following effects:
| In Millions | One Percentage Point Increase | One Percentage Point Decrease | ||||||
Effect on the aggregate of the service and interest cost components in fiscal 2017 | $ 3.1 | $ (2.7) | ||||||
Effect on the other postretirement accumulated benefit obligation as of May 29, 2016 | 71.2 | (63.8) | ||||||
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the Act) was signed into law in March 2010. The Act codifies health care reforms with staggered effective dates from 2010 to 2018. Estimates of the future impacts of several of the Act’s provisions are incorporated into our postretirement benefit liability.
We use our
Summarized financial information about defined benefit pension, other postretirement benefit, and postemployment
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | ||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Change in Plan Assets: | ||||||||||||||||||||||||
Fair value at beginning of year | $ | 5,758.5 | $ | 5,611.8 | $ | 582.8 | $ | 517.3 | ||||||||||||||||
Actual return on assets | 36.3 | 373.6 | (0.1 | ) | 44.0 | |||||||||||||||||||
Employer contributions | 23.7 | 24.1 | 24.1 | 24.1 | ||||||||||||||||||||
Plan participant contributions | 5.7 | 10.3 | 14.1 | 13.6 | ||||||||||||||||||||
Benefits payments | (277.5 | ) | (244.9 | ) | (18.5 | ) | (16.2) | |||||||||||||||||
Foreign currency | (6.8 | ) | (16.4 | ) | — | — | ||||||||||||||||||
| ||||||||||||||||||||||||
Fair value at end of year | $ | 5,539.9 | $ | 5,758.5 | $ | 602.4 | $ | 582.8 | ||||||||||||||||
| ||||||||||||||||||||||||
Change in Projected Benefit Obligation: | ||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 6,252.1 | $ | 5,618.0 | $ | 1,079.6 | $ | 1,074.8 | $ | 146.6 | $ | 145.3 | ||||||||||||
Service cost | 134.6 | 137.0 | 19.0 | 22.4 | 7.6 | 7.5 | ||||||||||||||||||
Interest cost | 267.8 | 249.2 | 44.1 | 46.9 | 3.9 | 4.3 | ||||||||||||||||||
Plan amendment | 0.9 | 1.9 | — | (42.4 | ) | 1.1 | — | |||||||||||||||||
Curtailment/other | 7.1 | 19.9 | 0.5 | 3.4 | 10.7 | 9.5 | ||||||||||||||||||
Plan participant contributions | 5.7 | 10.3 | 14.1 | 13.6 | — | — | ||||||||||||||||||
Medicare Part D reimbursements | — | — | 3.5 | 3.2 | — | — | ||||||||||||||||||
Actuarial loss (gain) | 65.2 | 479.7 | (64.5 | ) | 23.5 | 11.2 | (0.4 | ) | ||||||||||||||||
Benefits payments | (278.0 | ) | (245.5 | ) | (66.4 | ) | (62.8 | ) | (16.9 | ) | (19.1 | ) | ||||||||||||
Foreign currency | (6.9 | ) | (18.4 | ) | (1.0 | ) | (3.0 | ) | (0.1 | ) | (0.5 | ) | ||||||||||||
Projected benefit obligation at end of year | $ | 6,448.5 | $ | 6,252.1 | $ | 1,028.9 | $ | 1,079.6 | $ | 164.1 | $ | 146.6 | ||||||||||||
Plan assets less than benefit obligation as of fiscal year end | $ | (908.6 | ) | $ | (493.6 | ) | $ | (426.5 | ) | $ | (496.8 | ) | $ | (164.1 | ) | $ | (146.6 | ) | ||||||
Assumed mortality rates
The accumulated benefit obligation for all defined benefit pension plans was $5,950.7
2022.
