UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM
10-K

R

☑
ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE FISCAL YEAR ENDED May 30, 2021

£

MAY 28, 2023
☐
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________

Commission file number:
001-01185

________________

GENERAL MILLS, INC.

(Exact name of registrant as specified in its charter)

Delaware

41-0274440

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Number One General Mills Boulevard

Minneapolis, Minnesota

55426

(Address of principal executive offices)

(Zip Code)

Delaware
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600

(Registrant’s telephone number,
including area code)

Securities registered pursuant to Section 12(b)
of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common Stock, $.10 par value

GIS

New York Stock Exchange

1.000% Notes due 2023

GIS23A

New York Stock Exchange

0.450% Notes due 2026

GIS26

New York Stock Exchange

1.500% Notes due 2027

GIS27

New York Stock Exchange

Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, $.10 par value
GIS
New York Stock Exchange
0.125% Notes due 2025
GIS25A
New York Stock Exchange
0.450% Notes due 2026
GIS26
New York Stock Exchange
1.500% Notes due 2027
GIS27
New York Stock Exchange
3.907% Notes due 2029
GIS29
New York Stock Exchange
Securities registered pursuant to Section 12(g)
of the Act: None

Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
YesR
☑
No£

☐
Indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act. Yes£
☐
NoR

☑
Indicate
by
check
mark
whether
the
registrant
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange Act of 1934
during the preceding 12
months (or for such shorter
period that the registrant
was required to file
such reports),
and (2) has been subject to such filing requirements for the past 90 days.

YesR
☑
No£

☐
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
every
Interactive
Data
File
required
to
be
submitted
pursuant to Rule
405 of Regulation
S-T during
the preceding 12
months (or for
such shorter period
that the registrant
was required
to
submit such files).
YesR
☑
No£

☐
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
a
smaller
reporting
company,
or
an
emerging
growth
company.
See
the
definitions
of “large
“large
accelerated
filer,” “accelerated
“accelerated
filer,” “smaller
“smaller
reporting company,” and “emerging
“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer R

Accelerated filer £

Non-accelerated filer £

Smaller reporting company £

Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company£

☐

If

an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.£

☐
Indicate by check mark
whether the registrant has filed
a report on and
attestation to its management’s
assessment of the effectiveness
of its
internal control
over financial
reporting under
Section 404(b)
of the
Sarbanes-Oxley Act (15
(15 U.S.C.
7262(b)) by
the registered
public accounting firm that prepared or issued its audit report.R

☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check
mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously
issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based
compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant
to § 240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).

Yes£
☐
NoR

☑
Aggregate
market value
of Common
Stock held
by non-affiliates
of the
registrant, based
on the
closing price
of $60.13 $82.97
per share
as
reported on
the New
York
Stock Exchange
on November 29, 2020 (the
27, 2022
(the last
business day
of the
registrant’s
most recently
completed
second fiscal quarter): $36,765.2 $
48,920
million.

Number
of
shares
of
Common
Stock
outstanding
as
of
June 15, 2021: 607,210,408 (excluding 147,402,920
14,
2023:
585,182,745
(excluding
169,430,583
shares
held
in
the
treasury).

DOCUMENTS INCORPORATED
BY REFERENCE

Portions of the registrant’s Proxy
Statement for its 20212023 Annual Meeting of Shareholders are incorporated by reference
into Part III.

3

Table of Contents

Page
Part I
Item 1
4
Item 1A
8
Item 1B
13
Item 2
13
Item 3
14
Item 4
14
Part II
Item 5

3

 

Matters and Issuer Purchases of

PART I

ITEM 1 - Business

COMPANY OVERVIEW

We are a leading global manufacturer and marketer of branded consumer foods sold through retail stores. We also are a leading supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. We are also a leading manufacturer and marketer in the wholesome natural pet food category. We manufacture our products in 13 countries and market them in more than 100 countries. In addition to our consolidated operations, we have 50 percent interests in two strategic joint ventures that manufacture and market food products sold in more than 120 countries worldwide.

We manage and review the financial results of our business under five operating segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. See

14
Item 7
15
Item 7A
37
Item 8
39
Item 9
88
Item 9A
89
Item 9B
89
Item 9C
89
Part III
Item 10
89
Item 11
89
Item 12
90
Item 13
90
Item 14
90
Part IV
Item 15
91
Item 16
94
95
4
PART
I
ITEM 1 - Business
COMPANY OVERVIEW
For more than
150 years, General
Mills has been making
food the world
loves. We
are a leading
global manufacturer and
marketer of
branded consumer
foods with more
than 100 brands
in 100 countries
across six continents.
In addition to
our consolidated operations,
we
have
50
percent
interests
in
two
strategic
joint
ventures
that
manufacture
and
market
food
products
sold
in
approximately
130
countries worldwide.
We
manage and
review the
financial results
of our
business under
four operating
segments: North
America Retail;
International; Pet;
and
North
America
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.

We offer
a variety of human and pet food products that provide great
taste, nutrition, convenience, and value for consumers around
the
world. Our business is focused on the following large, global categories:

●
snacks, including grain, fruit and savory snacks, nutrition bars, and
frozen hot snacks;

●
ready-to-eat cereal;

●
convenient meals, including meal kits, ethnic meals, pizza, soup, side dish mixes,
frozen breakfast, and frozen entrees;

yogurt;

●
wholesome natural pet food;

super-premium ice cream;

●
refrigerated and frozen dough;
●
baking mixes and ingredients;
●
yogurt; and

refrigerated and frozen dough.

●
super-premium ice cream.
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, please see Note 17
to the Consolidated Financial
Statements in Item
8 of this report.

The terms “General
“General Mills,” “Company,
“Company,” “registrant,
“registrant,” “we,” “us,
“us,” and “our”
“our” mean
General Mills, Inc.
and all
subsidiaries included
in
the Consolidated Financial Statements in Item 8 of this report unless the context
indicates otherwise.

Certain terms used throughout this report are defined in a glossary 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
retailers, commercial
and noncommercial
foodservice distributors
and operators,
restaurants, convenience
stores,
and
pet
specialty
stores.
We
generally
sell
to
these
customers
through
our
direct
sales
force.
We
use
broker
and
distribution
arrangements for certain products and to serve certain
types of customers and certain markets. For further
information on our customer
credit
and
product
return practices,
please
refer
to Note
2
to the
Consolidated
Financial Statements
in
Item 8
of this
report.
During
fiscal 2021, 2023,
Walmart Inc.
and its affiliates (Walmart)
accounted for 2021 percent of our consolidated
net sales and 2928 percent of net sales
of our
North America
Retail segment.
No other
customer accounted
for 10
percent or
more of
our consolidated
net sales.
For further
information on significant customers, please refer to Note 8 to the Consolidated
Financial Statements in Item 8 of this report.

Competition

The packaged
human
and
pet
food
categories
are
highly
competitive,
with
numerous
manufacturers
of
varying
sizes in
the
United
States and
throughout the
world. The categories
in which
we participate
also are
very competitive.
Our principal
competitors in
these categories
are manufacturers, as
well as retailers with
their own branded
products. Competitors market
and sell their products
through brick-and-mortarbrick-and-
mortar stores
and e-commerce.
All of our
principal competitors
have substantial
financial, marketing,
and other
resources. Competition
in
our
product
categories
is
based
on
product
innovation,
product
quality,
price,
brand
recognition
and
loyalty,
effectiveness
of
marketing,
promotional
activity,
convenient
ordering
and
delivery
to
the consumer,
and the
ability
to
identify
and
satisfy
consumer
preferences.
Our
principal
strategies
for
competing
in
each
of
our
segments
include
unique
consumer
insights,
effective
customer
relationships, superior
product categories is based on quality,
innovative advertising,
product promotion,
product innovation product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, convenient ordering and delivery to the consumer, and the ability to identify and satisfy consumer preferences. Our principal strategies for competing in each of our segments include unique consumer insights, effective customer relationships, superior product quality, innovative advertising, product promotion, product innovation
aligned with consumers’
needs,
an efficient
supply chain, and
price. In most
product categories, we
compete not only
with other widely
advertised, branded
products,
but also
with regional
brands and
with generic
and private
label products
that are
generally sold
at lower
prices. Internationally,
we
compete with both multi-national and local manufacturers, and each
country includes a unique group of competitors.

4

5

Raw materials, ingredients, and packaging

The
principal
raw
materials
that
we
use
are
grains (wheat,
(wheat,
oats,
and
corn),
dairy
products,
meat,
vegetable
oils,
sugar,
vegetables,
fruits, vegetable oils, meats,
nuts, vegetables,
and
other
agricultural
products.
We
also
use
substantial
quantities
of
carton
board,
corrugated,
plastic,
and
metal
packaging
materials,
operating
supplies,
and
energy.
Most
of
these
inputs
for
our
domestic
and
Canadian
operations
are
purchased
from suppliers
in the
United States. In
our other
international operations,
inputs that
are not locally
available in
adequate supply
may
be imported
from other
countries. The
cost of
these inputs
may fluctuate
widely due
to external
conditions such
as weather,
climate
change,
product
scarcity,
limited
sources
of
supply,
commodity
market
fluctuations,
currency
fluctuations,
trade
tariffs,
pandemics, (including the COVID-19 pandemic),
war,
and
changes
in
governmental
agricultural
and
energy
policies
and
regulations.
We have some long-term fixed price contracts, but the majority of our inputs are purchased on the open market. We
believe
that
we
will
be
able
to
obtain
an
adequate supply
of needed
inputs. Occasionally
and where
possible, we
make advance
purchases of
items significant
to our
business
in order to ensure continuity of operations. Our objective
is to procure materials meeting both our quality standards and our
production
needs
at
price
levels
that
allow
a
targeted
profit
margin.
Since
these
inputs
generally
represent
the
largest
variable
cost
in
manufacturing our products, to the extent possible, we
often manage the risk associated with adverse
price movements for some inputs
using a
variety of
risk management
strategies. We
also have
a grain
merchandising operation
that provides
us efficient
access to,
and
more informed
knowledge of,
various commodity
markets, principally
wheat and
oats. This
operation holds
physical inventories
that
are carried at net realizable value and uses derivatives to manage its net inventory
position and minimize its market exposures.

TRADEMARKS AND PATENTS

Our
products
are
marketed
under
a
variety
of
valuable
trademarks.
Some
of
the
more
important
trademarks
used
in
our
global
operations (set
(set
forth
in
italics
in
this
report)
include
Annie’s
,
Betty
Crocker
,
Bisquick
,
Blue
Buffalo
,
Blue
Basics
,
Blue
Freedom
,
Bugles
,
Cascadian
Farm
,
Cheerios
,
Chex
,
Cinnamon Toast
Crunch
,
Cocoa Puffs
,
Cookie Crisp
,
EPIC
,
Fiber One
,Food Should Taste Good,
Fruit by
the Foot
,
Fruit
Gushers
,
Fruit
Roll-Ups
,
Gardetto's
,Go-Gurt
Gold
Medal
,Gold Medal
Golden
Grahams
,Golden Grahams,
Häagen-Dazs
,Helpers
Kitano
,Jus-Rol
Kix
,Kitano, Kix,
Lärabar
,
Latina
,Liberté
Lucky
Charms
,Lucky Charms,
Muir Glen
,
Nature
Valley
,
Nudges, Oatmeal
Crisp
,
Old El
Paso
,Oui
Pillsbury
, Pillsbury
Progresso
,Progresso,
Raisin Nut
Bran
,
Total
,
Top
Chews
Naturals,
Totino’s
,
Trix
,
True
Chews,
Wanchai
Ferry
,
Wheaties
,
Wilderness
,
and
Yoki, and Yoplait
.
We
protect
these marks
trademarks
as
appropriate
through registrations in the
United States and other jurisdictions.
Depending on the jurisdiction,
trademarks are generally valid
as long
as they are in use
or their registrations are properly
maintained and they have
not been found to have
become generic. Registrations of
trademarks can also generally be renewed indefinitely for
as long as the trademarks are in use.

Some
of
our
products
are
marketed
under
or
in
combination
with
trademarks
that
have
been
licensed
from
others
for
both
long-
standing
products
(e.g.,
Reese’s
Puffs
for
cereal,
Green
Giant
for vegetables
in combination with trademarks that have been licensed from otherscertain
countries, and
Yoplait
and related
brands for both long-standing
fresh dairy
in the
United States
and Canada),
and shorter
term promotional
products (e.g.,Reese’s Puffs for cereal, Green Giant for vegetables in certain countries, and Cinnabon for refrigerated dough, frozen pastries, and baking products) and shorter term promotional products (e.g.,
fruit snacks
sold under
various third
party
equities).

Our cereal
trademarks
are licensed
to CPW
and
may be
used in
association
with the
Nestlé
trademark.
Nestlé licenses
certain
of its
trademarks
to
CPW,
including
the
Nestlé
and
Uncle
Toby’s
trademarks.
The
Häagen-Dazs
trademark
is
licensed
royalty-free
and
exclusively
to
Nestlé
and
authorized
sublicensees
for
ice
cream
and
other
frozen dessert
products
in
the
United
States and
Canada.
The
Häagen-Dazs
trademark is licensed royalty-free and exclusively to Nestlé and authorized sublicensees for ice cream and other frozen dessert products in the United States and Canada. The Häagen-Dazs trademark is
also licensed
to HDJ
in Japan.
The
Pillsbury
brand and
the
Pillsbury Doughboy
character are
subject
to an exclusive, royalty-free
license that was granted to
a third party and its successors
in the dessert mix and
baking mix categories in
the United States and under limited circumstances in Canada and Mexico.

The Yoplait trademark

We
continue
our
focus
on
developing
and other related trademarks are owned by Yoplait Marques SNC, an entity in
marketing
innovative,
proprietary
products,
many
of
which we own a 50 percent interest. The Liberté trademark and other related trademarks are owned by Liberté Marques Sárl, an entity in which we own a 50 percent interest.These marks are licensed exclusively to Yoplait SAS, an entity in which we own a 51 percent interest. Yoplait SAS licenses these trademarks to its franchisees, including General Mills in the United States.

We continue our focus on developing and marketing innovative,

use
proprietary products, many of which use proprietary
expertise,
recipes and formulations. We
consider the collective rights under our various patents, which
expire from time to time, a valuable asset,
but we do not believe that our businesses are materially dependent upon any
single patent or group of related patents.

SEASONALITY

In
general,
demand
for
our
products
is
evenly
balanced
throughout
the
year.
However,
within
our
North
America
Retail
segment
demand
for
refrigerated
dough,
frozen
baked
goods,
and
baking
products
is
stronger
in
the
fourth
calendar
quarter.
Demand
for
Progresso
soup is higher
during the
fall and winter
months. Internationally, within Within
our Europe & Australia and Asia & Latin America segments,International
segment, demand
for
Häagen-Dazs
ice cream is
higher during
the summer
months and
demand for
baking mix and dough products
increases during
winter months.
Due to
the offsetting
impact of
these
demand
trends,
as well
as the
different
seasons
in
the
northern
and
southern
hemispheres,
our international segments’
International
segment’s
net
sales are
generally evenly balanced throughout the year.

5

QUALITY AND SAFETY REGULATION

The
manufacture
and
sale
of consumer
human
and
pet
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,
Occupational
Safety
and
Health
Administration,
and
Environmental
Protection
Agency,
as
well
as
various
federal,
state,
and
local
agencies
relating
to
the
production,
packaging,
labelling,
marketing,
storage,
distribution, quality,
and safety of food
and pet products and
the health and safety
of our employees.
Our business is also
regulated by
similar agencies outside of the United States.

6
ENVIRONMENTAL
MATTERS

As
of
May 30, 2021,
28,
2023,
we
were
involved
with
two
response
actions
associated
with
the
alleged
or
threatened
release
of
hazardous
substances or wastes located in Minneapolis, Minnesota and Moonachie, New
Jersey.

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
results of our
environmental proceedings
nor our compliance
in
general
with
environmental
laws
or
regulations
will
have
a
material
adverse
effect
upon
our
capital
expenditures,
earnings,
or
competitive position.

HUMAN CAPITAL MANAGEMENT

Recruiting, developing, engaging, and protecting our
workforce is critical to executing our strategy and achieving
business success. As
of
May 30, 2021,
28,
2023,
we
had
approximately
34,000
employees
around
the
globe,
with
approximately
16,000
in
the
U.S.
and
approximately 35,000 employees around the globe, with approximately 15,000 in the U.S. and approximately 20,000 18,000
located in our
markets outside
of the U.S.
Our workforce
is divided
between approximately
13,000 employees
dedicated to the production of our various products and approximately 22,00021,
000 non-production employees.

The
efficient
production
of
high-quality
products
and
successful
execution
of
our
strategy
requires
a
talented,
skilled,
and
engaged
team of employees. We
work to equip our employees with
critical skills and expand their contributions
over time by providing a range
of training and career
development opportunities, including
hands-on experiences via
challenging work assignments and
job rotations,
coaching
and mentoring
opportunities, and
training programs.
To
foster employee
engagement and
commitment, we
follow a
robust
process
to
listen
to
employees,
take
action,
and
measure
our
progress
with
on-going
employee
conversations,
transparent
communications, and employee engagement surveys.

We
believe that
fostering a culture
of inclusion and
belonging strengthens
our ability to
recruit talent and
allows all of
our employees
to thrive
and succeed.
We
actively cultivate
a culture
that acknowledges,
respects, and
values all
dimensions of
diversity –
including
gender, race,
sexual orientation, ability,
backgrounds, and
beliefs. Ensuring
diversity of input
and perspectives
is core to
our business
strategy,
and
we
are
committed
to
recruiting,
retaining,
developing,
and
advancing
a
workforce
that
reflects
the
diversity
of
the
consumers we
serve. This
commitment starts
with our
company leadership
where women
represent approximately 41
47 percent
of our
officer
and
director
population,
and
approximately 19
22
percent
of
our
officers
and
directors
are
racially
or
ethnically
diverse.
We
embed our culture of inclusion and
belonging into our day-to-day ways
of working through a number of programs
to foster discussion,
build empathy, and
increase understanding.

We
are
committed
to
maintaining
a
safe
and
secure
workplace
for
our
employees.
We
set
specific
safety
standards
to
identify
and
manage critical risks.
We
use global safety
management systems and
employee training to
ensure consistent implementation
of safety
protocols and
accurate measurement
and tracking of
incidents. To
provide a safe
and secure working
environment for our
employees,
we prohibit workplace
discrimination, and
we do not
tolerate abusive conduct
or harassment. Our
attention to the
health and safety
of
our workforce extends to the workers and communities in our supply chain.
We believe that respect
for human rights is fundamental to
our strategy and to our commitment to ethical business conduct.

During the COVID-19 pandemic, we implemented an enterprise-wide response to ensure employee safety. In our manufacturing facilities, we enacted social distancing protocols, temperature checks, enhanced sanitation, mask use, and other protective equipment and practices. Our layered protections, combined with robust contact tracing and exclusion protocols, enabled the continued operation of our manufacturing and distribution facilities without significant disruption. During the pandemic, our office staff shifted primarily to working remotely as dictated by local conditions.

6

INFORMATION ABOUT

OUR EXECUTIVE OFFICERS

The section below provides information regarding our executive officers
as of July 1, 2021.

Richard C. Allendorf, age 60, is General Counsel 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 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.

Jodi Benson, age 56, is Chief Innovation, Technology and Quality Officer. Ms. Benson joined General Mills in 2001 from The Pillsbury Company. She held a variety of positions before becoming the leader of our One Global Dairy Platform from 2011 to March 2016. She was named Vice President for our International business segment from April 2016 to March 2017, and Vice President of the Global Innovation, Technology, and Quality Capabilities Group from April 2017 to July 2018. She was named to her current position in August 2018.

June 28, 2023.

Kofi A. Bruce
, age 51,53, is Chief Financial
Officer. Mr.
Bruce joined General Mills in 2009 as
Vice President,
Treasurer after serving
in
a
variety
of
senior
management
positions
with
Ecolab
and
Ford
Motor
Company.
He
served
as
Treasurer
until
2010
when
he
was
named Vice
President, Finance for
Yoplait.
Mr. Bruce
reassumed his role
as Vice
President, Treasurer
from 2012 until
2014 when
he
was named
Vice
President, Finance
for Convenience
Stores &
Foodservice. He
was named
Vice
President, Controller
in August 2017,
Vice
President, Financial Operations in September 2019, and to his present position
in February 2020.

John R. Church

Paul J. Gallagher
,
age
55, is Chief Transformation & Enterprise Services Officer. Mr. Church joined General Mills in 1988 as a Product Developer in the Big G cereals division and held various positions before becoming Vice President, Engineering in 2003. In 2005, his role was expanded to include development of the Company’s strategy for the global sourcing of raw materials and manufacturing capabilities. He was named Vice President, Supply Chain Operations in 2007, Senior Vice President, Supply Chain in 2008, Executive Vice President, Supply Chain in 2013, Chief Supply Chain and Global Business Solutions Officer in June 2017, and to his present position in July 2021.

Paul J. Gallagher, age53, is Chief

Supply Chain Officer.
Mr.
Gallagher joined General
Mills in April
2019 as Vice
President, North
America
Supply Chain from Diageo plc. He began his career at Diageo
where he spent 25 years serving in a variety of leadership
roles
in manufacturing,
procurement, planning,
customer service,
and engineering
before becoming
President, North
America Supply
from
2013 to March 2019. He was named to his current position in July 2021.

Jeffrey L.
Harmening
, age 54,
56, is
Chairman of
the Board
and Chief
Executive Officer.
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
named
Vice
President,
7
Marketing
for
CPW
in
2003
and
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
2012. Mr.
Harmening returned from CPW
in 2014 and was
named Executive Vice
President, Chief Operating Officer,
U.S. Retail. He
became
President,
Chief
Operating
Officer
in July 2016.
He
was named
Chief
Executive
Officer
in June
2017
and
Chairman
of the
Board
in January
2018. Mr. Harmening is a director of
The Toro Company.

Dana
M.
McNabb
,
age 45,
47,
is
Chief
Strategy
&
Growth
Officer.
Ms.
McNabb
joined
General
Mills
in
1999
and
held
a
variety
of
marketing roles
in Cereal,
Snacks, Meals,
and New
Products before
becoming Vice
President, Marketing
for CPW
in 2011
and Vice
President, Marketing
for the Circle
of Champions
Business Unit
in 2015. She
became President,
U.S. Cereal
Operating Unit
in December 2016,
Group President, Europe & Australia in January 2020, and was named to her present
position in July 2021.

Jaime
Montemayor
,
age 57,
59,
is
Chief
Digital
and
Technology
Officer.
He
spent
21
years
at
PepsiCo,
Inc.,
serving
in
roles
of
increasing
responsibility,
including
most
recently
as
Senior
Vice
President
and
Chief
Information
Officer
of
PepsiCo’s
Americas
Foods segment
from 2013
to 2015, and
Senior Vice
President and
Chief Information
Officer,
Digital Innovation,
Data and Analytics,
PepsiCo from
2015 to
2016. Mr.
Montemayor served
as Chief
Technology
Officer of
7-Eleven Inc. from April 2017 until October
in 2017.
He assumed
his current
role in February 2020 after founding and operating a digital technology
consulting company from November 2017 until January 2020.

2020.

Jon J. Nudi
, age 51, 53,
is Group President,
North America
Retail. Mr.
Nudi joined
General Mills in
1993 as
a Sales Representative
and
held a
variety of
roles in
Consumer Foods
Sales. In
2005, he
moved into
marketing roles
in the
Meals division
and was
elected Vice
President
in
2007.
Mr.
Nudi
was
named
Vice
President;
President,
Snacks,
in
2010,
Senior
Vice
President,
President,
Europe/Australasia in 2014, and Senior Vice
President; President, U.S. Retail in September 2016. He was named to his present position in January
2017.

7

Shawn
P.

O’Grady

Shawn P. ,

age
59,
is
Group
President,
North
America
Foodservice.
Mr.
O’Grady, age 57, is Group
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 Convenience Stores & Foodservice. Mr. O’Grady joined General Mills
in 1990
1998
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, Senior Vice
President, President, Consumer Foods
Sales Division in 2010, and Senior
Vice
President,
President,
Sales &
Channel
Development
in 2012.
2012,
and
Group
President,
Convenience
Stores
&
Foodservice
in
2017.
He
was named to his current position in January 2017.

December 2021.

Mark A. Pallot,
age 48, 50,
is Vice
President, Chief
Accounting Officer.
Mr.
Pallot joined
General Mills in
2007 and
served as
Director,
Financial
Reporting
until August
2017,
when
he was
named
Vice
President,
Assistant
Controller.
He
was elected
to
his
present
position
in
February
2020.
Prior
to
joining
General
Mills,
Mr.
Pallot
held
accounting
and
financial
reporting
positions
at
Residential
Capital,
LLC, Metris, Inc., CIT Group Inc., and Ernst & Young, LLP.

LL
P.
Bethany
Quam
,
age 50,
52,
is
Group
President,
Pet.
Ms.
Quam
joined
General
Mills
in
1993
and
held
a
variety
of
positions
before
becoming
Vice
President,
Strategic
Planning
in
2007.
She
was
promoted
to
Vice
President,
Field
Sales,
Channels
in
2012,
Vice
President; President,
Convenience Stores
& Foodservice
in 2014,
and Senior
Vice
President; President,
Europe
& Australia
in August 2016,
and Group President; Europe & Australia in January 2017. She was named
to her current position in October
2019.

Sean Walker

Lanette Shaffer Werner
,age 55,52, is Group President, Asia & Latin America Chief Innovation, Technical
and Europe & Australia. Mr. Walker Quality Officer.
Ms. Shaffer Werner
joined General Mills in 1989 1995
and held a varietyvarious R&D roles
in Frozen Desserts and
Pillsbury before serving
as Director of positions before becomingOne Global
Dairy and Sr.
Director for One
Global Cereal.
In July
2021, Ms.
Shaffer
Werner
was named
as Vice
President, President of Latin America in 2009. HeInnovation,
Technical
and Quality,
Meals &
Baking
Solutions.
She was named to her present position in June 2023.
Sean
Walker
,
age
57,
is
Group
President,
International.
Mr.
Walker
joined
General
Mills
in
1989
and
held
a
variety
of
positions
before becoming
Vice
President, President
of Latin
America in
2009. He
was named
Senior Vice
President, President
Latin America
in 2012,
Senior Vice
President, Corporate
Strategy
in September 2016,
and Group
President,
Asia &
Latin America
in February
2019.
He was
named to his current position in July 2021.

Jacqueline
Williams-Roll
,
age 52,
54,
is
Chief
Human
Resources
Officer.
Ms.
Williams-Roll
joined
General
Mills
in
1995.
In
this
capacity,
she
also
has
responsibility
for
Corporate
Communications.
She
held
human
resources
leadership
roles
in
Supply
Chain,
Finance, Marketing, and Organization Effectiveness,
and shehas 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
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.

Karen Wilson
Thissen
, age
56, is
General Counsel
and Secretary.
Ms. Wilson
Thissen joined
General Mills
in June
2022.
Prior to
joining
General
Mills, she
spent
17 years
at Ameriprise
Financial,
Inc.,
serving in
roles of
increasing
responsibility,
including
most
recently as Executive Vice
President and General Counsel
from 2017 to June
2022, and Executive Vice
President and Deputy General
Counsel from
2014 to
2017.
Before
joining
Ameriprise Financial,
Inc., she
was a
partner at
the law
firm of
Faegre &
Benson LLP
(now Faegre Drinker Biddle & Reath LLP).
8
WEBSITE ACCESS

Our
website
is
https://www.generalmills.com.www.generalmills.com.
We
make
available,
free
of
charge
in
the “Investors”
“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).
All
such
filings
are
available
on the
SEC’s
website
at https://www.sec.gov.
Reports
of beneficial
ownership filed
pursuant
to Section
16(a) of
the 1934
Act are also available on our website.

8

ITEM 1A - Risk Factors

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.

Business and Industry Risks

Global health developments

The
categories
in
which
we
participate
are
very
competitive,
and economic uncertainty resulting from the COVID-19 pandemic could materially and adversely affect
if
we
are
not
able
to
compete
effectively,
our business, financial condition, and
results
of operations.

The public health crisis caused by the COVID-19 pandemic and the measures being taken by governments, businesses, including us, and the public at large to limit COVID-19’s spread have had, and we expect will continue to have, certain negative impacts on our business, financial condition, and results of operations including, without limitation, the following:

We have experienced, and may continue to experience, a decrease in sales of certain of our products in markets around the world that have been affected by the COVID-19 pandemic. In particular, sales of our products in the away-from-home food outlets across all our major markets have been negatively affected by reduced consumer traffic resulting from shelter-in-place regulations or recommendations and closings of restaurants, schools and cafeterias. If the COVID-19 pandemic persists or intensifies, its negative impacts on our sales, particularly in away-from-home food outlets, could be more prolonged and may become more severe.

Deteriorating economic and political conditions in our major markets affected by the COVID-19 pandemic, such as increased unemployment, decreases in disposable income, declines in consumer confidence, or economic slowdowns or recessions, could cause a decrease in demand for our products.

We have experienced minor temporary workforce disruptions in our supply chain as a result of the COVID-19 pandemic. We have implemented employee safety measures, based on guidance from the Centers for Disease Control and Prevention and World Health Organization, across all our supply chain facilities, including proper hygiene, social distancing, mask use, and temperature screenings. These measures may not be sufficient to prevent the spread of COVID-19 among our employees. Illness, travel restrictions, absenteeism, or other workforce disruptions could negatively affect our supply chain, manufacturing, distribution, or other business processes. We may face additional production disruptions in the future, which may place constraints on our ability to produce products in a timely manner or may increase our costs.

Changes and volatility in consumer purchasing and consumption patterns may increase demand for our products in one quarter, resulting in decreased consumer demand for our products in subsequent quarters. Short term or sustained increases in consumer demand at our retail customers may exceed our production capacity or otherwise strain our supply chain.

The failure of third parties on which we rely, including those third parties who supply our ingredients, packaging, capital equipment and other necessary operating materials, contract manufacturers, commercial transport, distributors, contractors, commercial banks, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, may negatively impact our operations.

Significant changes in the political conditions in markets in which we manufacture, sell, or distribute our products (including quarantines, import/export restrictions, price controls, governmental or regulatory actions, closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform necessary business functions, or otherwise prevent our third-party partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for the production, distribution, and sale of our products) could adversely impact our operations and results.

Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in investigations, legal claims or litigation against us.

The categories in which we participate are very competitive, and if we arenot able to compete effectively, our results of

operations could be adversely
affected.

The consumer
human
and
pet
food
categories
in
which
we
participate
are
very
competitive.
Our principal
competitors
in
these
categories
are
manufacturers,
as
well
as
retailers
with
their
own
branded
and
private
label
products.
Competitors
market
and
sell
their
products
through
brick-and-mortar
stores
and
e-commerce.
All
of
our
principal
competitors
have
substantial
financial,
marketing,
and
other
resources.
In
most
product
categories,
we
compete
not
only
with
other
widely
advertised
branded
products,
but
also
with
regional
brands
and
with
generic
and
private
label
products
that
are generally
sold
at
lower prices.
Competition
in
our
product
categories
is
based on
product
innovation, product
quality,
price,
brand recognition
and loyalty,
effectiveness
of marketing,
promotional
activity,
convenient
ordering
and
delivery
to
the
consumer,
and
the
ability
to
identify
and
satisfy
consumer
preferences.
If
our
large
competitors
were
to
seek
an
advantage
through
pricing
or
promotional
changes,
we
could
choose
to
do
the
same,
which
could
adversely affect
our margins
and profitability.
If we
did not
do the
same, our
revenues and
market share
could be
adversely affected.
Our market share
and revenue growth
could also be
adversely impacted if
we are not
successful in these categories introducing
innovative products
in
response
to
changing
consumer
demands
or by
new product
introductions
of our
competitors.
If
we
are manufacturers, as well as retailers with their own branded unable
to build
and
sustain
brand
equity
by
offering
recognizably
superior
product
quality,
we
may
be
unable
to
maintain
premium
pricing
over
generic
and
private label products. Competitors market and sell their products through brick-and-mortar stores and e-commerce. All of our principal competitors have substantial financial, marketing, and other resources. In most product categories, we compete not only with other widely advertised branded products, but also with regional brands and with generic and private label products that are generally sold at lower prices. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, convenient ordering and delivery to the consumer, and the ability to identify and satisfy consumer preferences. If our large competitors were to seek an advantage through pricing or promotional changes, we could choose to do the same, which could adversely affect our margins and profitability. If we did not do the same, our revenues and market share could be adversely affected. Our market share and revenue growth could also be adversely impacted if we are not successful in introducing innovative products in response to changing consumer demands or by new product introductions of our competitors. If we are unable to build and sustain

9

brand equity by offering recognizably superior product quality, we may be unable to maintain premium pricing over generic and private label products.

We may be unable to maintain our profit

margins in the face of a consolidating retail environment.

There has
been significant
consolidation in
the grocery industry,
resulting in
customers with increased
purchasing power.
In addition,
large
retail
customers
may
seek
to
use
their
position
to
improve
their
profitability
through
improved
efficiency,
lower
pricing,
increased
reliance
on
their
own
brand
name
products,
increased
emphasis
on
generic
and
other
economy
brands,
and
increased
promotional
programs.
If we
are
unable
to use their position to improve their profitability through improved efficiency, lower pricing, increased reliance on their own brand name products, increased emphasis on generic and other economy brands, and increased promotional programs. If we are unable to use
our
scale, marketing
expertise,
product
innovation,
knowledge
of consumers’
needs,
and category
leadership positions
to respond
to these
demands, our
profitability and
volume growth
could be
negatively impacted.
In
addition, the loss
of any large
customer could
adversely affect our
sales and profits.
In fiscal 2021, 2023,
Walmart
accounted for 20 21
percent
of our
consolidated net
sales and 29
28 percent
of net
sales of
our North
America Retail
segment.
For more
information on
significant
customers, please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

Price
changes
for
the
commodities
we
depend
on
for
raw
materials,
packaging,
and
energy
may
adversely
affect
our
profitability.

The
principal
raw
materials
that
we
use
are
commodities
that
experience
price
volatility
caused
by
external
conditions
such
as
weather,
climate
change,
product
scarcity,
limited
sources
of
supply,
commodity
market
fluctuations,
currency
fluctuations,
trade
tariffs, pandemics, (such as the COVID-19 pandemic)war (including international
sanctions imposed on Russia for its invasion of Ukraine),
and changes in governmental
agricultural and
energy policies
and regulations.
Commodity prices
have become,
and may continue
to be, more volatile during the COVID-19 pandemic.
volatile. Commodity
price
changes
may
result
in
unexpected
increases
in
raw
material,
packaging,
energy,
and
transportation
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.

9
Concerns with the safety and quality of our products could cause consumers
to
avoid certain products or ingredients.

We
could
be
adversely
affected
if
consumers
in
our
principal
markets
lose
confidence
in
the
safety
and
quality
of
certain
of
our
products
or
ingredients.
Adverse
publicity
about
these
types
of
concerns,
whether
or
not
valid,
may
discourage
consumers
from
buying our products or cause production and delivery disruptions.

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,
eating habits,
and purchasing
behaviors of
consumers and
to offer
products
that
appeal
to
their
preferences
in
channels
where
they
shop.
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, such as adapting to emerging
e-commerce channels, 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, grain-free
or legume-rich pet
food, 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 and profitability could be adversely affected.

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 degree to which consumers react and respond positively to these brands. Brand value could diminish significantly due to a number level
of factors, including consumer perception advertising
or promotional
support. The
use of
social
and
digital
media
by
consumers,
us,
and
third
parties
increases
the
speed
and
extent
that we have acted in an irresponsible manner, adverse publicity
information
or
misinformation
and
opinions can
be shared.
Negative posts
or comments
about us,
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, brands,
or our
products becoming unavailable to consumers. Consumer demand for our products may also be impacted by changes in the level of advertisingon
social or promotional support. The use of social and
digital media by consumers, us, and third parties increases the speed and extent that information or misinformation and

10

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.

Operating Risks

If
we
are
not
efficient
in
our
production,
our
profitability
could
suffer
as
a
result
of
the
highly
competitive
environment
in
which we operate.

Our future success and
earnings growth depend in
part on our ability to
be efficient in the
production and manufacture of
our products
in
highly
competitive
markets.
Gaining
additional
efficiencies
may
become
more
difficult
over
time.
Our
failure
to
reduce
costs
through
productivity
gains
or
by
eliminating
redundant
costs
resulting
from
acquisitions
or
divestitures
could
adversely
affect
our
profitability
and
weaken
our
competitive
position.
Many
productivity
initiatives
involve
complex
reorganization
of
manufacturing
facilities
and
production
lines.
Such
manufacturing
realignment
may
result
in
the
interruption
of
production,
which
may
negatively
impact
product
volume
and
margins.
We
periodically
engage
in
restructuring
and
cost
savings
initiatives
designed
to
increase
our
efficiency
and
reduce
expenses.
If
we
are
unable
to
execute
those
initiatives
as
planned,
we
may
not
realize
all
or
any
of
the
anticipated benefits, which could adversely affect our business and results of
operations.

Disruption of our supply chain could adversely affect our business.

Our
ability
to
make,
move,
and
sell
products
is
critical
to
our
success.
Damage
or
disruption
to
raw
material
supplies
or
our
manufacturing
or
distribution
capabilities
due
to
weather,
climate
change,
natural
disaster,
fire,
terrorism,
cyber-attack,
pandemics,
war,
governmental
restrictions
or
mandates,
labor
shortages,
strikes,
import/export
restrictions,
or
other
factors
could
impair
our
ability to make, move, and sell products is critical to our success. Damage or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, terrorism, cyber-attack, pandemics (such as the COVID-19 pandemic), governmental restrictions or mandates, strikes, import/export restrictions, or other factors could impair our ability to
manufacture or
sell our
products. Many
of our
product lines
are manufactured
at a
single location
or sourced
from a
single
supplier.
The
failure
of
third
parties
on
which
we
rely,
including
those
third
parties
who
supply
our
ingredients,
packaging,
capital
equipment
and
other
necessary
operating
materials,
contract
manufacturers,
commercial
transport,
distributors,
contractors,
and
10
external business partners, to meet
their obligations to us, or significant
disruptions in their ability to do
so, may negatively impact our
operations. Our
suppliers’ policies
and practices
can damage
our reputation
and the quality
and safety
of our
products. Disputes
with
significant suppliers,
including disputes regarding
pricing or performance,
could adversely
affect our
ability to supply
products to our
customers and
could materially
and adversely
affect our
sales, financial
condition, and
results of
operations. Failure
to take
adequate
steps
to
mitigate
the
likelihood
or
potential
impact
of
such
events,
or
to
effectively
manage
such
events
if
they
occur,
particularly
when a
product is
sourced from
a single
location or
supplier,
could adversely
affect our
business and
results of
operations, as
well as
require additional resources to restore our supply chain.

Short term or
sustained increases in
consumer demand at
our retail customers
may exceed our
production capacity or
otherwise strain
our supply chain. Our failure to meet the demand for our products could
adversely affect our business and results of operations.

Our international operations are subject to political and economic
risks.

In fiscal 2021, 26
2023, 19
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:

●
political and economic instability;

●
exchange controls and currency exchange rates;

●
tariffs on products and ingredients that we import and export;

●
nationalization or government control of operations;

●
compliance with anti-corruption regulations;

uncertainty relating to the impact of the United Kingdom’s exit from the European Union;

●
foreign tax treaties and policies; and

●
restriction on the transfer of funds to and from foreign countries, including
potentially negative tax consequences.

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.