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | Total | |||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | |||||||||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||
Net actuarial loss | $ | (1,886.0 | ) | $ | (1,674.9 | ) | $ | (57.6 | ) | $ | (72.2 | ) | $ | (14.6 | ) | $ | (9.0 | ) | $ | (1,958.2 | ) | $ | (1,756.1 | ) | ||||||||
Prior service (costs) credits | (6.8 | ) | (13.8 | ) | 19.9 | 23.8 | (1.2 | ) | (2.9 | ) | 11.9 | 7.1 | ||||||||||||||||||||
Amounts recorded in accumulated other comprehensive loss | $ | (1,892.8 | ) | $ | (1,688.7 | ) | $ | (37.7 | ) | $ | (48.4 | ) | $ | (15.8 | ) | $ | (11.9 | ) | $ | (1,946.3 | ) | $ | (1,749.0 | ) | ||||||||
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | ||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Projected benefit obligation | $ | 5,490.3 | $ | 512.3 | $ | — | $ | — | $ | 4.8 | $ | — | ||||||||||||
Accumulated benefit obligation | 4,998.3 | 440.6 | 1,024.7 | 1,074.8 | 159.3 | 143.5 | ||||||||||||||||||
Plan assets at fair value | 4,498.5 | — | 602.4 | 582.8 | — | — | ||||||||||||||||||
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | ||||||||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||||||||||||||
| In Millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||
Service cost | $ | 134.6 | $ | 137.0 | $ | 133.0 | $ | 19.0 | $ | 22.4 | $ | 22.7 | $ | 7.6 | $ | 7.5 | $ | 7.7 | ||||||||||||||||||
Interest cost | 267.8 | 249.2 | 239.5 | 44.1 | 46.9 | 50.5 | 3.9 | 4.3 | 4.1 | |||||||||||||||||||||||||||
Expected return on plan assets | (496.9 | ) | (476.4 | ) | (455.6 | ) | (46.2 | ) | (40.2 | ) | (34.6 | ) | — | — | — | |||||||||||||||||||||
Amortization of losses | 189.8 | 141.7 | 151.0 | 6.6 | 4.9 | 15.4 | 0.7 | 0.7 | 0.6 | |||||||||||||||||||||||||||
Amortization of prior service costs (credits) | 4.7 | 7.4 | 5.6 | (5.4 | ) | (1.6 | ) | (3.4 | ) | 2.5 | 2.4 | 2.4 | ||||||||||||||||||||||||
Other adjustments | 5.0 | 15.1 | — | 2.3 | 3.3 | — | 10.7 | 9.5 | 3.7 | |||||||||||||||||||||||||||
Settlement or curtailment losses | 13.1 | 18.0 | — | (1.0 | ) | 1.3 | (2.9 | ) | — | — | — | |||||||||||||||||||||||||
Net expense | $ | 118.1 | $ | 92.0 | $ | 73.5 | $ | 19.4 | $ | 37.0 | $ | 47.7 | $ | 25.4 | $ | 24.4 | $ | 18.5 | ||||||||||||||||||
We expect to recognize the following amounts in net periodic benefit
| In Millions | Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | |||||||||
Amortization of losses | $190.3 | $ 2.5 | $1.8 | |||||||||
Amortization of prior service costs (credits) | 2.5 | (5.4 | ) | 0.6 | ||||||||
(income)
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | ||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Discount rate | 4.19 | % | 4.38 | % | 3.97 | % | 4.20 | % | 2.94 | % | 3.55 | % | ||||||||||||
Rate of salary increases | 4.28 | 4.09 | — | — | 4.35 | 4.36 | ||||||||||||||||||
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | Postemployment Benefit Plans | ||||||||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||||||||||||||||||||
| 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||
Discount rate | 4.38 | % | 4.54 | % | 4.54 | % | 4.20 | % | 4.51 | % | 4.52 | % | 3.55 | % | 3.82 | % | 3.70 | % | ||||||||||||||||||
Rate of salary increases | 4.31 | 4.44 | 4.44 | — | — | — | 4.36 | 4.44 | 4.44 | |||||||||||||||||||||||||||
Expected long-term rate of return on plan assets | 8.53 | 8.53 | 8.53 | 8.14 | 8.13 | 8.11 | — | — | — | |||||||||||||||||||||||||||
| May 29, 2016 | May 31, 2015 | |||||||||||||||||||||||||||||||
| In Millions | Level 1 | Level 2 | Level 3 | Total Assets | Level 1 | Level 2 | Level 3 | Total Assets | ||||||||||||||||||||||||
Fair value measurement of pension plan assets: | ||||||||||||||||||||||||||||||||
Equity (a) | $ | 1,543.7 | $ | 943.7 | $ | 458.0 | $ | 2,945.4 | $ | 1,634.4 | $ | 1,010.3 | $ | 542.9 | $ | 3,187.6 | ||||||||||||||||
Fixed income (b) | 903.8 | 745.8 | — | 1,649.6 | 486.3 | 1,158.5 | — | 1,644.8 | ||||||||||||||||||||||||
Real asset investments (c) | 193.6 | 160.8 | 395.0 | 749.4 | 124.3 | 116.7 | 498.1 | 739.1 | ||||||||||||||||||||||||
Other investments (d) | — | — | 0.4 | 0.4 | — | — | 0.4 | 0.4 | ||||||||||||||||||||||||
Cash and accruals | 195.1 | — | — | 195.1 | 186.6 | — | — | 186.6 | ||||||||||||||||||||||||
Total fair value measurement of pension plan assets | $ | 2,836.2 | $ | 1,850.3 | $ | 853.4 | $ | 5,539.9 | $ | 2,431.6 | $ | 2,285.5 | $ | 1,041.4 | $ | 5,758.5 | ||||||||||||||||
| Fair value measurement of postretirement benefit plan assets: | ||||||||||||||||||||||||||||||||
Equity (a) | $ | 128.9 | $ | 124.1 | $ | 23.4 | $ | 276.4 | $ | 134.0 | $ | 120.6 | $ | 23.7 | $ | 278.3 | ||||||||||||||||
Fixed income (b) | 18.0 | 83.4 | — | 101.4 | 14.0 | 73.7 | — | 87.7 | ||||||||||||||||||||||||
Real asset investments (c) | — | 30.6 | 13.8 | 44.4 | 0.2 | 25.7 | 16.6 | 42.5 | ||||||||||||||||||||||||
Other investments (d) | — | 171.3 | — | 171.3 | — | 168.9 | — | 168.9 | ||||||||||||||||||||||||
Cash and accruals | 8.9 | — | — | 8.9 | 5.4 | — | — | 5.4 | ||||||||||||||||||||||||
| Fair value measurement of postretirement benefit plan assets | $ | 155.8 | $ | 409.4 | $ | 37.2 | $ | 602.4 | $ | 153.6 | $ | 388.9 | $ | 40.3 | $ | 582.8 | ||||||||||||||||
The following table is a roll forward of the Level underlying investments.
| Fiscal 2016 | ||||||||||||||||||||
| In Millions | Balance as of May 31, 2015 | Net Transfers Out | Net Purchases, Sales Issuances, and Settlements | Net Gain | Balance as of May 29, 2016 | |||||||||||||||
Pension benefit plan assets: | ||||||||||||||||||||
Equity | $ 542.9 | $ — | $ (92.6) | $ | 7.7 | $458.0 | ||||||||||||||
Real asset investments | 498.1 | — | (72.8) | (30.3 | ) | 395.0 | ||||||||||||||
Other investments | 0.4 | — | — | — | 0.4 | |||||||||||||||
Fair value activity of level 3 pension plan assets | $1,041.4 | $ — | $(165.4) | $ | (22.6 | ) | $853.4 | |||||||||||||
Postretirement benefit plan assets: | ||||||||||||||||||||
Equity | $ 23.7 | $ — | $ (1.2) | $ | 0.9 | $23.4 | ||||||||||||||
Real asset investments | 16.6 | — | (1.8) | (1.0 | ) | 13.8 | ||||||||||||||
Fair value activity of level 3 postretirement benefit plan assets | $ 40.3 | $ — | $ (3.0) | $ | (0.1 | ) | $37.2 | |||||||||||||
| Fiscal 2015 | ||||||||||||||||||||
| In Millions | Balance as of May 25, 2014 | Net Out | Net Purchases, Sales Issuances, and Settlements | Net Gain | Balance as of May 31, 2015 | |||||||||||||||
Pension benefit plan assets: | ||||||||||||||||||||
Equity | $ 568.2 | $ — | $(61.0) | $ 35.7 | $ 542.9 | |||||||||||||||
Real asset investments | 602.9 | — | (18.2) | (86.6) | 498.1 | |||||||||||||||
Other investments | 0.3 | — | 0.2 | (0.1) | 0.4 | |||||||||||||||
Fair value activity of level 3 pension plan assets | $1,171.4 | $ — | $(79.0) | $(51.0) | $1,041.4 | |||||||||||||||
Postretirement benefit plan assets: | ||||||||||||||||||||
Equity | $ 21.1 | $ — | $ 0.3 | $ 2.3 | $ 23.7 | |||||||||||||||
Real asset investments | 17.9 | — | 0.5 | (1.8) | 16.6 | |||||||||||||||
Fair value activity of level 3 postretirement benefit plan assets | $ 39.0 | $ — | $ 0.8 | $ 0.5 | $ 40.3 | |||||||||||||||
The net changepricing of certain private equity securities resulted in the transfer of $
investments.