A
strengthening
in
the
U.S.
dollar
relative
to
other
currencies
in
the
countries
in
which
we
operate such as has generally occurred during the COVID-19 pandemic to-date,
would
negatively
affect
our
reported results of operations and financial results due to currency translation losses and
currency transaction losses.

11

Our business operations could be disrupted if our information technology

systems fail to perform adequately or are breached.

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.

Our failure to successfully integrate acquisitions into our
existing operations could adversely affect our financial results.

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
and existing operations.
If we are
unable to successfully
integrate acquisitions,
our financial
results could
suffer.
Additional potential
risks associated
with acquisitions
include
additional debt
leverage, the
loss of
key
employees
and
customers
of
the
acquired
business,
the
assumption
of
unknown
liabilities,
the
inherent
risk
associated
with
entering a geographic area or line of business in which we have
no or limited prior experience, failure to achieve anticipated synergies,
and the impairment of goodwill or other acquisition-related intangible assets.

11
Legal and Regulatory Risks

If
our
products
become
adulterated,
misbranded,
or
mislabeled,
we
might
need
to
recall
those
items
and
may
experience
product liability claims if
consumers or their pets are injured.

We may need
to recall some of our products if they become adulterated,
misbranded, or mislabeled. A widespread product recall could
result in
significant losses
due to
the costs
of a
recall, the
destruction of
product inventory,
and lost
sales due
to the
unavailability of
product for a period of time.
We could
also suffer losses from a
significant product liability judgment
against us. A significant product
recall or
product liability
case could
also result
in adverse
publicity,
damage to
our reputation,
and a
loss of
consumer confidence
in
our products, which could have an adverse effect on our business results and the
value of our brands.

New regulations or regulatory-based claims could adversely
affect our business.

Our facilities and
products are subject
to many laws and
regulations administered by
the United States Department
of Agriculture, the
Federal Food and Drug
Administration, the Occupational
Safety and Health Administration,
and other federal, state, local,
and foreign
governmental agencies
relating to
the production,
packaging, labelling,
storage, distribution,
quality,
and safety
of food
products and
the
health
and
safety
of
our
employees.
Our
failure
to
comply
with
such
laws
and
regulations
could
subject
us
to
lawsuits,
administrative
penalties,
and safety civil
remedies,
including fines,
injunctions,
and recalls
of our employees. Our failure to comply with such laws and regulations could subject us to lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our
products.
We
advertise our
products and
could be
the target
of claims
relating to
alleged false
or deceptive
advertising
under federal,
state, and
foreign laws
and regulations.
We may also be
subject to new laws or regulations restricting our right to advertise our products,
including restrictions on the audience
to whom
products are
marketed. Changes
in laws
or regulations
that impose
additional regulatory
requirements on
us could
increase
our cost of doing business or restrict our actions, causing our results of operations
to be adversely affected.

Significant COVID-19 related changes in the political conditions in markets in which we manufacture, sell or distribute our products (including quarantines, import/export restrictions, price controls, governmental or regulatory actions, closures or other restrictions that limit or close our operating

We
are
subject
to
various
federal,
state,
local,
and manufacturing facilities, restrict our employees’ ability
foreign
environmental
laws
and
regulations.
Our
failure
to travel or perform necessary business functions or otherwise prevent our third-party partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for the production, distribution, sale, and support of our products) could adversely impact our operations and results.

We are subject to various federal, state, local, and foreign environmental laws and regulations. Our failure to

comply
with
environmental laws and regulations could subject us
to lawsuits, administrative penalties, and civil remedies.
We are currently
party to
a variety of
environmental remediation obligations.
Due to regulatory
complexities, uncertainties inherent
in litigation, and
the risk of
unidentified contaminants
on current and
former properties of
ours, the potential
exists for remediation,
liability,
indemnification, and

12

compliance
costs

to
differ
from
our
estimates.
We
cannot
guarantee
that
our
costs
in
relation
to
these
matters,
or
compliance
with

compliance costs environmental

laws
in
general,
will
not
exceed
our
established
liabilities
or
otherwise
have
an
adverse
effect
on
our
business
and
results of operations.
Climate change and other sustainability matters could adversely affect
our business.
There is
growing concern
that carbon
dioxide and
other greenhouse
gases in
the earth’s
atmosphere may
have an
adverse impact
on
global temperatures, weather patterns, and the frequency
and severity of extreme weather and natural disasters.
If such climate change
has a negative effect on agricultural productivity,
we may experience decreased availability and higher pricing for certain commodities
that are necessary
for our
products. Increased
frequency or
severity of
extreme weather
could also impair
our production
capabilities,
disrupt our
supply chain,
impact demand
for our
products, and
increase our
insurance and
other operating
costs.
Increasing concern
over
climate
change
or
other
sustainability
issues
also
may
adversely
impact
demand
for
our
products
due
to
changes
in
consumer
preferences or
negative consumer
reaction to
our commitments
and actions
to differ from address
these issues.
We
may also
become subject
to
additional
legal
and
regulatory
requirements
relating
to
climate
change
or
other
sustainability
issues,
including
greenhouse
gas
emission
regulations
(e.g.,
carbon
taxes),
energy
policies,
sustainability
initiatives
(e.g.,
single-use
plastic
limits),
and
disclosure
obligations.
If additional legal
and regulatory
requirements are
enacted and
are more aggressive
than the sustainability
measures that
we are currently
undertaking to reduce
our estimates. We cannot guarantee thatemissions and
improve our energy
efficiency and
other sustainability goals,
or if we
chose
to take actions to achieve more aggressive goals, we may experience significant
increases in our costs in relationof operations.
We
have announced goals
and commitments to these matters,
reduce our carbon footprint.
If we fail to
achieve or compliance with environmental laws in general, will not exceed our established liabilities or otherwise have an adverse effectimproperly
report on our businessprogress
toward
achieving
our
carbon
emissions
reduction
goals
and
commitments,
then
the
resulting
negative
publicity
could
harm
our
reputation and results of operations.

adversely affect demand for our products.

Financial and Economic Risks

Volatility
in
the
market
value
of
derivatives
we
use
to
manage
exposures
to
fluctuations
in
commodity
prices will
may
cause
volatility in our gross margins and net earnings.

We
utilize derivatives
to manage
price risk
for some
of our
principal ingredient
and energy
costs, including
grains (oats,
wheat, and
corn), oils (principally soybean),
dairy products, natural gas, and diesel
fuel. Changes in the values
of these derivatives are recorded
in
earnings currently, resulting
which may result in
volatility in both
gross margin and
net earnings. These gains
and losses are reported
in cost of
sales in
our
Consolidated
Statements
of
Earnings
and in
unallocated
corporate
items outside
our
segment
operating
results until
we
utilize
the
underlying
input
in
our
manufacturing
process,
at
which
time
the
gains
and
losses
are
reclassified
to
segment
operating
12
profit. We also
record our grain inventories at net realizable value. We
may experience volatile earnings as a result of these accounting
treatments.

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 &
North America
Foodservice segment.
Any of
these events
could have
an adverse
effect on
our results
of
operations.

We
have
a
substantial
amount
of
indebtedness,
which
could
limit
financing
and
other
options
and
in
some
cases
adversely
affect our ability to pay dividends.

As
of
May 30, 2021,
28,
2023,
we
had
total
debt redeemable
and
noncontrolling
interests and noncontrolling interests
of $13.5
$12.0
billion.
The
agreements
under
which
we
have
issued
indebtedness
do not
prevent us
from
incurring
additional unsecured
indebtedness
in the
future.
Our level
of indebtedness
may
limit
our:

●
ability to
obtain additional
financing for
working capital,
capital expenditures,
or general
corporate purposes,
particularly if
the ratings assigned to our debt securities by rating organizations
were revised downward; and

●
flexibility to
adjust to
changing business
and market
conditions and
may make
us more
vulnerable to
a downturn
in general
economic conditions.

There are
various financial
covenants and
other restrictions
in our
debt instruments
and noncontrolling
interests. If
we fail to
comply
with any of
these requirements, the
related indebtedness,
and other unrelated
indebtedness, could
become due and
payable prior
to its
stated maturity and our ability to obtain additional or alternative financing
may also be adversely affected.

Our ability
to make
scheduled payments
on or
to refinance
our debt
and other
obligations will
depend on
our operating
and financial
performance,
which
in
turn
is
subject
to
prevailing
economic
conditions
and
to
financial,
business,
and
other
factors
beyond
our
control.
We
depend
on stable,
liquid
and
well-functioning
capital and
credit markets
to fund
our operations.
Our financial
performance,
our
credit ratings,
interest rates,
the stability
of financial
institutions with
which in turn is subjectwe
partner, and
the liquidity
of the
overall global
capital
markets could affect our access to, prevailing economicand the availability,
terms and conditions, and to financial, business, cost of capital.
Volatility
in the
securities markets,
interest
rates,
and other factors beyond our control.

Global capital and credit market issues could negatively affect our liquidity,increase our costs of borrowing, and disrupt the operations of our suppliersand 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.

The COVID-19 pandemic has increased volatility and pricing in the capital markets. We may not have access to preferred sources of liquidity when needed or on terms we find acceptable, and our borrowing costs could increase. An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed. A disruption in the financial markets may have a

13

negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we rely for access to capital and as counterparties to our derivative contracts.

From time to time, we issue variable rate securities based on interbank offered rates (IBORs) and enter into interest rate swaps that contain a variable element based on an IBOR. There is currently uncertainty whether certain IBORs will continue to be available after 2021. If certain IBORs cease to be available, we may need to amend affected agreements, and we cannot predict what alternative index would be negotiated with our counterparties and security holders. As a result, our interest expense could increase and our available cash flow for general corporate requirements may be adversely affected.

Volatility in the securities markets, interest rates, and other factors could

substantially
increase
our defined
benefit
pension,
other postretirement benefit, and postemployment
benefit costs.

We
sponsor
a number
of defined
benefit plans
for employees
in the
United
States, Canada,
and various
foreign
locations, including
defined
benefit
pension,
retiree
health
and
welfare,
severance,
and
other
postemployment
plans.
Our
major
defined
benefit
pension
plans are
funded with
trust assets
invested in
a globally
diversified portfolio
of 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 pension, retiree health and welfare, severance, and other postemployment plans. Our major defined benefit pension plans are funded with trust assets invested in a globally diversified portfolio of 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
plans and
cause volatility
in the
net periodic
benefit cost
and future
funding requirements
of the
plans.
A
significant
increase
in
our
obligations
or
future
funding
requirements
could
have
a
negative
impact
on
our
results
of
operations and cash flows from operations.

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
consolidated
results of operations and net worth.

As of May 30, 2021,
28, 2023,
we had $20.7 $21.
2
billion of
goodwill and
indefinite-lived intangible
assets. Goodwill for
each of
our reporting
units
is tested
for impairment
annually and
whenever events
or changes
in circumstances
indicate that
impairment may
have occurred.
We
compare
the
carrying
value
of
the
reporting
unit,
including
goodwill,
to
the
fair
value
of
the
reporting
unit.
If
the
fair
value
of
the
reporting unit including goodwill, to the fair value of the reporting unit. If the fair value of the reporting unit
is less than
the carrying
value of
the reporting
unit, including
goodwill, impairment
has occurred.
Our estimates
of fair
value are determined
based on a
discounted cash
flow model. Growth
rates for sales
and profits are
determined using inputs
from our
long-range planning process. We
also make estimates of discount rates, perpetuity growth assumptions,
market comparables, and other
factors.
If
current
expectations
for
growth
rates
for
sales
and
profits
are
not
met,
or
other
market
factors
and
macroeconomic
conditions that could be affected by the COVID-19 pandemic or otherwise were to change,
then our reporting units could
become significantly impaired. Our Europe & Australia reporting unit had experienced declining business performance, and we continue to monitor this business. While
we currently believe that
our goodwill
is not impaired, different assumptions regarding
the future performance of our businesses could result in significant impairment
losses.

13
We
evaluate
the
useful
lives
of
our
intangible
assets,
primarily
intangible
assets
associated
with
the
Blue
Buffalo
,
Pillsbury
,
Totino’s
,Progresso, Yoplait,
Old El
Paso
,Yoki
Progresso
,
Annie’s
,
Nudges
,
and
Häagen-Dazs, and Annie’s
brands, to
determine
if they
are finite
or indefinite-lived. indefinite-
lived.
Reaching
a
determination
on
useful
life
requires
significant
judgments
and
assumptions
regarding
the
future
effects
of
obsolescence,
demand,
competition,
other
economic
factors (such
(such
as
the
stability
of
the
industry,
known
technological
advances,
legislative action
that results
in an
uncertain or
changing regulatory
environment, and
expected changes
in distribution
channels), the
level of required maintenance expenditures, and the expected lives of other
related groups of assets.

Our
indefinite-lived
intangible
assets
are
also
tested
for
impairment
annually
and
whenever
events
or
changes
in
circumstances
indicate
that impairment
may have
occurred.
Our estimate
of the
fair value
of the
brands is
based on
a discounted
cash flow
model
using inputs
including projected
revenues from
our long-range
plan, assumed
royalty rates which
could be
payable if we
did not
own
the brands, and
a discount rate.
If current expectations
for growth
rates for sales
and margins
are not met,
or other market
factors and
macroeconomic
conditions that
were
to
change,
then
our
indefinite-lived
intangible
assets
could be affected by the COVID-19 pandemic or otherwise were to change, then our indefinite-lived intangible assets could
become
significantly
impaired.
Our
Progresso
,Green Giant
EPIC
, andEPIC
Uncle Toby’s
brands had experienced declining business performance,risk of decreasing coverage and we continue to monitor these businesses.

For further information
on goodwill and intangible
assets, please refer to
Note 6 to the Consolidated
Financial Statements in Item
8 of
this report.

ITEM 1B - Unresolved Staff Comments

None.

14

None.

ITEM 2 - Properties

We
own
our
principal
executive
offices
and
main research
facilities,
which
are
located
in the
Minneapolis,
Minnesota
metropolitan
area. We
operate numerous
manufacturing facilities
and maintain many
sales and administrative
offices, warehouses,
and distribution
centers around the world.

As of May 30, 2021,28,
2023, we operated 46
45 facilities for
the production of
a wide variety
of food products.
Of these facilities, 24
27 are located
in the United
States, (1 of which is leased), 6 in Latin
America and Mexico,
5 in Europe/Australia,
4 in the Greater
China region, 1 in the Asia/Middle East/Africa Region, 2
in Canada (1 of
which is
leased), 8
and
1
in Europe/Australia, and 7 in Latin America and Mexico.
the
Asia/Middle
East/Africa
Region.
The
following
is
a
list
of
the
locations
of
our
principal
production
facilities,
which primarily support the segment noted:

North America Retail

• St. Hyacinthe, Canada

• Irapuato, Mexico

• Buffalo, New York

• Covington, Georgia

• Reed City, Michigan

• Cincinnati, Ohio

• Belvidere, Illinois

• Fridley, Minnesota

• Wellston, Ohio

• Geneva, Illinois

• Hannibal, Missouri

• Murfreesboro, Tennessee

• Cedar Rapids, Iowa

• Albuquerque, New Mexico

• Milwaukee, Wisconsin

Convenience Stores & Foodservice

• Chanhassen, Minnesota

• Joplin, Missouri

Europe & Australia

• Rooty Hill, Australia

• Le Mans, France

• Inofita, Greece

• Arras, France

• Moneteau, France

• San Adrian, Spain

• Labatut, France

• Vienne, France

Asia & Latin America

• Cambara, Brazil

• Recife, Brazil

• Nashik, India

• Campo Novo do Pareceis, Brazil

• Guangzhou, China

• Nova Prata, Brazil

• Nanjing, China

• Paranavai, Brazil

• Sanhe, China

• Pouso Alegre, Brazil

• Shanghai, China

Pet

• Joplin, Missouri

• Richmond, Indiana

We operate numerous grain elevators in the United States in support of our domestic manufacturing activities. We also utilize approximately 15 million square feet of warehouse and distribution space, nearly all of which is leased, that primarily supports our

North America Retail segment.
• St. Hyacinthe, Canada
• Irapuato, Mexico
• Buffalo, New York
• Covington, Georgia
• Reed City, Michigan
• Cincinnati, Ohio
• Belvidere, Illinois
• Fridley, Minnesota
• Wellston, Ohio
• Geneva, Illinois
• Hannibal, Missouri
• Murfreesboro, Tennessee
• Cedar Rapids, Iowa
• Albuquerque, New Mexico
• Milwaukee, Wisconsin
International
• Rooty Hill, Australia
• Recife, Brazil
• Arras, France
• Cambara, Brazil
• Guangzhou, China
• Labatut, France
• Campo Novo do Pareceis, Brazil
• Nanjing, China
• Inofita, Greece
• Paranavai, Brazil
• Sanhe, China
• Nashik, India
• Pouso Alegre, Brazil
• Shanghai, China
• San Adrian, Spain
Pet
• Richmond, Indiana
• Joplin, Missouri
North America Foodservice
• Chanhassen, Minnesota
• Joplin, Missouri
• St. Charles, Missouri
• Green Bay, Wisconsin
We
operate
numerous
grain
elevators
in
the
United
States
in
support
of
our
domestic
manufacturing
activities.
We
also
utilize
approximately
16 million
square
feet
of
warehouse
and
distribution
space, nearly
all of
which
is leased,
that
primarily
supports
our
14
North America
Retail
and Pet segments.
We
own and
lease a number
of dedicated
sales and administrative
offices around
the world,
totaling approximately 32 million square feet. We
have additional warehouse, distribution, and office space in
our plant locations.

As part
of our
Häagen-Dazs
business in
our Europe & Australia and Asia & Latin America segments, International
segment
we operate 466
450 (all
leased) and
franchise 392 382
branded ice
cream
parlors in various countries around the world, all outside of the United States and Canada.

ITEM 3 - Legal Proceedings

We are the
subject of various pending or threatened legal
actions in the ordinary course of our business. All
such matters are subject to
many uncertainties and
outcomes that are not
predictable with assurance.
In our opinion,
there were no
claims or litigation pending
as
of
May 30, 2021,
28,
2023,
that
were
reasonably
likely
to
have
a
material
adverse
effect
on
our
consolidated
financial
position
or
results
of
operations. See
the information
contained under
the section entitled “Environmental
“Environmental Matters”
in Item 1
of this report
for a discussion
of environmental matters in which we are involved.

ITEM 4 - Mine Safety Disclosures

None.

15

None.

PART

II

ITEM 5 - Market for Registrant’s Common

Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

Our common
stock is
listed on
the New
York
Stock Exchange
under the
symbol “GIS.”
On June 15, 2021,
2023, there
were approximately 26,000
24,200 record holders of our common stock.

The
following
table
sets
forth
information
with
respect
to
shares
of
our
common
stock
that
we
purchased
during
the
fiscal
quarter
ended May 28, 2023:
Period
Total
Number
of Shares
Purchased (a)
Average Price
Paid Per Share
Total
Number of Shares
Purchased as Part of a
Publicly Announced
Program (b)
Maximum Number of
Shares that may yet
be Purchased
Under the Program (b)
February 27, 2023 -
April 2, 2023
1,338,293
$
79.20
1,338,293
86,503,364
April 3, 2023 -
April 30, 2021:

Period

Total Number

of Shares

Purchased (a)

 

Average Price Paid Per Share

 

Total Number of Shares

Purchased as Part of a

Publicly Announced

Program (b)

 

Maximum Number of

Shares that may yet

be Purchased

Under the Program (b)

March 1, 2021 -

April 4, 2021

2,126,480

 

$

58.78

 

2,126,480

 

37,290,922

April 5, 2021 -

May 2, 2021

2,339,540

 

 

61.14

 

2,339,540

 

34,951,382

May 3, 2021 -

May 30, 2021

518,285

 

 

63.21

 

518,285

 

34,433,097

Total

4,984,305

 

$

60.35

 

4,984,305

 

34,433,097

2023

846,538
86.88
846,538
85,656,826
May 1, 2023 -
May 28, 2023
793,957
89.58
793,957
84,862,869
Total
2,978,788
$
84.06
2,978,788
84,862,869
(a)
The total
number of
shares purchased
includes shares
of common
stock withheld
for the
payment of
withholding taxes
upon the
distribution of deferred option units.