| Defined Benefit Pension Plans | Other Postretirement Benefit Plans | |||||||||||||||
| Fiscal Year | Fiscal Year | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
Asset category: | ||||||||||||||||
United States equities | 30.5 | % | 28.9 | % | 37.2 | % | 38.7 | % | ||||||||
International equities | 19.0 | 18.4 | 23.4 | 24.1 | ||||||||||||
Private equities | 8.3 | 9.5 | 3.9 | 4.1 | ||||||||||||
Fixed income | 28.6 | 30.3 | 29.4 | 26.3 | ||||||||||||
Real assets | 13.6 | 12.9 | 6.1 | 6.8 | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| In Millions | Defined Benefit Pension Plans | Other Postretirement Benefit Plans Gross Payments | Medicare Subsidy Receipts | Postemployment Benefit Plans | ||||||||||||
2017 | $ | 277.7 | $ 61.3 | $ 4.8 | $22.1 | |||||||||||
2018 | 287.9 | 65.5 | 5.2 | 20.6 | ||||||||||||
2019 | 297.1 | 67.1 | 5.6 | 19.2 | ||||||||||||
2020 | 306.8 | 68.3 | 5.2 | 17.8 | ||||||||||||
2021 | 316.4 | 69.2 | 4.2 | 17.0 | ||||||||||||
2022-2026 | 1,731.5 | 355.2 | 23.2 | 75.6 | ||||||||||||
2021.
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Earnings before income taxes and | ||||||||||||
United States | $ | 1,941.4 | $ | 1,338.6 | $ | 2,181.4 | ||||||
Foreign | 462.2 | 423.3 | 473.6 | |||||||||
Total earnings before income taxes and | $ | 2,403.6 | $ | 1,761.9 | $ | 2,655.0 | ||||||
Income taxes: | ||||||||||||
Currently payable: | ||||||||||||
Federal | $ | 489.8 | $ | 392.7 | $ | 526.7 | ||||||
State and local | 30.8 | 29.3 | 37.8 | |||||||||
Foreign | 114.0 | 139.5 | 146.3 | |||||||||
Total current | 634.6 | 561.5 | 710.8 | |||||||||
Deferred: | ||||||||||||
Federal | 123.0 | 70.3 | 159.1 | |||||||||
State and local | (6.9 | ) | (8.7 | ) | 21.3 | |||||||
Foreign | 4.5 | (36.3 | ) | (7.9 | ) | |||||||
Total deferred | 120.6 | 25.3 | 172.5 | |||||||||
Total income taxes | $ | 755.2 | $ | 586.8 | $ | 883.3 | ||||||
| Fiscal Year | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
United States statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State and local income taxes, net of federal tax benefits | 0.7 | 0.7 | 1.4 | |||||||||
Foreign rate differences | (2.2 | ) | (3.1 | ) | (0.1 | ) | ||||||
Repatriation of foreign earnings | — | 4.5 | — | |||||||||
Non-deductible goodwill | 2.6 | — | — | |||||||||
Domestic manufacturing deduction | (2.0 | ) | (2.9 | ) | (2.3 | ) | ||||||
Other, net (a) | (2.7 | ) | (0.9 | ) | (0.7 | ) | ||||||
Effective income tax rate | 31.4 | % | 33.3 | % | 33.3 | % | ||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Accrued liabilities | $ | 89.9 | $ | 98.0 | ||||
Compensation and employee benefits | 491.5 | 536.2 | ||||||
Unrealized hedges | — | 0.8 | ||||||
Pension | 322.0 | 169.0 | ||||||
Tax credit carryforwards | 4.5 | 5.6 | ||||||
Stock, partnership, and miscellaneous investments | 353.6 | 384.1 | ||||||
Capital losses | 14.5 | 6.1 | ||||||
Net operating losses | 97.9 | 89.3 | ||||||
Other | 84.1 | 74.5 | ||||||
Gross deferred tax assets | 1,458.0 | 1,363.6 | ||||||
Valuation allowance | 227.0 | 215.4 | ||||||
Net deferred tax assets | 1,231.0 | 1,148.2 | ||||||
Brands | 1,311.7 | 1,346.3 | ||||||
Fixed assets | 476.3 | 446.5 | ||||||
Intangible assets | 221.8 | 208.4 | ||||||
Tax lease transactions | 48.0 | 50.8 | ||||||
Inventories | 53.0 | 59.7 | ||||||
Stock, partnership, and miscellaneous investments | 476.0 | 472.5 | ||||||
Unrealized hedges | 22.6 | — | ||||||
Other | 21.2 | 14.2 | ||||||
Gross deferred tax liabilities | 2,630.6 | 2,598.4 | ||||||
Net deferred tax liability | $ | 1,399.6 | $ | 1,450.2 | ||||
Of the total
We have $113.1 million of
2023.
Wewill continueto monitorlocal country withholding taxes are
recorded on earnings each year.During fiscal 2014, the IRS concluded its field examination of our federal tax returns for fiscal 2011 and 2012. The audit closure and related adjustments did not have a material impact on our results of operations
| Fiscal Year | ||||||||
| In Millions | 2016 | 2015 | ||||||
| ||||||||
Balance, beginning of year | $ | 161.1 | $ | 150.9 | ||||
Tax positions related to current year: | ||||||||
Additions | 31.6 | 34.8 | ||||||
Tax positions related to prior years: | ||||||||
Additions | 23.9 | 17.4 | ||||||
Reductions | (25.7 | ) | (21.8 | ) | ||||
Settlements | (4.0 | ) | (12.0 | ) | ||||
Lapses in statutes of limitations | (10.4 | ) | (8.2 | ) | ||||
Balance, end of year | $ | 176.5 | $ | 161.1 | ||||
2022.
The Company’s leases are generally
Some operating leases require payment
Noncancelable future lease commitments are:
In Millions |
| Operating Leases |
|
| Capital Leases |
| ||
2017 | $107.9 | $0.9 | ||||||
2018 | 83.5 | 0.7 | ||||||
2019 | 67.2 | 0.6 | ||||||
2020 | 49.6 | 0.3 | ||||||
2021 | 39.6 | 0.1 | ||||||
After 2021 | 49.8 | 0.1 | ||||||
| ||||||||
Total noncancelable future lease commitments | $397.6 | $2.7 | ||||||
| ||||||||
Less: interest | (0.2 | ) | ||||||
| ||||||||
Present value of obligations under capital leases | $2.5 | |||||||
| ||||||||
These future lease commitments will be partially offset by estimated future sublease receipts of approximately $1 million. Depreciation on capital leases is recorded as depreciation expense in our results of operations.
As of May 29, 2016, we have issued guarantees and comfort letters of $383.2 million for the debt and other obligations of
28, 2023.
In fiscal 2015, we changed how we assess operating segment performance to exclude the asset and liability remeasurement impact from hyperinflationary economies. This impact is now included in unallocated corporate items. All periods presented have been changed to conform to this presentation.
In fiscal 2015, we realigned certain operating units within our U.S. Retail operating segment. We also changed the name of our Yoplait operating unit to Yogurt and our Big G operating unit to Cereal. Frozen Foods transitioned into Meals and Baking Products. Small Planet Foods transitioned into Snacks, Cereal, and Meals. The Yogurt operating unit was unchanged. We revised the amounts previously reported in the net sales and net sales percentage change by operating unit within our U.S. Retail segment to conform to the new operating unit structure. These realignments had no effect on previously reported consolidated net sales, operating segments’ net sales, operating profit, segment operating profit, net earnings attributable to General Mills, or EPS. In addition, results from the acquired Annie’s business are included in the Meals and Snacks operating units.
Our
North America Foodservice.
snack bars.