(b)
On May 6, 2014,
June
27, 2022,
our
Board of
Directors
approved an
a new
authorization
for
the repurchase
of
up to
100,000,000
shares of
our
common stock.
stock
and
terminated
the
prior
authorization.
Purchases
can
be
made
in
the
open
market
or
in
privately
negotiated
transactions,
including
the
use
of
call
options
and
other
derivative
instruments,
Rule
10b5-1
trading
plans,
and
accelerated
repurchase programs. The Board did not specify an expiration date for
the authorization.

16

15

ITEM 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations

EXECUTIVE OVERVIEW

We
are
a
global packaged
foods company.
We
develop
distinctive
value-added
food
products
and
market
them under
unique
brand
names.
We
work
continuously
to
improve
our
core
products
and
to
create
new
products
that
meet
consumers’
evolving
needs
and
preferences.
In
addition,
we
build
the
equity
of
our
brands
over
time
with
strong
consumer-directed
marketing,
innovative
new
products,
and
effective
merchandising.
We
believe
our
brand-building
approach
is
the
key
to
winning
and
sustaining
leading
share
positions in markets around the globe.

Our fundamental
financial goal is
to generate competitively
differentiated returns
for our shareholders
over the long
term. We
believe
achieving
that
goal
requires
us
to
generate
a
consistent
balance
of
net
sales
growth,
margin
expansion,
cash
conversion,
and
cash
return to shareholders over time.

Our long-term growth objectives are to deliver the following performance
on average over time:

●
2 to 3 percent annual growth in organic net sales;

●
mid-single-digit annual growth in adjusted operating profit;

●
mid- to high-single-digit annual growth in adjusted diluted earnings per share
(EPS);

●
free cash flow conversion of at least 95 percent of adjusted net earnings after
tax; and

●
cash return to shareholders of 80 to 90 percent of free cash flow,
including an attractive dividend yield.

We
are executing
our Accelerate
strategy to
drive sustainable,
profitable growth
and top-tier
shareholder returns
over the
long term.
The
strategy
focuses
on
four
pillars
to
create
competitive
advantages
and
win:
boldly
building
brands,
relentlessly
innovating,
unleashing
our scale,
and
being a
force for
good. We
are prioritizing
our core
markets, global
platforms,
and
local gem
brands
that
have
the
best
prospects
for
profitable
growth,
and
we
are
committed
to
reshaping
our
portfolio
with
strategic
acquisitions
and
divestitures to further enhance our growth profile.

In
fiscal
2023,
we
continued
to
successfully
adapt
to
the
dynamic
operating
environment
and
deliver
strong
performance.
This
included
growth
in
organic
net
sales,
adjusted
operating
profit,
and
adjusted
diluted
EPS
that
was
ahead
of
our
initial
targets.
We expect that changes in consumer behaviors driven by the COVID-19 pandemic will result in ongoing elevated consumer demand for food at home, relative to pre-pandemic levels. These changes include more time spent working from home and increased consumer appreciation for cooking and baking. We plan to capitalize on these opportunities, addressing evolving consumer needs through our leading brands, innovation, and advantaged capabilities to generate profitable growth.

In fiscal 2021, we executed well amid the uncertain environment caused by the pandemic, delivering strong growth in organic net sales, adjusted operating profit, and adjusted diluted EPS. We

achieved each of the three priorities we established at the beginning of the year:

We competed
continued
to
compete
effectively, everywhere we play, highlighted
including
holding
or
growing
market
share
in
more
than
50
percent
of
our
global
priority businesses for
the fifth consecutive
year, when
adjusting for an
unusual competitive
dynamic in cereal
in fiscal 2022
and
assessing
that
platform
on
a
2-year
basis.
We
generated
organic
net
sales
growth
across
each
of
our
four
operating
segments, fueled by market share gains
compelling brand building
and innovation across eachour
leading brands, and supported
with strong levels of
net price realization in response to 13 percent input cost inflation.
We
continued
to
invest
for
the
future,
including
a
17
percent
increase
in
media
and
advertising
expense,
a
double-digit
increase
in
investment
in
our
digital
and
technology
capability,
and
a
strong
increase
in
capital
investment
related
to
new
growth capacity.
We
continued
to reshape
our five global platforms: cereal, pet food, ice cream, snack bars,portfolio,
including
closing
on one
acquisition and Mexican food. Our positive market share performance amid pandemic-driven elevated demand for food at home helped drive organic net sales growth in
two divestitures
that further
improved our North America Retail, Europe & Australia, and Asia & Latin America segments. Conversely, lower away-from-home food demand stemming from the pandemic resulted in a decline in organic net sales for our Convenience Stores & Foodservice segment. For our Pet segment, which was largely unaffected by the pandemic, we were able
portfolio’s ability to generate organic net sales profitable
growth despiteover the comparison against long term.
Our
consolidated
net
sales
for
fiscal
2023
rose
6
percent
to
$20,094 million.
On
an extra month
organic
basis,
net
sales
increased
10
percent
compared
to
year-ago
levels.
Operating
profit
of results in the prior year.

We drove efficiency to fuel investment in our brands and capabilities. We generated strong levels

$3,434 million
was
down
1
percent.
Adjusted
operating
profit
of Holistic Margin Management (HMM) cost savings and were able to meaningfully increase our investment in brand building activities and in strategic capabilities such as E-commerce, Digital, Data & Analytics, and Strategic Revenue Management.

We reduced our debt leverage and

$3,457 million
increased our financial flexibility. As a result of our continued cash discipline, we were able to reduce our debt and generate a reduction in our leverage ratio. Due to our improved balance sheet position, we were able to resume dividend growth and share repurchase activity during fiscal 2021.

We also announced important transactions during fiscal 2021 intended to reshape our portfolio for growth, in line with our Accelerate strategy. In March 2021, we announced the proposed sale of our European Yoplait operations to Sodiaal, in exchange for full ownership of the Canadian Yoplait business and a reduced royalty rate for the use of the Yoplait and Liberté brands in the United States and Canada. The proposed transaction would be anticipated to close by the end of calendar 2021, subject to appropriate labor consultations, regulatory filings, and other customary closing conditions. In May 2021, we reached a definitive agreement to acquire Tyson Foods’ pet treats business for $1.2 billion in cash. The acquisition is expected to close in the first quarter of fiscal 2022, subject to regulatory approval and other customary closing conditions.

17

Our consolidated net sales for fiscal 2021 rose 3 percent to $18.1 billion. On an organic basis, net sales increased 4 percent compared to year-ago levels. Operating profit of $3.1 billion increased 6 percent. Adjusted operating profit of $3.2 billion increased 28 percent on

a constant-currency basis.
Diluted EPS of $3.78$4.31 was up 6
down 2 percent compared
to fiscal 2020 2022
results. Adjusted
diluted
EPS
of $3.79
$4.30
increased 4
10
percent
on
a
constant-currency
basis (See
(See
the “Non-GAAP
“Non-GAAP
Measures”
section
below
for
a
description of our use of measures not defined by generally accepted
accounting
principles (GAAP)).

Net cash
provided by
operations totaled $3.0 billion
$2,779 million in
fiscal 2021 2023,
representing a
conversion rate
of 127 106
percent of
net earnings,
including earnings attributable
to redeemable and noncontrolling
interests. This cash generation
supported capital investments
totaling $531
$690 million, and our resulting free cash flow was $2.4 billion$2,089
million at a conversion rate of 10380 percent of adjusted
net earnings, including
earnings attributable
to redeemable
and noncontrolling
interests. We
returned cash
to shareholders
through dividends
totaling $1.2 billion$1,288
million and net
share repurchases totaling $301 million, and we reduced total debt outstanding by $928
$1,171 million. Our ratio of net debt-to-operating cash flow was 3.7 in fiscal 2021, and our net debt-to-adjusted earnings before net interest, income taxes, depreciation and amortization (net debt-to-adjusted EBITDA) ratio was 2.9 (See
the “Non-GAAP Measures”
section below for
a description of
our use
of measures not defined by GAAP).

A
detailed
review
of
our
fiscal 2021
2023
performance
compared
to
fiscal 2020
2022
appears
below
in
the
section
titled “Fiscal 2021
“Fiscal
2023
Consolidated Results of Operations.” A detailed review of
our fiscal 2020 2022
performance compared to our fiscal 2019 2021
performance is set
forth
in Part
II, Item
7 of
our Form
10-K for
the fiscal
year
ended
May 31, 2020 30, 2022
under the
caption “Management’s
“Management’s
Discussion and
16
Analysis of
Financial Condition
and Results
of Operations
– Fiscal 2020
2022
Results of
Consolidated Operations,”
which is incorporated
herein by reference.

In fiscal 2022,202
4, we expect
to build on
our positive momentum
and continue
to advance our
Accelerate strategy.
Our key priorities
are
to
continue
to
compete
effectively,
to
improve
our
supply
chain
efficiency,
and
to
maintain
our
disciplined
approach
to
capital
allocation.
We
expect
the
largest
factors
impacting
our
performance
in a dynamic environment, work aggressively to navigate a turbulent
fiscal
2024
will
be
the
economic
health
of
consumers,
the
moderating
rate of
input cost environment,
inflation,
and successfully execute our portfolio and organization reshaping actions.the
increasing stability
of the
supply chain
environment. We
expect the largest factors impacting to
drive organic
net
sales
growth
in
fiscal
2024
through
strong
marketing,
innovation,
in-store
support,
and
net
price
realization
generated
through
our performance
Strategic Revenue
Management (SRM) capability,
most of which
will be carried
over from SRM
actions taken in
fiscal 2023. For
the relative balance of at-home versus away-from-home consumer food demand and the inflationary
full year,
input cost environment, both of which remain uncertain. We expect at-home food demand will decline year over year across most of our core markets, though will remain above pre-pandemic levels. Conversely, we expect away-from-home food demandinflation
is expected to continue to recover, though not fully to pre-pandemic levels. With roughly 85
be approximately
5 percent of our net sales representing at-home food occasions, we
total cost of
goods sold, driven
primarily by labor
inflation
that
continues
to
impact
sourcing,
manufacturing,
and
logistics
costs.
We
expect these dynamics
to result in lower aggregate consumer demand in our categories in fiscal 2022
generate
higher
levels
of
Holistic
Margin
Management (HMM) cost savings compared to fiscal 2021 levels.

Total input cost inflation is expected to be approximately 7 percent of cost of goods sold in fiscal 2022. We are addressing the inflationary environment with strong HMM cost savings expected to total roughly 4 percent of cost of goods sold and with positive net price realization generated through our Strategic Revenue Management capability.

2023.

Based on these assumptions, our key full-year fiscal 20222024 targets
are summarized below:

●
Organic net sales are expected to decline 1increase 3 to 3 percent, which is generally in line with the expected level of aggregate category demand in fiscal 2022.

Constant-currency adjusted4 percent.

●
Adjusted operating profit
is expected to decline 2increase
4 to 46 percent in
constant-currency from the
base of $3.2 billion $3,457 million
reported
in fiscal 2021.

Constant-currency adjusted 2023.

●
Adjusted
diluted
EPS
are
expected
to
range
between
4
to range between flat and down 2 6
percent
in
constant-currency
from
the
base
of $3.79
$4.30
earned
in
fiscal 2021.

Relative to pre-pandemic levels in fiscal 2019, the midpoints of these fiscal 2022 guidance ranges equate to 3-year compound annual growth rates of approximately 2 percent for organic net sales, approximately 2 percent for constant-currency adjusted operating profit, and approximately 5 percent for constant-currency adjusted diluted EPS.

2023.

●
Free cash flow conversion is expected to be approximatelyat least 95 percent of adjusted after-tax
earnings.

See the “Non-GAAP Measures” section below for a description of our use
of measures not defined by GAAP.

Certain terms used throughout this report are defined in a glossary in Item 8 of
this report.

FISCAL 20212023 CONSOLIDATED
RESULTS
OF OPERATIONS

Fiscal 2021 had 52 weeks compared to 53 weeks in fiscal 2020. Fiscal 2020 included 13 months of Pet operating segment results as we changed the Pet operating segment’s reporting period from an April fiscal year end to a May fiscal year end to match our fiscal calendar.

In fiscal 2021, 2023,
net sales increased 3
6 percent compared
to fiscal 2022
and organic net
sales increased 10
percent compared to fiscal 2020 and organic net sales increased 4 percent compared to
last year.
Operating profit margin of 17.3decreased 1 percent was up 50 basis points from year-ago levels
to $3,434 million primarily driven by favorable net price realization and mix, a favorable change to the mark-to-market valuation of certain commodity positions and grain inventories, and favorable net corporate investment activity, partially offset
by higher input costs, higher restructuring charges, and the loss on the sale of our

a decrease
in contributions from volume

18

growth,
an

unfavorable
change
to
the
mark-to-market
valuation
of
certain
commodities
positions
and
grain
inventories,
and
an

Laticínios Carolina businessincrease in Brazil. Adjusted operating profit margin increased 10 basis points to 17.4 percent, primarily driven by favorable net price realization and mix and lower selling, general,

and administrative (SG&A) expenses,
including increased media
and advertising expenses,
partially offset
by
favorable
net
price
realization
and
mix.
Operating
profit
margin
of
17.1
percent
decreased
120
basis
points.
Adjusted
operating
profit of $3,
457 million increased
8 percent
on a constant-currency
basis, primarily
driven by
favorable net price
realization and
mix,
partially offset
by higher
input costs. costs,
a decrease
in contributions
from volume
growth and
an increase
in SG&A
expenses, including
increased media and advertising expenses. Adjusted operating profit
margin increased 30 basis points to 17.2 percent.
Diluted earnings
per share of $3.78 increased 6$4.31 decreased 2 percent compared
to fiscal 2020.2022. Adjusted diluted earnings per share
of $3.79$4.30 increased 410 percent on a
constant-currency
basis (see
(see
the “Non-GAAP
“Non-GAAP
Measures”
section
below
for
a
description
of
our
use
of
measures
not
defined
by
GAAP).

A summary of our consolidated financial results for fiscal 20212023 follows:

Fiscal 2021

In millions, except per share

 

Fiscal 2021 vs. Fiscal 2020

 

Percent of Net Sales

 

Constant-Currency Growth (a)

Net sales

$

18,127.0

 

3

%

 

 

 

 

 

 

Operating profit

 

3,144.8

 

6

%

 

17.3

%

 

 

 

Net earnings attributable to General Mills

 

2,339.8

 

7

%

 

 

 

 

 

 

Diluted earnings per share

$

3.78

 

6

%

 

 

 

 

 

 

Organic net sales growth rate (a)

 

 

 

4

%

 

 

 

 

 

 

Adjusted operating profit (a)

 

3,153.2

 

3

%

 

17.4

%

 

2

%

Adjusted diluted earnings per share (a)

$

3.79

 

5

%

 

 

 

 

4

%

(a) See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP.

 

Consolidated

Fiscal 2023
In millions,
except per
share
Fiscal 2023 vs.
Fiscal 2022
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
20,094.2
6
%
Operating profit
3,433.8
(1)
%
17.1
%
Net earnings attributable to General Mills
2,593.9
(4)
%
Diluted earnings per share
$
4.31
(2)
%
Organic net sales growth rate (a)
10
%
Adjusted operating profit (a)
3,457.3
8
%
17.2
%
8
%
Adjusted diluted earnings per share (a)
$
4.30
9
%
10
%
(a)
See the "Non-GAAP Measures" section below for our use of measures not defined by
GAAP.
17
Consolidated
net sales
were as follows:

 

Fiscal 2021

 

Fiscal 2021 vs. Fiscal 2020

 

Fiscal 2020

Net sales (in millions)

$

18,127.0

 

3

%

 

$

17,626.6

Contributions from volume growth (a)

 

 

 

Flat

 

 

 

 

Net price realization and mix

 

 

 

2

pts

 

 

 

Foreign currency exchange

 

 

 

1

pt

 

 

 

Note: Table may not foot due to rounding

(a) Measured in tons based on the stated weight of our product shipments.

The 3 percent increase in net

Fiscal 2023
Fiscal 2023 vs.
Fiscal 2022
Fiscal 2022
Net sales in fiscal 2021 reflects favorable net(in millions)
$
20,094.2
6
%
$
18,992.8
Contributions from volume growth (a)
(8)
pts
Net price realization and mix
15
pts
Foreign currency exchange
(1)
pt
Note: Table may
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Net sales in fiscal
2023 increased 6
percent compared to fiscal
2022, driven by favorable
net price realization
and favorable mix, partially offset
by a decrease in contributions from volume growth and unfavorable
foreign currency exchange.

Components of organic net sales growth are shown in the following
table:

Fiscal 2021 vs. Fiscal 2020

Contributions from organic volume growth (a)

2

pts

Organic net price realization and mix

2

pts

Organic net sales growth

4

pts

Foreign currency exchange

1

pt

53rd week

(2)

pts

Net sales growth

3

pts

Note: Table may not foot due to rounding

(a) Measured in tons based on the stated weight of our product shipments.

Fiscal 2023 vs. Fiscal 2022
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
14
pts
Organic net sales growth
10
pts
Foreign currency exchange
(1)
pt
Acquisitions and divestitures
(4)
pts
Net sales growth
6
pts
Note: Table may
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Organic
net sales
in fiscal2021
2023 increased 4
10 percent
compared to
fiscal 2020, 2022,
driven by an increase
favorable organic
net price
realization and
mix, partially offset by a decrease in contributions from organic
volume growth and favorable organic net price realization and mix.

growth.

Cost of sales
increased $182$958 million in fiscal 2021 2023
to $11,679$13,548 million. The increase was
primarily driven by a $366$1,454 million
increase
attributable to
product rate and
mix, andpartially offset
by a $43 $950
million increasedecrease due
to higherlower volume.
We
recorded a $139
$292 million net decrease
increase
in
cost
of
sales
related
to
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
fiscal 2021,
2023,
compared to a net increasedecrease of $25 $133
million in fiscal 2020 (please2022
(please see Note 8 to the Consolidated
Financial Statements in Item 8 of this
report
for
additional
information).
In
fiscal 2021,
2023,
we
recorded $2
a
$25
million
charge
related
to
a
voluntary
recall
on
certain
international
Häagen-Dazs
ice cream
products.
We
also recorded
$5 million
of restructuring
charges and
$2 million
of restructuring
initiative project-related
costs in
cost of
sales in
fiscal 2023
compared to
$3 million
of restructuring
charges in
cost of
sales compared to $26 million of restructuring charges and $2 million of restructuring initiative project-related costs in
fiscal 2020
2022 (please see Note 4 to the Consolidated Financial Statements in Item 8 of this
report for additional information).In fiscal 2020, we recorded a $19 million charge related to a product recall in our international Green Giant business. In fiscal 2020, we recorded an $18 million increase in certain compensation and benefits expenses.

19

Gross margin

increased 52 percent
in fiscal 2021 versus2023
compared to fiscal 2020.
2022. Gross margin
as a percent
of net sales increased 80
decreased 110
basis
points to 35.632.6 percent compared to fiscal 2020.

2022.

SG&A expenses decreased $72
increased $353 million to $3,080 $3,500
million in fiscal 20212023 compared
to fiscal 2020. The decrease2022 primarily driven
by increased media
and
advertising
expenses,
unfavorable
valuation
adjustments
and
the
loss
on
sale
of
certain
corporate
investments,
an
increase
in
certain compensation and benefits
expenses,
and an increase in charitable
contributions in fiscal 2023. SG&A expenses primarily reflects favorable net corporate investment activity and decreased administrative expenses, partially offset by higher media and advertising expenses. SG&A
expenses as a percent of
net sales in fiscal 2021 decreased 902023 increased 80 basis points compared to fiscal 2020.