In our Convenience Stores
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Net sales: | ||||||||||||
U.S. Retail | $ | 10,007.1 | $ | 10,507.0 | $ | 10,604.9 | ||||||
International | 4,632.2 | 5,128.2 | 5,385.9 | |||||||||
Convenience Stores and Foodservice | 1,923.8 | 1,995.1 | 1,918.8 | |||||||||
Total | $ | 16,563.1 | $ | 17,630.3 | $ | 17,909.6 | ||||||
Operating profit: | ||||||||||||
U.S. Retail | $ | 2,179.0 | $ | 2,159.3 | $ | 2,311.5 | ||||||
International | 441.6 | 522.6 | 535.1 | |||||||||
Convenience Stores and Foodservice | 378.9 | 353.1 | 307.3 | |||||||||
Total segment operating profit | 2,999.5 | 3,035.0 | 3,153.9 | |||||||||
Unallocated corporate items | 288.9 | 413.8 | 258.4 | |||||||||
Divestitures (gain) | (148.2 | ) | — | (65.5 | ) | |||||||
Restructuring, impairment, and other exit costs | 151.4 | 543.9 | 3.6 | |||||||||
Operating profit | $ | 2,707.4 | $ | 2,077.3 | $ | 2,957.4 | ||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Snacks | $ | 3,297.2 | $ | 3,392.0 | $ | 3,232.5 | ||||||
Convenient meals | 2,779.0 | 2,810.3 | 2,844.2 | |||||||||
Yogurt | 2,760.9 | 2,938.3 | 2,964.7 | |||||||||
Cereal | 2,731.5 | 2,771.3 | 2,860.1 | |||||||||
Dough | 1,820.0 | 1,877.0 | 1,890.2 | |||||||||
Baking mixes and ingredients | 1,704.3 | 1,867.7 | 1,996.4 | |||||||||
Super-premium ice cream | 731.2 | 769.5 | 756.6 | |||||||||
Vegetables | 532.3 | 937.3 | 1,014.7 | |||||||||
Other | 206.7 | 266.9 | 350.2 | |||||||||
Total | $ | 16,563.1 | $ | 17,630.3 | $ | 17,909.6 | ||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Net sales: | ||||||||||||
United States | $ | 11,930.9 | $ | 12,501.8 | $ | 12,523.0 | ||||||
Non-United States | 4,632.2 | 5,128.5 | 5,386.6 | |||||||||
Total | $ | 16,563.1 | $ | 17,630.3 | $ | 17,909.6 | ||||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Cash and cash equivalents: | ||||||||
United States | $ | 118.5 | $ | 22.9 | ||||
Non-United States | 645.2 | 311.3 | ||||||
Total | $ | 763.7 | $ | 334.2 | ||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Land, buildings, and equipment: | ||||||||
United States | $ | 2,755.1 | $ | 2,727.5 | ||||
Non-United States | 988.5 | 1,055.8 | ||||||
Total | $ | 3,743.6 | $ | 3,783.3 | ||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Receivables: | ||||||||
Customers | $ | 1,390.4 | $ | 1,412.0 | ||||
Less allowance for doubtful accounts | (29.6 | ) | (25.3 | ) | ||||
Total | $ | 1,360.8 | $ | 1,386.7 | ||||
Inventories: Raw materials and packaging Finished goods Grain Excess of FIFO over LIFO cost (a) TotalIn Millions May 29,
2016 May 31,
2015 $ 397.3 $ 390.8 1,163.1 1,268.6 72.6 95.7 (219.3 ) (214.2 ) $ 1,413.7 $ 1,540.9
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Prepaid expenses and other current assets: | ||||||||
Other receivables | $ | 159.3 | $ | 148.8 | ||||
Prepaid expenses | 177.9 | 169.3 | ||||||
Derivative receivables, primarily commodity-related | 44.6 | 80.9 | ||||||
Grain contracts | 1.8 | 3.3 | ||||||
Miscellaneous | 15.4 | 21.5 | ||||||
Total | $ | 399.0 | $ | 423.8 | ||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Land, buildings, and equipment: | ||||||||
Land | $ | 92.9 | $ | 96.0 | ||||
Buildings | 2,236.0 | 2,272.7 | ||||||
Buildings under capital lease | 0.3 | 0.3 | ||||||
Equipment | 5,945.6 | 6,091.1 | ||||||
Equipment under capital lease | 3.0 | 9.8 | ||||||
Capitalized software | 523.0 | 499.0 | ||||||
Construction in progress | 702.7 | 622.2 | ||||||
Total land, buildings, and equipment | 9,503.5 | 9,591.1 | ||||||
Less accumulated depreciation | (5,759.9 | ) | (5,807.8 | ) | ||||
Total | $ | 3,743.6 | $ | 3,783.3 | ||||
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Other assets: | ||||||||
Investments in and advances to joint ventures | $ | 518.9 | $ | 530.6 | ||||
Pension assets | 90.9 | 138.2 | ||||||
Exchangeable note with related party | 12.7 | 30.7 | ||||||
Life insurance | 26.3 | 26.6 | ||||||
Miscellaneous | 102.9 | 85.1 | ||||||
Total | $ | 751.7 | $ | 811.2 | ||||
Other current liabilities: Accrued trade and consumer promotions Accrued payroll Dividends payable Accrued taxes Accrued interest, including interest rate swaps Grain contracts Restructuring and other exit costs reserve Derivative payable Miscellaneous TotalIn Millions May 29,
2016 May 31,
2015 $ 563.7 $ 564.7 386.4 361.8 23.8 27.9 110.5 20.7 90.4 91.8 5.5 7.8 76.6 120.8 35.6 122.9 302.5 271.5 $ 1,595.0 $ 1,589.9
| In Millions | May 29, 2016 | May 31, 2015 | ||||||
Other noncurrent liabilities: | ||||||||
Accrued compensation and benefits, including obligations for underfunded other postretirement benefit and postemployment benefit plans | $ | 1,755.0 | $ | 1,451.4 | ||||
Accrued taxes | 204.0 | 202.5 | ||||||
Miscellaneous | 128.6 | 90.9 | ||||||
Total | $ | 2,087.6 | $ | 1,744.8 | ||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Depreciation and amortization | $ | 608.1 | $ | 588.3 | $ | 585.4 | ||||||
Research and development expense | 222.1 | 229.4 | 243.6 | |||||||||
Advertising and media expense (including production and communication costs) | 754.4 | 823.1 | 869.5 | |||||||||
| Fiscal Year | ||||||||||||
| Expense (Income), in Millions | 2016 | 2015 | 2014 | |||||||||
Interest expense | $ | 319.6 | $ | 335.5 | $ | 323.4 | ||||||
Capitalized interest | (7.7 | ) | (6.9 | ) | (4.9 | ) | ||||||
Interest income | (8.1 | ) | (13.2 | ) | (16.1 | ) | ||||||
Interest, net | $ | 303.8 | $ | 315.4 | $ | 302.4 | ||||||
| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Cash interest payments | $ | 292.0 | $ | 305.3 | $ | 288.3 | ||||||
Cash paid for income taxes | 533.8 | 562.6 | 757.2 | |||||||||
In Millions, Except Per Share Amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||||||||||||||||
| Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | |||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
Net sales | $ | 4,207.9 | $ | 4,268.4 | $ | 4,424.9 | $ | 4,712.2 | $ | 4,002.4 | $ | 4,350.9 | $ | 3,927.9 | $ | 4,298.8 | ||||||||||||||||
Gross margin | 1,554.6 | 1,438.7 | 1,540.6 | 1,619.1 | 1,357.5 | 1,375.9 | 1,376.8 | 1,515.5 | ||||||||||||||||||||||||
Net earnings attributable to General Mills | 426.6 | 345.2 | 529.5 | 346.1 | 361.7 | 343.2 | 379.6 | 186.8 | ||||||||||||||||||||||||
EPS: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.71 | $ | 0.56 | $ | 0.88 | $ | 0.58 | $ | 0.61 | $ | 0.57 | $ | 0.63 | $ | 0.31 | ||||||||||||||||
Diluted | $ | 0.69 | $ | 0.55 | $ | 0.87 | $ | 0.56 | $ | 0.59 | $ | 0.56 | $ | 0.62 | $ | 0.30 | ||||||||||||||||
Dividends per share | $ | 0.44 | $ | 0.41 | $ | 0.44 | $ | 0.41 | $ | 0.44 | $ | 0.41 | $ | 0.46 | $ | 0.44 | ||||||||||||||||
Market price of common stock: | ||||||||||||||||||||||||||||||||
High | $ | 59.55 | $ | 55.56 | $ | 59.23 | $ | 53.82 | $ | 60.14 | $ | 55.11 | $ | 65.36 | $ | 57.14 | ||||||||||||||||
Low | $ | 54.36 | $ | 50.15 | $ | 55.41 | $ | 48.86 | $ | 54.12 | $ | 51.13 | $ | 58.85 | $ | 51.70 | ||||||||||||||||
During
The effective tax rate foran additional
During
During
Glossary
Accelerated depreciation associated with restructured assets.The increase in depreciation expense caused by updating
AOCI.
items affecting year-to-yearcomparability.