Divestiture loss2022.

Divestitures
gain, net
totaled $54 $445
million in
fiscal 2021 due 2023
primarily related
to the
sale of our Laticínios Carolina business
Helper main
meals and
Suddenly Salad
side dishes
business.
In fiscal
2022,
we recorded
a $194
million divestitures
gain
related
to the
sale of
our
interest in Brazil (please
Yoplait
SAS,
Yoplait
marques
SNC
and
Liberté
Marques
Sàrl
and
our
European
dough
businesses
(please
refer
to
Note
3
to
the
Consolidated
Financial Statements in Part I, Item 1 of this report).
Restructuring,
impairment,
and
other
exit
costs
(recoveries)
totaled
$56
million
in
fiscal
2023
compared
to
$26
million
of
net
recoveries
in
fiscal
2022.
In
fiscal
2023,
we
approved
restructuring
actions
to
enhance
the
efficiency
of
our
global
supply
chain
structure and to optimize
our Häagen-Dazs shops network,
and as a result,
we recorded $41 million
of charges in
fiscal 2023. In fiscal
2022,
we
approved
restructuring
actions
in the
International
segment
to drive
efficiencies
in
manufacturing
and
logistics operations
and recorded $12 million
of charges.
Please see Note 3 of4
to the Consolidated Financial
Statements in Item 8
of this report).

Restructuring, impairment,report for

additional
information.
18
Benefit plan
non-service income
totaled $89
million in
fiscal 2023
compared to
$113 million
in fiscal
2022, primarily
reflecting an
increase in interest costs, partially
offset by lower amortization
of losses and other exit costs totaled $170 million in fiscal 2021 compared to $24 million in fiscal 2020. In fiscal 2021, we approved restructuring actions designed to better align our organizational structure and resources with strategic initiatives. As a result, we recorded $157 million of charges in fiscal 2021. We also recorded $11 million of charges related to Asia & Latin America segment route-to-market and supply chain optimization actions in fiscal 2021. We did not undertake any new restructuring actions in fiscal 2020. Please higher expected
return on plan assets (please
see Note 4 14
to the Consolidated Financial Statements in Item 8 of this report for additional information.

Benefit plan non-service income totaled $133 million in fiscal 2021 compared to $113 million in fiscal 2020, primarily reflecting lower interest costs, partially offset by lower expected returns on plan assets (please see Note 2 to the Consolidated Financial Statements in Item 8 of this report

for additional information).

Interest, net
for fiscal 20212023 totaled $420$382 million, $46$2 million lowerhigher than fiscal 2020, primarily driven by lower rates and lower average debt balances.

2022.
Our
effective tax rate
for fiscal 2021
2023 was 22.019.5 percent compared to 18.5 18.3
percent in fiscal 2020.2022. The 3.5 1.2 percentage
point increase was
primarily
driven
by
a
change in
the
valuation
allowance
on our
capital
loss carryforward
s
in
fiscal
2022,
partially
offset
by
certain
favorable discrete tax
items in fiscal 2023
.
Our adjusted effective
tax rate was 20.4
percent in fiscal 2023
compared to 20.9
percent in
fiscal 2022
(see the
“Non-GAAP Measures”
section below
for a
description of
our use
of measures
not defined
by GAAP).
The 0.5
percentage point increasedecrease was primarily due to the net benefit related to the reorganization of certain wholly owned subsidiariesfavorable discrete tax
items in fiscal 2020, the non-deductible loss associated with the sale of our Laticínios Carolina business2023.
After-tax earnings
from
joint ventures
decreased to
$81 million in Brazil in
fiscal 2021, and certain nonrecurring discrete tax benefits in fiscal 2020. Our adjusted effective tax rate was 21.1 percent in fiscal 2021 2023
compared to 20.7 percent
$112
million in
fiscal 2020 (see 2022,
primarily
driven by higher input
costs at CPW and
HDJ and lower net sales
at HDJ,
partially offset by
favorable net price realization
and mix at
CPW.
On
a
constant-currency
basis,
after-tax
earnings
from
joint
ventures
decreased
18
percent
(see
the “Non-GAAP
“Non-GAAP
Measures”
section below for a
description of our use
of measures not defined by GAAP).

After-tax earnings from joint ventures increased 29 percent to $118 million in fiscal 2021 compared to fiscal 2020, primarily driven by higher net sales at CPW and HDJ. On a constant-currency basis, after-tax earnings from joint ventures increased 26 percent (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). The components

of our joint ventures’
net sales growth
are shown in the following table:

Fiscal 2021 vs. Fiscal 2020

CPW

 

HDJ

 

Total

 

Contributions from volume growth (a)

4

pts

2

pts

 

 

Net price realization and mix

1

pt

4

pts

 

 

Net sales growth in constant currency

5

pts

6

pts

5

pts

Foreign currency exchange

1

pt

2

pts

1

pt

Net sales growth

6

pts

8

pts

6

pts

Note: Table may not foot due to rounding

 

 

 

 

 

 

(a) Measured in tons based on the stated weight of our product shipments

Fiscal 2023 vs. Fiscal 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(10)
pts
(5)
pts
Net earnings attributable to redeemableprice realization and noncontrolling interests decreased 79 percent to $6 million primarily due to the redeemable interest’s 49 percent share of the loss on sale of the Laticínios Carolina businessmix
14
pts
Flat
Net sales growth in Brazil.

Average diluted shares outstanding increased by 6 million in fiscal 2021 from fiscal 2020 primarily due to option exercises.

RESULTS OF SEGMENT OPERATIONS

Our businesses are organized into five operating segments: North America Retail; Europe & Australia; Convenience Stores & Foodservice; Pet, and Asia & Latin America. Fiscal 2020 includes 13 months of Pet operating segment results as we changed the Pet operating segment’s reporting period from an April fiscal year end to a May fiscal year end to match our fiscal calendar.

constant currency

20

4

The following tables provide the dollar amount and percentage of netpts

(5)
pts
2
pts
Foreign currency exchange
(8)
pts
(15)
pts
(10)
pts
Net sales and operating profit from each segment for fiscal 2021 and fiscal 2020:

 

 

Fiscal Year

 

2021

 

2020

In Millions

Dollars

Percent of Total

 

Dollars

Percent of Total

Net Sales

 

 

 

 

 

 

 

 

 

North America Retail

$

10,995.4

60

%

 

$

10,750.5

61

%

Europe & Australia

 

1,981.5

11

 

 

 

1,838.9

10

 

Convenience Stores & Foodservice

 

1,742.4

10

 

 

 

1,816.4

10

 

Pet

 

1,732.4

10

 

 

 

1,694.6

10

 

Asia & Latin America

 

1,675.3

9

 

 

 

1,526.2

9

 

Total

$

18,127.0

100

%

 

$

17,626.6

100

%

 

 

 

 

 

 

 

 

 

 

Segment Operating Profit

 

 

 

 

 

 

 

 

 

North America Retail

$

2,623.2

73

%

 

$

2,627.0

75

%

Europe & Australia

 

151.0

4

 

 

 

113.8

3

 

Convenience Stores & Foodservice

 

306.0

9

 

 

 

337.2

10

 

Pet

 

415.0

12

 

 

 

390.7

11

 

Asia & Latin America

 

85.6

2

 

 

 

18.7

1

 

Total

$

3,580.8

100

%

 

$

3,487.4

100

%

Segment operating profit as reviewed by our executive management excludes unallocated corporate items, net gain/loss on divestitures, and restructuring, impairment, and other exit costs that are centrally managed.

NORTH AMERICA RETAIL SEGMENT

Our North America Retail operating segment reflects business with a wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers. Our product categories in this business segment are ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, snack bars, fruit snacks, savory snacks, and a wide variety of organic products including ready-to-eat cereal, frozen and shelf-stable vegetables, meal kits, fruit snacks, snack bars, and refrigerated yogurt.

North America Retail net sales were as follows:

 

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

Fiscal 2020

Net sales (in millions)

$

10,995.4

 

2

%

 

$

10,750.5

Contributions from volume growth (a)

 

 

 

1

pt

 

 

 

Net price realization and mix

 

 

 

1

pt

 

 

 

Foreign currency exchange

 

 

 

Flat

 

 

 

 

growth

(5)
pts
(21)
pts
(8)
pts
Note: Table may
not foot due to rounding.

rounding

(a)Measured in tons based on the stated weight of our product shipments.

Net
earnings
attributable
to
redeemable
and
noncontrolling
interests
decreased
to
$16
million
in
fiscal
2023
compared
to
$28
million in fiscal 2022, primarily driven by the sale of
our interests in Yoplait
SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl in
fiscal 2022.
Average
diluted
shares
outstanding
decreased
by
11 million
in
fiscal
2023
from
fiscal
2022
primarily
due
to
share
repurchases,
partially offset by option exercises.
RESULTS
OF SEGMENT OPERATIONS
Our businesses are organized into four operating segments: North
America Retail, International, Pet, and North America Foodservice
.
In fiscal
2022, we
completed a
new organization
structure to
streamline our
global operations.
We
restated our
net sales
by segment
and
segment
operating
profit
to
reflect
our
new
operating
segments.
These
segment
changes
had
no
effect
on
previously
reported
consolidated net sales, operating profit, net earnings attributable to General
Mills, or earnings per share.
19
The 2 percent increase following tables provide
the dollar amount and percentage
of net sales and operating
profit from each segment for
fiscal 2023 and
fiscal 2022:
Fiscal Year
2023
2022
In Millions
Dollars
Percent of Total
Dollars
Percent of Total
Net Sales
North America Retail
$
12,659.9
63
%
$
11,572.0
61
%
International
2,769.5
14
3,315.7
17
Pet
2,473.3
12
2,259.4
12
North America Foodservice
2,191.5
11
1,845.7
10
Total
$
20,094.2
100
%
$
18,992.8
100
%
Segment Operating Profit
North America Retail
$
3,181.3
78
%
$
2,699.7
74
%
International
161.8
4
232.0
6
Pet
445.5
11
470.6
13
North America Foodservice
290.0
7
255.5
7
Total
$
4,078.6
100
%
$
3,657.8
100
%
Segment
operating
profit
as
reviewed
by
our
executive
management
excludes
unallocated
corporate
items,
net
gain
or
loss
on
divestitures, and restructuring, impairment, and other exit costs that are centrally
managed.
NORTH AMERICA RETAIL
SEGMENT
Our North America Retail
operating segment reflects business
with a wide variety of
grocery stores, mass merchandisers,
membership
stores,
natural
food
chains,
drug,
dollar
and
discount
chains,
convenience
stores,
and
e-commerce
grocery
providers.
Our
product
categories
in
this
business
segment
are
ready-to-eat
cereals,
refrigerated
yogurt,
soup,
meal
kits,
refrigerated
and
frozen
dough
products,
dessert
and
baking
mixes,
frozen
pizza
and
pizza
snacks,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks and snack bars.
North America Retail net sales for fiscal 2021 was primarily driven by favorable netwere as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
12,659.9
9
%
$
11,572.0
Contributions from volume growth (a)
(6)
pts
Net price realization and mix and an increase in contributions from volume growth. The 53rd week in fiscal 2020 contributed 2 percentage points of net sales decline in fiscal 2021, reflecting 2 percentage points of decline from volume.

21

16

The components of North America Retail organic net sales growth are shown in the following table:

Fiscal 2021 vs. 2020 Percentage Change

Contributions from organic volume growth (a)

3

pts

Organic net price realization and mix

1

pt

Organic net sales growth

4

pts

Foreign currency exchange

Flat

53rd week

(2)

pts

Net sales growth

2

pts

pts

Foreign currency exchange
(1)
pt
Note: Table may
not foot due to rounding.

(a)
Measured in tons based on the stated weight of our product shipments.

The
9
percent
increase
in
North
America
Retail
net
sales
for
fiscal
2023
was
driven
by
favorable
net
price
realization
and
mix,
partially offset by a decrease in contributions from volume growth
and unfavorable foreign currency exchange.
20
The components of North America Retail organic net
sales growth are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
16
pts
Organic net sales growth
12
pts
Foreign currency exchange
(1)
pt
Divestitures (b)
(2)
pts
Net sales growth
9
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Divestitures primarily include the impact
of the sale of our Helper main
meals and Suddenly Salad side
dishes businesses in fiscal
2023.
Please see Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report.
North America
Retail organic
net sales
increased 4 12
percent in
fiscal 2021 2023
compared to
fiscal 2020, primarily 2022,
driven by an increase
favorable organic
net
price realization and mix, partially offset by a decrease in
contributions from organic volume growth and favorable organic net price realization and mix.

growth.

Net sales for our North America Retail operating units are shown in the following table:

In Millions

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

Fiscal 2020

U.S. Meals & Baking

$

4,611.6

 

5

%

 

$

4,408.5

U.S. Cereal

 

2,455.2

 

1

%

 

 

2,434.1

U.S. Snacks

 

2,048.3

 

(2)

%

 

 

2,091.9

Canada (a)

 

953.2

 

6

%

 

 

897.0

U.S. Yogurt and other

 

927.1

 

1

%

 

 

919.0

Total

$

10,995.4

 

2

%

 

$

10,750.5

In Millions
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
U.S. Meals & Baking Solutions
$
4,426.3
10
%
$
4,023.8
U.S. Morning Foods
3,620.1
7
%
3,370.9
U.S. Snacks
3,611.0
13
%
3,191.4
Canada (a)
1,002.5
2
%
985.9
Total
$
12,659.9
9
%
$
11,572.0
(a)
On a constant
currency basis, Canada
operating unit net
sales increased 3 8
percent in fiscal 2021.
2023.
See the “Non-GAAP
Measures”
section below for our use of this measure not defined by GAAP.

Segment operati
ng profit
increased 18
percent to
$3,181 million in
fiscal 2023
compared to
$2,700 million
in fiscal
2022,
primarily
driven
by
favorable
net
price
realization
and
mix,
partially
offset
by
higher
input
costs,
a
decrease
in
contributions
from
volume
growth,
and an
increase in
SG&A expenses,
including increased
media and
advertising expenses.
Segment operating
profit of $2,623 million increased
18 percent on
a constant-currency basis
in fiscal 2021 essentially matched2023
compared to fiscal 2020 levels,2022
(see the “Non-GAAP
Measures” section below
for our
use of this measure not defined by GAAP).
INTERNATIONAL SEGMENT
Our International
operating segment
reflects retail
and foodservice
businesses outside
of the
United States
and Canada.
Our product
categories
include
super-premium
ice
cream
and frozen
desserts, meal
kits,
salty
snacks,
snack
bars,
dessert
and
baking
mixes,
and
shelf stable vegetables.
International net sales were as higher input costs werefollows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
2,769.5
(16)
%
$
3,315.7
Contributions from volume growth (a)
(28)
pts
Net price realization and mix
16
pts
Foreign currency exchange
(5)
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The
16
percent
decrease
in
International
net
sales
in
fiscal
2023
was
driven
by
a
decrease
in
contributions
from
volume
growth,
including
the
impact
of volume
declines
from
divestitures
and
the
voluntary
recall
on certain
international
Häagen-Dazs
ice
cream
products, and unfavorable foreign currency exchange, partially offset
by favorable net price realization and mix.
21
The components of International organic net sales growth
are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(8)
pts
Organic net price realization and mix
12
pts
Organic net sales growth
4
pts
Foreign currency exchange
(5)
pts
Divestitures (b)
(16)
pts
Net sales growth
(16)
pts
Note: Table may
not foot due to rounding
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Divestitures primarily include
the impact of
the sale of our
interests in Yoplait
SAS, Yoplait
Marques SNC, and
Liberté Marques
Sàrl and our European dough businesses in fiscal 2022.
Please see Note 3 to the Consolidated Financial Statements in Part II, Item
8 of this report.
The 4
percent increase
in International
organic
net sales
growth in
fiscal 2023
was driven
by favorable
organic
net price
realization
and mix, partially offset by a decrease in contributions
from organic volume growth.
Segment operating
profit decreased
30 percent
to $162 million
in fiscal
2023 compared
to $232
million in
2022, primarily
driven by
higher input costs and
a decrease in contributions
from volume growth,
including the impact of
volume declines from
divestitures and
the
voluntary
recall on
certain
international
Häagen-Dazs
ice
cream
products,
partially
offset
by
favorable
net
price realization
and
mix and a decrease in
SG&A expenses, including an increase
insurance recovery from the voluntary
recall. Segment operating profit
decreased
25 percent on
a constant-currency basis
in fiscal 2023
compared to fiscal 2022
(see the “Non-GAAP
Measures” section below
for our
use of this measure not defined by GAAP).
PET SEGMENT
Our Pet operating segment includes
pet food products sold primarily in the
United States and Canada in national
pet superstore chains,
e-commerce retailers,
grocery stores,
regional pet
store chains,
mass merchandisers,
and veterinary
clinics and
hospitals. Our
product
categories include
dog and
cat food
(dry foods,
wet foods,
and treats)
made with
whole meats,
fruits, and
vegetables and
other high-
quality natural ingredients. Our
tailored pet product offerings
address specific dietary,
lifestyle, and life-stage needs
and span different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
functions,
and textures and cuts for wet foods.
Pet net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
2,473.3
9
%
$
2,259.4
Contributions from volume growth (a)
(2)
pts
Net price realization and mix
12
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Pet net
sales increased
9 percent
in fiscal
2023 compared
to fiscal
2022, driven
by favorable
net price
realization and
mix,
partially
offset by a decrease in contributions from volume growth.
22
The components of Pet organic net sales growth are shown in the following
table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
11
pts
Organic net sales growth
9
pts
Foreign currency exchange
Flat
Acquisition (b)
1
pt
Net sales growth
9
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Acquisition of Tyson
Foods’ pet treats business
in fiscal 2022. Please
see Note 3 to
the Consolidated Financial
Statements in Part
II, Item 8 of this report.
The 9
percent increase
in Pet
organic
net sales
growth in
fiscal 2023
was driven
by favorable
organic
net price
realization and
mix,
partially offset by a decrease in contributions from organic
volume growth.
Pet operating
profit decreased
5 percent
to $446 million
in fiscal
2023, compared
to $471 million
in fiscal
2022, primarily
driven by
higher
input
costs,
an
increase
in
SG&A
expenses,
including
an
increase
in
media
and
advertising
expenses,
and
a
decrease
in
contributions
from volume
growth,
partially
offset
by favorable
net price
realization
and mix.
Segment operating
profit was flatdecreas
ed 5
percent on a constant-currency basis
in fiscal 20212023 compared to fiscal 2020
2022 (see the “Non-GAAP Measures”
section below for our use
of this measure not defined by GAAP).
NORTH AMERICA FOODSERVICE SEGMENT
Our
major
product
categories
in
our
North
America
Foodservice
operating
segment
are
ready-to-eat
cereals,
snacks,
refrigerated
yogurt,
frozen
meals,
unbaked
and
fully
baked
frozen
dough
products,
baking
mixes,
and
bakery
flour.
Many
products
we
sell
are
branded to the consumer
and nearly all are
branded to our customers.
We
sell to distributors and
operators in many customer
channels
including foodservice, vending, and supermarket bakeries.
North America Foodservice net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
2,191.5
19
%
$
1,845.7
Contributions from volume growth (a)
2
pts
Net price realization and mix
16
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North America
Foodservice net sales
increased 19
percent in fiscal
2023,
driven by favorable
net price realization
and mix, including
market index pricing on bakery flour, and an
increase in contributions from volume growth.
23
The components of North America Foodservice organic
net sales growth are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(2)
pts
Organic net price realization and mix
15
pts
Organic net sales growth
13
pts
Foreign currency exchange
Flat
Acquisition (b)
6
pts
Net sales growth
19
pts
Note: Table may
not foot due to rounding
(a)
Measured in tons based on the standard weight of our product shipments.
(b)
Acquisition
of
TNT
Crust
in
fiscal
2023.
Please
see
Note
3
to
the
Consolidated
Financial
Statements
in
Part
II,
Item
8
of
this
report.
The 13
percent increase
in North
America
Foodservice
organic
net sales
growth
in fiscal
2023
was driven
by
favorable organic
net
price realization
and mix,
including market
index pricing
on bakery
flour, partially
offset by
a decrease in
contributions from
organic
volume growth.
Segment
operating
profit
increased
14
percent
to
$290 million
in
fiscal
2023,
compared
to
$256 million
in
fiscal
2022,
primarily
driven by
favorable net
price realization
and mix,
partially offset
by higher
input costs
and an
increase in
SG&A expenses.
Segment
operating
profit
increased
14
percent
on
a
constant-currency
basis
in
fiscal
2023
compared
to
fiscal
2022
(see
the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).

EUROPE & AUSTRALIA SEGMENT

Our Europe & Australia

UNALLOCATED CORPORATE
ITEMS
Unallocated
corporate
items
include
corporate
overhead
expenses,
variances
to
planned
domestic
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative
project-related
costs,
gains
and
losses
on
corporate
investments,
and
other
items
that
are
not
part
of
our
measurement
of
segment
operating
performance.
These
include
gains
and
losses
arising
from
the
revaluation
of
certain
grain
inventories
and
gains
and
losses
from
mark-to-market
valuation
of
certain
commodity
positions
until
passed
back
to
our
operating
segments.
These
items
affecting
operating
profit
are
centrally
managed
at
the
corporate
level
and
are
excluded
from
the
measure
of
segment
profitability
reviewed
by
executive
management.
Under
our
supply
chain
organization,
our
manufacturing, warehouse, and distribution
activities are substantially integrated across
our operations in order to maximize efficiency
and
productivity.
As
a
result,
fixed
assets
and
depreciation
and
amortization
expenses
are
neither
maintained
nor
available
by
operating segment reflects retail and foodservice businesses in the greater Europe and Australia regions. Our product categories include refrigerated yogurt, meal kits, snack bars, super-premium ice cream, refrigerated and frozen dough products, shelf stable vegetables, and dessert and baking mixes. Revenues from franchise fees are reported in the region or country where the franchisee is located.

Europe & Australia net sales were as follows:

 

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

Fiscal 2020

Net sales (in millions)

$

1,981.5

 

8

%

 

$

1,838.9

Contributions from volume growth (a)

 

 

 

(3)

pts

 

 

 

Net price realization and mix

 

 

 

3

pts

 

 

 

Foreign currency exchange

 

 

 

7

pts

 

 

 

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

The 8 percent increase in Europe & Australia net sales in fiscal 2021 was primarily driven by favorable foreign currency exchange and favorable net price realization and mix, partially offset by a decrease in contributions from volume growth. The 53rd week in fiscal 2020 contributed 2 percentage points of net sales decline in fiscal 2021, reflecting 2 percentage points of decline from volume.

segment.

22

Unallocated corporate
expense totaled $1,033

The components of Europe & Australia organic net sales growth are shown in the following table:

Fiscal 2021 vs. 2020 Percentage Change

Contributions from organic volume growth (a)

Flat

Organic net price realization and mix

4

pts

Organic net sales growth

3

pts

Foreign currency exchange

7

pts

Divestiture

(1)

pt

53rd week

(2)

pts

Net sales growth

8

pts

Note: Table may not foot due to rounding

(a)Measured in tons based on the stated weight of our product shipments.

The 3 percent increase in Europe & Australia organic net sales growth in fiscal 2021 was primarily driven by favorable organic net price realization and mix.

Segment operating profit increased 33 percent to $151 million in fiscal 2021

2023, compared
to $403 million
last year.
We
recorded a $292
million
net increase
in expense
related to
the mark-to-market
valuation
of certain
commodity positions
and
grain inventories
in fiscal
2023,
compared to
a $133 million
net decrease
in expense
last year.
We
recorded $84
million of
net losses
related to
valuation adjustments
and the sale of corporate investments in fiscal 2023,
compared to $114 million in 2020, primarily driven by favorable net price realization and mix, partially offset by higher input costs. Segment operating profit increased 24 percent on a constant-currency basis in fiscal 2021 compared to fiscal 2020 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

CONVENIENCE STORES & FOODSERVICE SEGMENT

Our major product categories in our Convenience Stores & Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, baking mixes, and bakery flour. Many products we sell are branded to the consumer 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 in the United States.

Convenience Stores & Foodservice net sales were as follows:

 

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

Fiscal 2020

Net sales (in millions)

$

1,742.4

 

(4)

%

 

$

1,816.4

Contributions from volume growth (a)

 

 

 

(4)

pts

 

 

 

Net price realization and mix

 

 

 

Flat

 

 

 

 

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

Convenience Stores & Foodservice net sales decreased 4 percent in fiscal 2021 primarily driven by a decrease in contributions from volume growth. The 53rd week in fiscal 2020 contributed 1 percentage point of net sales decline in fiscal 2021, reflecting 1 percentage point of decline from volume.

The components of Convenience Stores & Foodservice organic net sales growth are shown in the following table:

Fiscal 2021 vs. 2020 Percentage Change

Contributions from organic volume growth (a)

(2)

pts

Organic net price realization and mix

(1)

pt

Organic net sales growth

(3)

pts

53rd week

(1)

pt

Net sales growth

(4)

pts

Note: Table may not foot due to rounding

(a)Measured in tons based on the standard weight of our product shipments

The 3 percent decrease in Convenience Stores & Foodservice organic net sales growth in fiscal 2021 was primarily driven by a decrease in contributions from organic volume growth and unfavorable organic net price realization and mix.

23

Segment operating profit decreased 9 percent to $306 million in fiscal 2021, compared to $337 million in fiscal 2020, primarily driven by higher input costs, unfavorable net price realization and mix, and a decrease in contributions from volume growth.

PET SEGMENT

Our Pet operating segment includes pet food products sold primarily in the United States in national pet superstore chains, e-commerce retailers, grocery stores, regional pet store chains, mass merchandisers, and veterinary clinics and hospitals. Our product categories include dog and cat food (dry foods, wet foods, and treats) made with whole meats, fruits, and vegetables and other high-quality natural ingredients. Our tailored pet product offerings address specific dietary, lifestyle, and life-stage needs and span different product types, diet types, breed sizes for dogs, lifestages, flavors, product functions and textures, and cuts for wet foods.

Fiscal 2021 included 12 months of results. Fiscal 2020 included 13 months of Pet operating segment results as we changed the Pet operating segment’s reporting period from an April fiscal year end to a May fiscal year end to match our fiscal calendar.

Pet net sales were as follows:

 

 

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

 

Fiscal 2020

Net sales (in millions)

$

1,732.4

 

2

%

 

$

1,694.6

Contributions from volume growth (a)

 

 

 

2

pts

 

 

 

Net price realization and mix

 

 

 

Flat

 

 

 

 

Foreign currency exchange

 

 

 

Flat

 

 

 

 

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

Pet net sales increased 2 percent in fiscal 2021 compared to fiscal 2020, primarily driven by an increase in contributions from volume growth.

The components of Pet organic net sales growth are shown in the following table:

Fiscal 2021 vs. 2020 Percentage Change

Contributions from organic volume growth (a)

2

pts

Organic net price realization and mix

Flat

Organic net sales growth

2

pts

Foreign currency exchange

Flat

Net sales growth

2

pts

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

The 2 percent increase in Pet organic net sales growth in fiscal 2021 was primarily driven by an increase in contributions from organic volume growth.

Pet operating profit increased 6 percent to $415 million in fiscal 2021, compared to $391 million in fiscal 2020, primarily driven by an increase in contributions from volume growth, lower SG&A expenses, and favorable net price realization and mix, partially offset by higher input costs. Segment operating profit increased 6 percent on a constant-currency basis in fiscal 2021 compared to fiscal 2020 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

ASIA & LATIN AMERICA SEGMENT

Our Asia & Latin America operating segment consists of retail and foodservice businesses in the greater Asia and South America regions. Our product categories include super-premium ice cream and frozen desserts, meal kits, dessert and baking mixes, snack bars, salty snacks, refrigerated and frozen dough products, and wellness beverages. We also sell super-premium ice cream and frozen desserts directly to consumers through owned retail shops. Our Asia & Latin America 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 or franchisee is located.

24

Asia & Latin America net sales were as follows:

 

Fiscal 2021

 

Fiscal 2021 vs. 2020 Percentage Change

 

Fiscal 2020

Net sales (in millions)

$

1,675.3

 

10

%

 

$

1,526.2

Contributions from volume growth (a)

 

 

 

10

pts

 

 

 

Net price realization and mix

 

 

 

4

pts

 

 

 

Foreign currency exchange

 

 

 

(4)

pts

 

 

 

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

Asia & Latin America net sales increased 10 percent in fiscal 2021 compared to fiscal 2020, primarily driven by an increase in contributions from volume growth and favorable net price realization and mix, partially offset by unfavorable foreign currency exchange. The 53rd week in fiscal 2020 contributed 2 percentage points of net sales decline in fiscal 2021, reflecting 2 percentage points of decline in volume.

The components of Asia & Latin America organic net sales growth are shown in the following table:

Fiscal 2021 vs. 2020 Percentage Change

Contributions from organic volume growth (a)

12

pts

Organic net price realization and mix

3

pts

Organic net sales growth

15

pts

Foreign currency exchange

(4)

pts

53rd week

(2)

pts

Net sales growth

10

pts

Note: Table may not foot due to rounding.

(a)Measured in tons based on the stated weight of our product shipments.

The 15 percent increase in Asia & Latin America organic net sales in fiscal 2021 was primarily driven by an increase in contributions from organic volume growth and favorable organic net price realization and mix.

Segment operating profit increased $67 million to $86 million in fiscal 2021, compared to $19 million in fiscal 2020, primarily driven by favorable net price realization and mix, an increase in contributions from volume growth, and favorable foreign currency exchange, partially offset by higher input costs.

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 8 to the Consolidated Financial Statements in Item 8 of this report.

In fiscal 2021, unallocated corporate expense decreased $297 million to $212 million compared to $509 million last year. In fiscal 2021, we recorded a $139 million net decrease in expense related to mark-to-market valuation of certain commodity positions and grain inventories, compared to a $25 million net increase in expense in the prior year. In addition, we recorded $2 million of restructuring charges in cost of sales in fiscal 2021, compared to $26 million of restructuring charges and $2 million of restructuring initiative project-related costs in cost of sales in fiscal 2020. We also recorded a $4 million favorable adjustment related to a product recall in our international Green Giant business in fiscal 2021, compared to a $19 million charge in fiscal 2020. In fiscal 2021, we recorded $76 million of net gains related to valuation adjustments and the gain on sale of certain corporate investments, compared to $8$15 million of net losses in fiscal 2022.

In fiscal 2023, we recorded a
$22 million net charge
related to valuation adjustments and the lossa voluntary
recall on sale of certain corporate investments in fiscal 2020. In fiscal 2021, we recorded $10 million of transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business. international
Häagen-Dazs
ice cream products.
In addition, we recorded a $9
$6 million gainof integration
costs primarily related to
our acquisition of TNT Crust
in fiscal 2023, compared
to $22 million of integration
costs
related
to
our
acquisition
of
Tyson
Foods’
pet
treats
business
in
fiscal
2022.
In
fiscal
2022,
we
recorded
$73
million
of
transaction costs primarily related to the sale of our
interests in Yoplait
SAS, Yoplait
Marques SNC, Liberté Marques Sàrl and the sale
of
our
European
dough
businesses.
In
addition,
we
recorded
a
$22
million
recovery
related
to
a
Brazil
indirect
tax
item
and
a
$13
million
insurance
recovery
in
fiscal
2022.
In
addition,
certain
compensation
and
benefits
expenses
and
charitable
contributions
increased in fiscal 2021.

2023 compared to fiscal 2022.

25

IMPACT OF INFLATION

We
experienced
broad
based
global
input
cost
inflation
of 4
13
percent
in
fiscal 2021
2023
and 4
8
percent
in
fiscal 2020, primarily on commodity inputs.
2022.
We
expect
approximately
5
percent
input
cost
inflation
in
fiscal
2024.
We
attempt
to
minimize
the
effects
of approximately 7 percent in fiscal 2022. We attempt to minimize the effects of
inflation
through
HMM, strategic revenue management,
SRM,
planning, and operating practices. Our market risk management
practices are discussed in Item 7A of this report.

LIQUIDITY AND CAPITAL
RESOURCES

The primary source of our
liquidity is cash flow from
operations. Over the most recent
two-year period, our operations have
generated $6.6
$6.1 billion
in cash.
A substantial
portion of
this operating
cash flow
has been
returned to
shareholders through
dividends and
share
repurchases.
We
also
use
cash
from
operations
to
fund
our
capital
expenditures,
acquisitions,
and
debt
service.
We
typically
use
a
24
combination
of
cash,
notes
payable,
and
long-term
debt,
and
occasionally
issue
shares
of
common
stock,
to
finance
significant
acquisitions. We typically use a combination
As of
May
28,
2023,
we had
$381
million
of cash notes payable,
and long-term debt, and occasionally issue shares
cash equivalents
held
in foreign
jurisdictions.
In
anticipation
of common stock, to finance significant acquisitions. Our sources of liquidity were not materially impacted
repatriating
funds
from the COVID-19 pandemic.

As of May 30, 2021,

foreign
jurisdictions,
we had $687 million of
record
local
country
withholding
taxes
on
our
international
earnings,
as
applicable.
We
may
repatriate our
cash and
cash equivalents held in foreign jurisdictions. In anticipation of repatriating funds from foreign jurisdictions, we record local country withholding taxes on our international earnings, as applicable. We may repatriate our cash and cash equivalents
held by
our foreign
subsidiaries without
such funds
being subject
to further
U.S. income
tax
liability. Earnings
prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in
those jurisdictions.

Cash Flows from Operations

 

Fiscal Year

In Millions

2021

 

2020

Net earnings, including earnings attributable to redeemable and noncontrolling interests

$

2,346.0

 

$

2,210.8

Depreciation and amortization

 

601.3

 

 

594.7

After-tax earnings from joint ventures

 

(117.7)

 

 

(91.1)

Distributions of earnings from joint ventures

 

95.2

 

 

76.5

Stock-based compensation

 

89.9

 

 

94.9

Deferred income taxes

 

118.8

 

 

(29.6)

Pension and other postretirement benefit plan contributions

 

(33.4)

 

 

(31.1)

Pension and other postretirement benefit plan costs

 

(33.6)

 

 

(32.3)

Divestiture loss

 

53.5

 

 

-

Restructuring, impairment, and other exit costs

 

150.9

 

 

43.6

Changes in current assets and liabilities, excluding the effects of divestiture

 

(155.9)

 

 

793.9

Other, net

 

(131.8)

 

 

45.9

Net cash provided by operating activities

$

2,983.2

 

$

3,676.2

During fiscal 2021, cash provided by operations was $2,983 million compared

Fiscal Year
In Millions
2023
2022
Net earnings, including earnings attributable to $3,676 million in the same period last year. The $693 million decrease was primarily driven by a $950 million changeredeemable and noncontrolling
interests
$
2,609.6
$
2,735.0
Depreciation and amortization
546.6
570.3
After-tax earnings from joint ventures
(81.3)
(111.7)
Distributions of earnings from joint ventures
69.9
107.5
Stock-based compensation
111.7
98.7
Deferred income taxes
(22.2)
62.2
Pension and other postretirement benefit plan contributions
(30.1)
(31.3)
Pension and other postretirement benefit plan costs
(27.6)
(30.1)
Divestitures gain, net
(444.6)
(194.1)
Restructuring, impairment, and other exit costs (recoveries)
24.4
(117.1)
Changes in current assets and liabilities, partially offsetexcluding the effects of
acquisitions and divestitures
(48.9)
277.4
Other, net
71.1
(50.7)
Net cash provided by operating activities
$
2,778.6
$
3,316.1
During
fiscal
2023,
cash
provided
by
operations
was
$2,779
million
compared
to
$3,316 million
in
the
same
period
last
year.
The
$538 million decrease
was primarily driven by
a $148$326 million change in deferred income taxes and a $135 million increase in net earnings. The $950 million change in
current assets and liabilities was primarily driven by
and a $458$250 million
change in inventory balances net
divestitures
gain.
The
$326
million
change
in
current
assets
and
liabilities
was
primarily
driven
by
a $296
$233
million
change
in
inventories
and
a
$257
million
change
in
accounts
payable,
partially
offset
by
a
$125
million
change
in
the
timing
of
accounts
receivable.
We
strive
to
grow
core
working
capital
at
or
below
the
rate
of
growth
in
our
net
sales.
For
fiscal
2023,
core
working
capital
net
liability
decreased
20
percent,
compared
to
a
net
sales
increase
of
6
percent.
The
core
working
capital
net
liability
decreased
$84
million changefrom a
net liability of
$423 million in other current liabilities, primarily driven by changes in income taxes payable, incentive accruals, and trade and advertising accruals.

We strive

fiscal 2022 to grow core working capital at or below the rate of growth in our net sales. For fiscal 2021, core working capital increased 6 percent, compared to a net sales increase of 3 percent. As of May 30, 2021, our core working capital balance was
a net liability of $194
$339 million compared to ain
fiscal 2023. The
$84 million net
liability of $206 million in fiscal 2020. The $12 million change
decrease was primarily due to lower inventory balancesan increase in fiscal 2020 driven by the surge in at-home demand at the outset of the pandemic,inventories, partially offset
by an increase in accounts payable in fiscal 2021 due to increased costs incurred to service demand. In fiscal 2020, core working capital decreased $591 million, compared to a net sales increase of 5 percent.

2023.

26

Cash Flows from Investing Activities

 

Fiscal Year

In Millions

2021

 

2020

Purchases of land, buildings, and equipment

$

(530.8)

 

$

(460.8)

Investments in affiliates, net

 

15.5

 

 

(48.0)

Proceeds from disposal of land, buildings, and equipment

 

2.7

 

 

1.7

Proceeds from divestiture

 

2.9

 

 

-

Other, net

 

(3.1)

 

 

20.9

Net cash used by investing activities

$

(512.8)

 

$

(486.2)

Fiscal Year
In fiscal 2021, we used $513 millionMillions
2023
2022
Purchases of land, buildings, and equipment
$
(689.5)
$
(568.7)
Acquisitions, net of cash throughacquired
(251.5)
(1,201.3)
Investments in affiliates, net
(32.2)
15.4
Proceeds from disposal of land, buildings, and equipment
1.3
3.3
Proceeds from divestitures, net of cash divested
633.1
74.1
Other, net
(7.6)
(13.5)
Net cash used by investing activities
$
(346.4)
$
(1,690.7)
In
fiscal
2023,
we
used
$346 million
of
cash
through
investing
activities
compared
to $486
$1,691 million
in
fiscal 2020.
2022.
We
invested $531
$690 million in land, buildings, and equipment in fiscal 2021, 2023,
an increase of $70$121 million from fiscal 2020.

2022.

During fiscal 2023, we acquired TNT Crust for $252 million cash, net of cash acquired.
During fiscal 2023, we completed the sale of
our Helper main meals and Suddenly Salad side dishes businesses for cash proceeds
of $607 million.
During fiscal 2022, we acquired Tyson
Foods’ pet treats business for an aggregate purchase price of $1.2 billion. During fiscal
2022,
we sold our interests in Yoplait
SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl for cash proceeds
of $32 million, net of cash
25
divested,
as part of the sale. We expect capital expenditures to be approximately 3.5 percentalso completed
the sale of reported net salesour European dough businesses in fiscal 2022. 2022 for cash proceeds of $42
million.
We
expect
capital
expenditures
to
be
approximately
4
percent
of
reported
net
sales
in
fiscal
2024.
These
expenditures
will
fund
initiatives that are expected to fuel growth, support innovative products,
and continue HMM initiatives throughout the supply chain.