Adjusted return on average total capital.Net earnings including earnings attributable to redeemable and noncontrolling interests, excluding after-tax net interest, and adjusted for certain items affecting year-over-year comparability, divided by adjusted average total capital.
Average total capital.Notes payable, long-term debt including current portion, redeemable interest, noncontrolling interests, and stockholders’ equity are used to calculate return on average total capital. The average is calculated using the average of the beginning of fiscal year and end of fiscal year Consolidated Balance Sheet amounts for these line items.
Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2:Observable inputsother than quotedprices included inLevel 1, suchas quoted pricesfor similar assetsor liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3:Unobservable inputs reflecting management’sassumptions about |
Fixed charge coverage ratio.The sum of earnings before income taxes and fixed charges (before tax), divided by the sum ofinputs used in pricing the fixed charges (before tax) and interest.
asset or liability.
equipment.
price realization
calculated.
activities.
Return
Segment operating profit margin.Segment operating profit divided by net sales for the segment.
SKU. Shop keeping unit.
promotion optimization across each of our businesses.
Variable interest entities (VIEs).A legal structure that is used for business purposes that either (1) does not have equity investors that have voting rights and share in all the entity’s profits and losses or (2) has equity investors that do not provide sufficient financial resources to support the entity’s activities.
28, 2023.
28, 2023
Information regarding
Conduct
isavailableonourwebsiteathttps://www.generalmills.com.We have adopted a Code
The information contained in the section entitled “Ownership of General Mills Common Stock by Directors, Officers
The information set forth in the sections entitled “Board Independence and Accountability” and “Certain Relationships and Related Transactions” contained in our definitive Proxy Statement for our 2016 Annual Meeting of Shareholders is incorporated herein by reference.
The information contained in the section entitled “Independent Registered Public Accounting Firm Fees” in our definitive Proxy Statement for our 2016 Annual Meeting of Shareholders is incorporated herein by reference.
Schedules
30, 2021.
29, 2022.
30, 2021.
30, 2021.
PCAOB ID:
II – Valuation 29, 2005).
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| Fiscal Year | ||||||||||||
| In Millions | 2016 | 2015 | 2014 | |||||||||
Allowance for doubtful accounts: | ||||||||||||
Balance at beginning of year | $ 25.3 | $ 21.0 | $ 19.9 | |||||||||
Additions charged to expense | 21.4 | 19.8 | 12.5 | |||||||||
Bad debt write-offs | (17.5 | ) | (12.5 | ) | (11.6 | ) | ||||||
Other adjustments and reclassifications | 0.4 | (3.0 | ) | 0.2 | ||||||||
Balance at end of year | $ 29.6 | $ 25.3 | $ 21.0 | |||||||||
Valuation allowance for deferred tax assets: | ||||||||||||
Balance at beginning of year | $ 215.4 | $221.6 | $232.8 | |||||||||
Additions charged to expense | (1.5 | ) | 2.9 | 0.1 | ||||||||
Adjustments due to acquisitions, translation of amounts, and other | 13.1 | (9.1 | ) | (11.3 | ) | |||||||
Balance at end of year | $ 227.0 | $215.4 | $221.6 | |||||||||
Reserve for restructuring and other exit charges: | ||||||||||||
Balance at beginning of year | $ 120.8 | $ 3.5 | $ 19.5 | |||||||||
Additions charged to expense, including translation amounts | 70.2 | 185.1 | 6.4 | |||||||||
Net amounts utilized for restructuring activities | (114.4 | ) | (67.8 | ) | (22.4 | ) | ||||||
Balance at end of year | $ 76.6 | $120.8 | $ 3.5 | |||||||||
Reserve for LIFO valuation: | ||||||||||||
Balance at beginning of year | $ 214.2 | $216.9 | $221.8 | |||||||||
Increase (decrease) | 5.1 | (2.7 | ) | (4.9 | ) | |||||||
Balance at end of year | $ 219.3 | $214.2 | $216.9 | |||||||||
Exhibit Index
|
| |
114