Cash Flows from Financing Activities

 

Fiscal Year

In Millions

2021

 

2020

Change in notes payable

$

71.7

 

$

(1,158.6)

Issuance of long-term debt

 

1,576.5

 

 

1,638.1

Payment of long-term debt

 

(2,609.0)

 

 

(1,396.7)

Debt exchange participation incentive cash payment

 

(201.4)

 

 

-

Proceeds from common stock issued on exercised options

 

74.3

 

 

263.4

Purchases of common stock for treasury

 

(301.4)

 

 

(3.4)

Dividends paid

 

(1,246.4)

 

 

(1,195.8)

Distributions to redeemable and noncontrolling interest holders

 

(48.9)

 

 

(72.5)

Other, net

 

(30.9)

 

 

(16.0)

Net cash used by financing activities

$

(2,715.5)

 

$

(1,941.5)

Fiscal Year
In Millions
2023
2022
Change in notes payable
$
(769.3)
$
551.4
Issuance of long-term debt
2,324.4
2,203.7
Payment of long-term debt
(1,421.7)
(3,140.9)
Proceeds from common stock issued on exercised options
232.3
161.7
Purchases of common stock for treasury
(1,403.6)
(876.8)
Dividends paid
(1,287.9)
(1,244.5)
Distributions to redeemable and noncontrolling interest holders
(15.7)
(129.8)
Other, net
(62.6)
(28.0)
Net cash used by financing activities
$
(2,404.1)
$
(2,503.2)
Financing activities
used $2.7$2.4 billion
of cash
in fiscal 2021
2023 compared
to $2.5 billion
in fiscal
2022. We
had $133 million
of net
debt
issuances in
fiscal 2023
compared to $1.9 billion in fiscal 2020. We had $961
$386 million of
net debt repayments
in fiscal 2021 compared to $917 million of net debt repayments in fiscal 2020. In addition, we paid a participation incentive of $201 million related to a debt exchange in fiscal 2021. 2022.
For more
information on
our debt
issuances
and payments, please refer to Note 9 to the Consolidated Financial Statements in
Item 8 of this report.

During
fiscal 2021,
2023,
we
received $74
$232 million
of
net
proceeds
from
common
stock
issued
on
exercised
options
compared
to $263
$162 million in fiscal 2020.

2022.

During fiscal 2021, 2023, we
repurchased 18 million shares
of our common stock for
$1,404 million. During fiscal 2022,
we repurchased 5 14
million shares of our common stock for $301$877 million. Share repurchases in fiscal 2020 were insignificant.

Dividends paid in fiscal 20212023 totaled $1,246
$1,288 million, or $2.02$2.16 per share. Dividends
paid in fiscal 2020 2022
totaled $1,196$1,244 million, or $1.96 $2.04
per share.

Selected Cash Flows from Joint Ventures

Selected cash flows from our joint ventures are set forth in the following table:

 

Fiscal Year

Inflow (Outflow), in Millions

2021

 

2020

Investments in affiliates, net

$

15.5

 

$

(48.0)

Dividends received

 

95.2

 

 

76.5

27

Fiscal Year

Inflow (Outflow), in Millions

2023
2022
Investments in affiliates, net
$
(32.2)
$
15.4
Dividends received
69.9
107.5
The following table details the fee-paid committed and uncommitted credit
lines we had available as of May 30, 2021:

In Billions

Facility Amount

 

Borrowed Amount

Credit facility expiring:

 

 

 

 

 

April 2026

$

2.7

 

$

-

September 2022

 

0.2

 

 

-

Total committed credit facilities

 

2.9

 

 

-

Uncommitted credit facilities

 

0.6

 

 

0.4

Total committed and uncommitted credit facilities

$

3.5

 

$

0.4

28, 2023:

In Billions
Facility Amount
Borrowed Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
and uncommitted credit facilities
$
3.3
$
-
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe. In response to uncertainty surrounding the availability and cost of commercial paper borrowings as a result of the COVID-19 pandemic, we issued $750 million of fixed-rate notes in April 2020 and reduced our borrowings under commercial paper programs. As the COVID-19 pandemic evolves, we will continue to evaluate its impact to our sources of liquidity.
We also have uncommitted and asset-backed credit lines that support our foreign operations.

We

have material
contractual obligations
that arise
in the
normal course
of business
and we
believe that
cash flows
from operations
will be adequate to meet our liquidity and capital needs for at least the next 12
months.

26
Certain
of
our
long-term
debt
agreements,
our
credit
facilities,
and
our
noncontrolling
interests
contain
restrictive
covenants.
As
of
May 30, 2021,28, 2023, we were in compliance with all of these covenants.

We
have $2,464$1,709 million
of long-term debt
maturing in the
next 12 months
that is classified
as current, including €200
$500 million of 2.2
3.65
percent fixed-rate notes due June 2021, €500February
15, 2024, $400 million of 0.0 percent fixed-rate floating-rate
notes due August 2021,October 17, 2023, €500
million of 0.0 percent fixed-rate floating-rate
notes due July
27, 2023, and €250
million of floating-rate
notes due November 2021, and $1 billion of 3.15 percent fixed-rate notes due December 2021.
10, 2023. We
believe that cash
flows from operations,
together
with available
short- and
long-term
debt financing,
will be
adequate
to meet
our liquidity
and capital
needs for
at least
the
next 12 months.

As of May 30, 2021,
28, 2023,
our total debt,
including the
impact of derivative
instruments designated
as hedges, was 88
80 percent
in fixed-rate
and 20
percent in
floating-rate instruments,
compared to
77 percent
in fixed-rate
and 12 23
percent in
floating-rate instruments compared to 87 percent in fixed-rate and 13 percent in floating-rate instruments
on May 31, 2020.

Our net debt to operating cash flow ratio increased to 3.7 in fiscal 2021

29, 2022.
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class
A
Interests
receives
quarterly
preferred
distributions
from 3.2 in fiscal 2020, primarily driven by a decrease in cash provided by operations. Our net debt-to-adjusted EBITDA ratio declined to 2.9 in fiscal 2021 from 3.2 in fiscal 2020 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

We have a 51 percent controlling interest in Yoplait SAS and a 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl. Sodiaal International (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 30, 2021, the redemption value of the redeemable interest was $605 million which approximates its fair value.

In March 2021, we entered into a non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business to Sodiaal. As part of the proposed transaction, we would obtain Sodiaal’s 49 percent ownership interest in our Canadian yogurt business, making the Canadian yogurt business a wholly owned subsidiary. The proposed transaction would be anticipated to close in fiscal 2022, subject to labor consultations, regulatory filings, and other customary closing conditions.

The third-party holder of the General Mills Cereals, LLC (GMC) Class A Interests receives quarterly preferred distributions from

available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most
recent mark-to-marketmark
-to-market valuation (currently
(currently $252
million). On June 1, 2021, the The
floating preferred
return rate
on GMC’s
Class A
Interests was reset to is
the sum of three-month LIBORthree
-month Term
SOFR plus 160 186
basis points. The preferred
return rate is adjusted
every three years
through a negotiated
agreement with the Class A Interest holder or through a remarketing auction.

We
have an option
to purchase the
Class A Interests for
consideration equal to
the then current
capital account value,
plus any unpaid
preferred return
and the
prescribed make-whole
amount. If
we purchase
these interests,
any change
in the
third-party holder’s
capital
account
from
its
original
value
will
be
charged
directly
to
retained
earnings
and
will
increase
or
decrease
the
net
earnings
used
to
calculate EPS in that period.

28

CRITICAL ACCOUNTING ESTIMATES

For a complete description of our
significant accounting policies, please see Note
2 to the Consolidated Financial
Statements in Item 8
of this report. Our critical accounting
estimates are those that have
a meaningful impact on the reporting of our
financial condition and
results of operations.
These estimates include
our accounting for
revenue recognition, valuation
of long-lived assets,
intangible assets, redeemable interest,
stock-based compensation, income taxes, and defined benefit pension,
other postretirement benefit, and postemployment benefit plans.

Considerations related to the COVID-19 pandemic

The continuing impact that the recent COVID-19 pandemic will have on our consolidated results of operations is uncertain. We saw increased orders from retail customers across all geographies in response to increased consumer demand for food at home. We also experienced a COVID-19-related decrease in consumer traffic in away-from-home food outlets. In fiscal 2022, we expect at-home food demand will decline year over year across most of our core markets though will remain above pre-pandemic levels. Conversely, we expect away-from home food demand to continue to recover, though not fully to pre-pandemic levels. We expect one of the largest factors impacting our performance will be relative balance of at-home versus away-from-home consumer food demand, primarily driven by the level of virus control in markets around the world, which remains uncertain. We have considered the potential impacts of the COVID-19 pandemic in our significant accounting estimates as of May 30, 2021, and will continue to evaluate the nature and extent of the impact to our business and consolidated results of operations.

plans

.
Revenue Recognition

Our
revenues
are
reported
net
of
variable
consideration
and
consideration
payable
to
our
customers,
including
trade
promotion,
consumer
coupon
redemption,
and
other
reductions
to
the
transaction
price,
including
estimated
allowances
for
returns,
unsalable
product,
and
prompt
pay
discounts.
Trade
promotions
are
recorded
using
significant
judgment
of
estimated
participation
and
performance levels
for offered
programs at the
time of sale.
Differences between
the estimated and
actual reduction to
the transaction
price
are
recognized
as
a
change
in
estimate
in
a
subsequent
period.
Our
accrued
trade
and
coupon
promotion
liabilities
were $508
$394 million
as of
May 30, 2021,28,
2023, and $471
$420 million
as of
May 31, 2020.29,
2022. Because
these amounts
are significant,
if our
estimates are
inaccurate we would have to make adjustments in subsequent periods that could have
a significant effect on our results of operations.

Valuation
of Long-Lived Assets

We
estimate
the useful
lives
of long-lived long
-lived
assets and
make
estimates concerning
undiscounted
cash flows
to review
for impairment
whenever
events or
changes in
circumstances indicate
that the
carrying
amount of
an asset (or
(or asset
group)
may not
be recoverable.
Fair value is measured using discounted cash flows or independent appraisals,
as appropriate.

Intangible Assets

Goodwill
and
other
indefinite-lived
intangible
assets
are
not
subject
to
amortization
and
are
tested
for
impairment
annually
and
whenever
events or
changes in
circumstances
indicate
that impairment
may have
occurred. Our
estimates of
fair value
for
goodwill
impairment
testing
are determined
based on
a
discounted
cash
flow
model.
We
use
inputs from
our
long-range
planning
process to
determine
growth
rates
for
sales
and
profits.
We
also
make
estimates
of
discount
rates,
perpetuity
growth
assumptions,
market
comparables, and other factors.

We evaluate the
useful lives of our other intangible assets, mainly brands, to
determine if they are finite or indefinite-lived.
Reaching a
determination
on
useful
life
requires
significant
judgments
and
assumptions
regarding
the
future
effects
of
obsolescence,
demand,
competition, other economic
factors (such as the
stability of the industry,
known technological advances,
legislative action that
results
in an uncertain or
changing regulatory environment,
and expected changes in
distribution channels), the level
of required maintenance
expenditures,
and
the
expected
lives
of
other
related
groups
of
assets.
Intangible
assets
that
are
deemed
to
have
finite
lives
are
amortized
on a
straight-line basis
over their
useful lives,
generally
ranging from
4 to
30 years.
Our estimate
of the
fair value
of our
brand
assets
is
based
on
a
discounted
cash
flow
model
using
inputs
which
include
projected
revenues
from
our
long-range
plan,
assumed royalty rates that could be payable if we did not own the brands, and
a discount rate.

27
As of
May 30, 2021,
28,
2023,
we
had $21
$21 billion
of
goodwill
and
indefinite-lived
intangible
assets. While
we
currently
believe
that
the
fair
value of each
intangible exceeds its carrying
value,
and that those intangibles
will contribute indefinitely
to our cash flows,
materially
different
assumptions
regarding
future performance
of our
businesses
or
a different
weighted-average
cost
of capital
could
result
in
material impairment losses
and amortization expense.
We
performed our fiscal 2021
2023
assessment of our
intangible assets as of
the first
day
of
the
second
quarter
of
fiscal 2021,
2023,
and
we
determined
there
was
no
impairment
of
our
intangible
assets
as
their
related
fair
values
were
substantially
in
excess
of
the
carrying values.

While

value,
except
for
Uncle
Toby’s
band
intangible
asset.
In
addition,
while
having
significant
coverage
as
of
our
fiscal 2021
2023
assessment
date,
the Europe & Australia reporting unit
Progresso
and the Progresso, Green Giant, and
EPIC
brand
intangible
assets
had
risk
of
decreasing
coverage. We will continue
to monitor these businesses for potential impairment.

29

Redeemable Interest

The significant assumptions used to estimate the redemption value of the redeemable interest 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 30, 2021, the redemption value of the redeemable interest was $605 million.

Stock-based Compensation

The valuation of
stock options is a
significant accounting estimate
that requires us to
use judgments and
assumptions that are
likely to
have a material
impact on
our financial statements.
Annually,
we make predictive
assumptions regarding
future stock price
volatility,
employee exercise behavior,
dividend yield, and
the forfeiture rate. For
more information on
these assumptions, please
see Note 12
to
the Consolidated Financial Statements in Item 8 of this report.

The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Fiscal Year
2023
2022
2021
Estimated fair values of stock options granted and the assumptions used for the Black-Scholes option-pricing model were as follows:

 

Fiscal Year

 

2021

 

2020

 

2019

Estimated fair values of stock options granted

$

8.03

 

 

$

7.10

 

 

$

5.35

 

Assumptions:

 

 

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

0.7

%

 

 

2.0

%

 

 

2.9

%

Expected term

 

8.5

years

 

 

8.5

years

 

 

8.5

years

Expected volatility

 

19.5

%

 

 

17.4

%

 

 

16.3

%

Dividend yield

 

3.3

%

 

 

3.6

%

 

 

4.3

%

$
14.16
$
8.77
$
8.03
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
0.7
%
Expected term
8.5
years
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
19.5
%
Dividend yield
3.1
%
3.4
%
3.3
%
The risk-free interest rate
for periods during the
expected term of the options
is based on the U.S. Treasury
zero-coupon yield curve in
effect at the time of grant. An increase in the expected term by
1 year, leaving all other assumptions constant, would increase
decrease the grant
date
fair value
by less
than
1 percent. percent
.
If all
other
assumptions
are held
constant,
a one
percentage
point
increase
in our
fiscal 2021
2023
volatility assumption would increase the grant date fair value of our fiscal 2021 2023
option awards by 75 percent.

To
the extent
that actual
outcomes differ
from our
assumptions, we
are not
required to
true up
grant-date fair
value-based expense
to
final
intrinsic
values.
Historical
data
has
a
significant
bearing
on
our
forward-looking
assumptions.
Significant
variances
between
actual and predicted experience could lead to prospective
revisions in our assumptions, which could then significantly
impact the year-over-yearyear-
over-year comparability of stock-based compensation expense.

Any corporate
income tax
benefit realized
upon exercise
or vesting
of an
award in
excess of
that previously
recognized in
earnings (referred
(referred to as
a windfall tax benefit)
is presented in the
Consolidated Statements of
Cash Flows as an
operating cash flow.
The actual
impact on future years’
cash flows will depend,
in part, on the volume
of employee stock option
exercises during a particular
year and
the
relationship
between
the
exercise-date
market
value
of
the
underlying
stock
and
the
original
grant-date
fair
value
previously
determined for financial reporting purposes.

Realized windfall
tax benefits
and shortfall
tax deficiencies
related to the
exercise or
vesting of
stock-based awards
are recognized
in
the Consolidated Statement
of Earnings. Because
employee stock option
exercise behavior is not
within our control,
it is possible that
significantly different reported results could occur if different
assumptions or conditions were to prevail.

Income Taxes

We
apply a more-likely-than-not
threshold to the
recognition and derecognition
of uncertain tax
positions. Accordingly,
we recognize
the amount of
tax benefit that
has a greater
than 50 percent
likelihood of being
ultimately realized upon
settlement. Future
changes in
judgment related
to the
expected ultimate
resolution of
uncertain tax
positions will
affect earnings
in the
period of
such change.
For
more information on income taxes, please see Note 15 to the Consolidated Financial
Statements in Item 8 of this report.

Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
Benefit Plans

We have
defined benefit pension plans
covering many employees in the United
States, Canada, Switzerland, France, and the
United Kingdom.
We also
sponsor plans that provide
health care benefits to
many of our retirees
in the United States, Canada,
and Brazil. Under certain
circumstances,
we
also
provide
accruable
benefits,
primarily
severance,
to
former
and
inactive
employees
in
the
United
States,
Canada,
and
Mexico.
Please see
Note
14
to
the
Consolidated
Financial
Statements
in
Item
8
of
this
report
for
a
description
of
our
defined benefit pension, other postretirement benefit, and postemployment
benefit plans.

28
We
recognize
benefits
provided
during
retirement
or
following
employment
over
the
plan
participants’
active
working
lives.
Accordingly,
we
make
various
assumptions
to
predict
and
measure
costs
and
obligations
many
years
prior
to
the
settlement
of
our
obligations.
Assumptions
that
require
significant
management
judgment
and
have
a material
impact
on
the
measurement
of
our
net

30

periodic
benefit

expense
or
income
and
accumulated
benefit
obligations
include
the
long-term
rates
of
return
on
plan
assets,
the

periodic benefit expense or income and accumulated benefit obligations include the long-term rates of return on plan assets, the interest rates used to discount the obligations for our benefit plans, and health

care cost trend rates.

Expected Rate of Return on Plan Assets

Our expected
rate of return
on plan assets
is determined
by our asset
allocation, our
historical long-term
investment performance,
our
estimate of future long-term returns
by asset class (using input from our
actuaries, investment services, and investment
managers), and
long-term inflation
assumptions. We
review this assumption
annually for
each plan; however,
our annual
investment performance
for
one particular year does not, by itself, significantly influence our evaluation.

Our
historical
investment
returns (compound
(compound
annual
growth
rates)
for
our
United
States
defined
benefit
pension
and
other
postretirement
benefit
plan
assets
were 11.4
a
5.7
percent
loss
in
the
1-year
period
ended
May
28,
2023
and
returns
of
3.4
percent,
5.9
percent, 10.8 percent, 9.3 percent, 8.05.5 percent, and 8.37.7 percent for the 1, 5, 10, 15, and 20 year20-year periods
ended May 30, 2021.

28, 2023.

On a weighted-average basis, the
expected rate of return for all
defined benefit plans was 6.70
percent for fiscal 2023, 5.85
percent for
fiscal 2022, and 5.72 percent for fiscal 2021, 6.95 percent for fiscal 2020, and 7.25 percent for fiscal 2019. 2021.
For fiscal 2022,2024, we increased our weighted-average expected
rate of return on plan assets
for our principal
defined benefit pension
and other postretirement
plans in the
United States to 5.96
7.20 percent due
to expected higher prospective
long-term asset returns.

Lowering the expected long-term rate of returnreturns primarily on fixed income investments.

Lowering
the
expected
long-term
rate
of
return
on
assets
by
100
basis
points
would
increase
our
net
pension
and
postretirement
expense by $72$62 million for
fiscal 2022.2024. A market-related
valuation basis is used to reduce
year-to-year expense volatility.
The market-relatedmarket-
related valuation
recognizes certain
investment gains
or losses
over a
five-year period
from the
year in
which they
occur.
Investment
gains or
losses for
this purpose
are the difference
between the
expected return
calculated using
the market-related
value of
assets and
the
actual
return
based
on
the
market-related
value
of
assets.
Our
outside
actuaries
perform
these
calculations
as
part
of
our
determination of annual expense or income.

Discount Rates

We
estimate
the
service
and
interest
cost
components
of
the
net
periodic
benefit
expense
for
our
United
States
and
most
of
our
international
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plans
utilizing
a
full
yield
curve
approach
by applying
the specific
spot rates
along
the yield
curve used
to determine
the benefit
obligation
to the
relevant projected
cash flows. Our
discount rate assumptions
are determined annually
as of May 31
for our defined
benefit pension, other
postretirement
benefit,
and
postemployment
benefit
plan
obligations.
We
work
with
our
outside
actuaries
to
determine
the
timing
and
amount
of
expected future cash outflows to plan
participants and, using the Aa Above
Median corporate bond yield, to develop a
forward interest
rate curve, including
a margin to
that index based
on our credit
risk. This forward
interest rate curve including a margin to that index based on our credit risk. This forward interest rate curve
is applied to
our expected
future
cash outflows to determine our discount rate assumptions.

Our weighted-average discount rates were as follows:

 

Defined Benefit Pension Plans

 

Other Postretirement Benefit Plans

 

Postemployment Benefit Plans

Effective rate for fiscal 2022 service costs

3.53

%

 

3.34

%

 

2.46

%

Effective rate for fiscal 2022 interest costs

2.42

%

 

2.08

%

 

1.48

%

Obligations as of May 31, 2021

3.17

%

 

3.03

%

 

2.04

%

Effective rate for fiscal 2021 service costs

3.59

%

 

3.44

%

 

2.54

%

Effective rate for fiscal 2021 interest costs

2.54

%

 

2.32

%

 

1.41

%

Obligations as of May 31, 2020

3.20

%

 

3.02

%

 

1.85

%

Effective rate for fiscal 2020 service costs

4.19

%

 

4.04

%

 

3.51

%

Effective rate for fiscal 2020 interest costs

3.47

%

 

3.28

%

 

2.84

%

Defined Benefit
Pension Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Effective rate for fiscal 2024 service costs
5.27
%
5.15
%
5.00
%
Effective rate for fiscal 2024 interest costs
5.06
%
4.96
%
4.61
%
Obligations as of May 31, 2023
5.18
%
5.19
%
4.55
%
Effective rate for fiscal 2023 service costs
4.57
%
4.41
%
3.69
%
Effective rate for fiscal 2023 interest costs
4.03
%
3.80
%
3.35
%
Obligations as of May 31, 2022
4.39
%
4.36
%
3.62
%
Effective rate for fiscal 2022 service costs
3.53
%
3.34
%
2.46
%
Effective rate for fiscal 2022 interest costs
2.42
%
2.08
%
1.48
%
Lowering
the
discount
rates
by
100
basis
points
would
increase
our
net
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment benefit plan expense
for fiscal 20222024 by approximately $54
$30 million. All obligation-related
experience gains and losses
are amortized
using
a straight-line
method over
the average
remaining
service period
of active
plan participants
or over
the average
remaining lifetime of the remaining plan participants if the plan is viewed as “all or
almost all” inactive participants.

29
Health Care Cost Trend
Rates

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

31

and projections, and

assumptions used by other
similar organizations.
Our initial health
care cost trend
rate is adjusted
as necessary to
remain consistent
with this
review,
recent experiences,
and short-term
expectations. Our
initial health
care cost
trend rate
assumption
is 6.3 6.6
percent for
retirees age
65 and
over and 6.0
6.6 percent
for retirees
under age
65 at
the end
of fiscal 2021.
2023. Rates
are graded
down
annually until
the ultimate
trend rate
of 4.5
percent is
reached in 2029
2032 for
all retirees.
The trend
rates are
applicable for
calculations
only if
the retirees’
benefits increase
as a
result of
health care
inflation. The
ultimate trend
rate is
adjusted annually,
as necessary,
to
approximate
the
current
economic
view
on
the
rate
of
long-term
inflation
plus
an
appropriate
health
care
cost
premium.
Assumed
trend rates for health care costs have an important effect on the
amounts reported for the other postretirement benefit plans.

Any
arising
health
care
claims cost-related
experience
gain
or
loss is
recognized
in the
calculation
of expected
future claims.
Once
recognized, experience gains and
losses are amortized using a straight-linestraight
-line method over the average remaining
service period of active
plan participants
or over
the average
remaining lifetime
of the
remaining plan
participants if
the plan
is viewed
as “all
or almost
all”
inactive participants.

Financial Statement Impact

In
fiscal
2023,
we
recorded
net
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plan
income
of
$6 million
compared to
$26 million of
income in
fiscal 2021, we recorded net defined benefit pension, other postretirement benefit, 2022
and postemployment benefit plan expense of $4 million compared to $2 million
of income expense
in fiscal 2020 and $24 million of expense in fiscal 2019.
2021. As
of May 30, 2021,
28, 2023,
we had
cumulative unrecognized
actuarial net losses of $2
$2 billion on our
defined benefit pension plans
and cumulative unrecognized
actuarial
net
gains
of $179
$189 million
on
our
postretirement
and
postemployment
benefit
plans,
mainly
as
the
result
of
liability
increases
from
lower historical
interest rates, partially offset by recent increases in the values of plan assets.rates. These
unrecognized actuarial net
losses will result
in increases in
our future pension
and postretirement
benefit expenses because they currently exceed the corridors defined by
GAAP.

Actual
future
net
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plan
income
or
expense
will
depend on
investment performance,
changes in
future discount
rates, changes
in health care
cost trend
rates, and
other factors
related
to the populations participating in these plans.

RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2020,
December
2022,
the
Financial
Accounting
Standards
Board
(FASB)
issued
optional
accounting
guidance
for
a
limited
period
of
time
to
ease
the
potential
burden
in
accounting
for
reference
rate
reform.
The
new
standard
provides
expedients
and
exceptions
to
existing accounting requirements
for contract modifications and
hedge accounting related to
transitioning from discontinued
reference
rates,
such
as
LIBOR,
to
alternative
reference
rates,
if
certain
criteria
are
met.
The
new
accounting
requirements
can
be
applied
through
December 31,
2024.
We
have
reviewed
and
modified
certain
contracts,
where
necessary,
to
apply
a
new
reference
rate,
primarily the SOFR. The guidance
has not had and
is not expected to alternative reference rates, if certain criteria are met. The new accounting requirements can be applied as of the beginning of the interim period including March 12, 2020, or any date thereafter, through December 31, 2022. We are in the process of reviewing our contracts and arrangements that will be affected by have
a discontinued reference rate and are analyzing thematerial impact of this guidance on
our results of operations
and financial
position.

We

will continue
to review
our contracts
and arrangements
that will
be affected
by a
discontinued reference
rate during
the
transition period.
In September 2022,
the FASB
issued Accounting Standards
Update (ASU) 2022-04
requiring enhanced disclosures
related to supplier
financing programs.
The ASU
requires disclosure
of the
key terms
of the
program and
a rollforward
of the
related obligation
during
the annual period,
including the amount of
obligations confirmed and
obligations subsequently paid.
The new disclosure requirements
are effective
for fiscal years beginning
after December 15, 2022,
with the exception
of the rollforward requirement,
which is effective
for fiscal years beginning
after December 15, 2023,
which for us is
the first quarter of
fiscal 2024 for the
primary requirement and
the
first quarter
of fiscal
2025 for
the rollforward
requirement. Early
adoption is
permitted. We
have historically
presented the
key terms
of these
programs
and the
associated obligation
outstanding. We
do not
expect this
ASU to
have a
material
impact on
our financial
statements and related disclosures.
NON-GAAP MEASURES

We
have
included
in
this
report
measures
of
financial
performance
that
are not
defined
by
GAAP.
We
believe
that
these
measures
provide useful information to investors and include these measures in other
communications to investors.

For each
of these
non-GAAP financial
measures, we
are providing
below a
reconciliation of
the differences
between the
non-GAAP
measure and the most
directly comparable GAAP measure,
an explanation of why
we believe the non-GAAP
measure provides useful
information to
investors, and
any additional
material purposes
for which
our management
or Board
of Directors
uses the
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
in lieu of, the comparable GAAP measure.

30
Significant Items Impacting Comparability
Several
measures
below
are
presented
on
an
adjusted
basis.
The
adjustments
are
either
items
resulting
from
infrequently
occurring
events or items that, in management’s
judgment, significantly affect the year-to-year
assessment of operating results.

Organic Net Sales Growth Rates

We provide organic net sales growth rates for our consolidated net sales and segment net sales. This measure is used in reporting to our Board

The following are descriptions of Directors and executive management and as a component of the measurement significant items impacting comparability
of our performance for incentive compensation purposes. We believe that organicresults.
Divestitures gain, net sales growth rates provide useful information
Net divestitures
gain primarily
related to investors because they provide transparency to underlying performance in our net sales by excluding
the effect that foreign currency exchange rate fluctuations, as well as acquisitions, divestitures, and a 53rd week, when applicable, have on year-to-year comparability. A reconciliation of these measures to reported net sales growth rates, the relevant GAAP measures, are included in our Consolidated Results of Operations and Results of Segment Operations discussions in the MD&A above.

sale

32

Adjusted Operating Profit Growth on a Constant-currency Basis

This measure is used in reporting to our Board of Directors and executive management and as a component of the measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is the operating profit measure we use to evaluate operating profit performance on a comparable year-to-year basis. Additionally, the measure is evaluated on a constant-currency basis by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility

Helper main
meals and
Suddenly Salad
side dishes
business in foreign currency exchange rates.

Our adjusted operating profit growth on a constant-currency basis is calculated as follows:

 

 

Fiscal Year

 

 

2021

 

2020

Change

Operating profit as reported

$

3,144.8

$

2,953.9

6

%

Restructuring charges (a)

 

172.7

 

50.2

 

 

Project-related costs (a)

 

-

 

1.5

 

 

Mark-to-market effects (b)

 

(138.8)

 

24.7

 

 

Investment activity, net (c)

 

(76.4)

 

8.4

 

 

Divestiture loss (d)

 

53.5

 

-

 

 

Transaction costs (e)

 

9.5

 

-

 

 

Non-income tax gain (f)

 

(8.8)

 

-

 

 

Product recall adjustment, net (g)

 

(3.5)

 

19.3

 

 

Adjusted operating profit

$

3,153.2

$

3,058.0

3

%

Foreign currency exchange impact

 

 

 

 

1

pt

Adjusted operating profit growth, on a constant-currency basis

 

 

 

 

2

%

Note: Table may not foot due to rounding.

(a)Restructuring charges

fiscal 2023.
Divestitures gain
related to actions designed to better align
the sale
of our organizational structure
interests in
Yoplait
SAS, Yoplait
Marques SNC,
and resources with strategic initiatives, Asia & Latin America route-to-market Liberté
Marques Sàrl
and supply chain optimization actions, and previously announced restructuring actionsthe
sale of
our European dough businesses in fiscal 2021. Restructuring and project-related charges for previously announced restructuring actions in fiscal 2020. Please see Note 4 to the Consolidated Financial Statements in Item 8 of this report.

(b)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

(c)Valuation adjustments and the gain on sale of certain corporate investments in fiscal 2021. Valuation adjustments and the loss on sale of certain corporate investments in fiscal 2020.

(d)Divestiture loss from the sale of our Laticínios Carolina business in Brazil. 2022.

Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(e)Transaction

Mark-to-market effects
Net
mark-to-market
valuation
of
certain
commodity
positions
recognized
in
unallocated
corporate
items.
Please
see
Note
8
to
the
Consolidated Financial Statements in Item 8 of this report.
Investment activity, net
Valuation
adjustments and the
loss on sale of
certain corporate investments
in fiscal 2023.
Valuation
adjustments and the
gain on sale
of certain corporate investments in fiscal 2022.
Restructuring charges (recoveries) and project-related
costs
Restructuring
charges
and
project-related
costs
for
global
supply
chain
actions,
network
optimization
actions,
and
previously
announced
restructuring
actions
in
fiscal
2023.
Restructuring
charges
for
International
restructuring
actions
and
net
restructuring
recoveries for previously announced restructuring
actions in fiscal 2022. Please see Note 4 to the
Consolidated Financial Statements in
Item 8 of this report.
Product recall, net
Voluntary
recall costs recorded in fiscal 2023 related to our non-binding memorandumcertain international
Häagen-Dazs
ice cream products, net of understanding to sell our 51 percent controlling interest insurance
recovery.
Acquisition integration costs
Integration costs
primarily resulting
from the acquisition
of TNT Crust
in our European Yoplait business and transactionfiscal 2023.
Integration costs related to our planned
resulting from
the acquisition
of Tyson Foods’ pet
treats business.

(f)Gain business in fiscal 2022. Please see Note 3 to the Consolidated Financial Statements

in Item 8 of this report.
Transaction costs
Transaction
costs primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dish
business in
fiscal 2023.
Fiscal
2022 transaction
costs related
primarily to
the sale of
our interests in
Yoplait
SAS, Yoplait
Marques SNC,
and Liberté Marques
Sàrl,
the
sale
of
our
European
dough
businesses,
the
sale
of
our
Helper
main
meals
and
Suddenly
Salad
side
dishes
business,
and
the
acquisition of TNT Crust. Please see Note 3 to the Consolidated Financial Statements
in Item 8 of this report.
Non-income tax recovery
Recovery related to a Brazil indirect tax item.

(g)Net product recall adjustmentitem recorded in fiscal 2022.

Tax item
Discrete
tax
benefit
recognized
in
fiscal
2022
related
to
a
release
of
a
valuation
allowance
associated
with
our
capital
loss
carryforwards expected to be used against future divestiture gains.
CPW restructuring charges
CPW restructuring charges related to previously announced
restructuring actions.
Organic Net Sales Growth Rates
We
provide organic
net sales
growth rates
for our
consolidated net
sales and
segment net
sales. This
measure is
used in
reporting to
our
Board
of
Directors
and
executive
management
and
as
a
component
of
the
measurement
of
our
performance
for
incentive
compensation purposes.
We
believe that
organic net
sales growth
rates provide
useful information
to investors
because they
provide
transparency
to underlying
performance
in our
net sales
by excluding
the effect
that foreign
currency
exchange rate
fluctuations,
as
well
as
acquisitions,
divestitures,
and
a
53
rd
week,
when
applicable,
have
on
year-to-year
comparability.
A
reconciliation
of
these
measures to reported
net sales growth
rates, the relevant
GAAP measures, are
included in our
Consolidated Results of
Operations and
Results of Segment Operations discussions in the MD&A above.
31
Adjusted Operating Profit and Related Constant-currency Growth Rate
This measure is used in reporting
to our international Green Giant businessBoard of Directors and
executive management and as a
component of the measurement of
our
performance for
incentive compensation purposes.
We
believe that
this measure provides
useful information
to investors because
it is
the
operating
profit
measure
we
use
to
evaluate
operating
profit
performance
on
a
comparable
year-to-year
basis.
Additionally,
the
measure
is
evaluated
on
a
constant-currency
basis
by
excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year comparability given the volatility in fiscal 2021. foreign
currency exchange rates.
Our adjusted operating profit growth on a constant-currency basis is calculated as follows:
Fiscal Year
2023
2022
Change
Operating profit as reported
$
3,433.8
$
3,475.8
(1)
%
Divestitures gain, net
(444.6)
(194.1)
Mark-to-market effects
291.9
(133.1)
Investment activity, net
84.0
14.7
Restructuring charges (recoveries)
61.0
(23.2)
Product recall, net
22.5
-
Acquisition integration costs
5.9
22.4
Project related costs
2.4
-
Transaction costs
0.4
72.8
Non-income tax recovery
-
(22.0)
Adjusted operating profit
$
3,457.3
$
3,213.3
8
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
8
%
Note: Table may not foot due to our international Green Giant business in fiscal 2020.

rounding.

33

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

32
Adjusted Diluted EPS and Related Constant-currency Growth Rate

This measure
is used in
reporting to
our Board of
Directors and executive
management.
We
believe that
this measure provides
useful
information to
investors because it
is the profitability
measure we use
to evaluate earnings
performance on
a comparable year-to-year
basis.

The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
EPS and the related constant-currency growth rate follows:

 

Fiscal Year

Per Share Data

 

2021

 

2020

2021 vs. 2020 Change

 

Diluted earnings per share, as reported

$

3.78

$

3.56

6

%

Restructuring charges (a)

 

0.22

 

0.06

 

 

Mark-to-market effects (b)

 

(0.17)

 

0.03

 

 

Investment activity, net (c)

 

(0.10)

 

-

 

 

Divestiture loss (d)

 

0.04

 

-

 

 

Tax items (e)

 

0.02

 

(0.09)

 

 

Transaction costs (f)

 

0.01

 

-

 

 

Non-income tax gain (g)

 

(0.01)

 

-

 

 

Product recall (h)

 

-

 

0.03

 

 

CPW restructuring charges (i)

 

-

 

0.01

 

 

Adjusted diluted earnings per share

$

3.79

$

3.61

5

%

Foreign currency exchange impact

 

 

 

 

1

pt

Adjusted diluted earnings per share growth, on a constant-currency basis

 

 

 

 

4

%

Fiscal Year
Per Share Data
2023
2022
2023 vs.
2022 Change
Diluted earnings per share, as reported
$
4.31
$
4.42
(2)
%
Divestitures gain, net
(0.62)
(0.31)
Mark-to-market effects
0.37
(0.17)
Investment activity, net
0.11
0.01
Restructuring charges (recoveries)
0.08
(0.03)
Product recall, net
0.03
-
Acquisition integration costs
0.01
0.03
Transaction costs
-
0.09
Non-income tax recovery
-
(0.02)
Tax item
-
(0.08)
Adjusted diluted earnings per share
$
4.30
$
3.94
9
%
Foreign currency exchange impact
(1)
pt
Adjusted diluted earnings per share growth, on a constant-currency basis
10
%
Note: Table may not foot due to rounding.

(a)Restructuring charges related to actions designed to better align our organizational structure and resources with strategic initiatives, Asia & Latin America route-to-market and supply chain optimization actions, and previously announced restructuring actions in fiscal 2021. Restructuring charges for previously announced restructuring actions in fiscal 2020. Please see Note 4

For more information on the reconciling items, please refer to the Consolidated Financial Statements in Item 8 of this report.

(b)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

(c)Valuation adjustments and the gain on sale of certain corporate investments.

(d)Our 51 percent share of the divestiture loss from the sale of our Laticínios Carolina business in Brazil. Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(e)Tax item related to amendments to reorganize certain U.S. retiree health and welfare benefit plans in fiscal 2021. Discrete tax benefit related to the reorganization of certain wholly owned subsidiaries in fiscal 2020. Please see Note 15 to the Consolidated Financial Statements in Item 8 of this report.

(f)Transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business.

(g)Gain related to Brazil indirect tax item.

(h)Product recall costs related to our international Green Giant business in fiscal 2020.

(i)CPW restructuring charges related to previously announced restructuring actions.

Significant Items Impacting Comparability section above.

See our reconciliation
below of the effective
income tax rate as
reported to the adjusted
effective income tax
rate for the tax
impact of
each item affecting comparability.

34

33
Free Cash Flow Conversion Rate

We
believe
this
measure
provides
useful
information
to
investors
because
it
is
important
for
assessing
our
efficiency
in
converting
earnings
to
cash
and
returning
cash
to
shareholders.
The
calculation
of
free
cash
flow
conversion
rate
and
net
cash
provided
by
operating activities conversion rate, its equivalent GAAP measure, follows:

In Millions

 

Fiscal 2021

Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported

$

2,346.0

Restructuring charges, net of tax (a)

 

137.2

Mark-to-market effects, net of tax (b)

 

(106.9)

Investment activity, net, net of tax (c)

 

(60.8)

Divestiture loss, net of tax (d)

 

53.1

Tax item (e)

 

11.2

Transaction costs, net of tax (f)

 

7.2

Non-income tax gain, net of tax (g)

 

(5.8)

Product recall adjustment, net, net of tax (h)

 

(3.1)

CPW restructuring charges, net of tax (i)

 

1.9

Adjusted net earnings, including earnings attributable to redeemable and noncontrolling interests

$

2,380.1

 

 

 

Net cash provided by operating activities

 

2,983.2

Purchases of land, buildings, and equipment

 

(530.8)

Free cash flow

$

2,452.4

 

 

 

Net cash provided by operating activities conversion rate

 

127%

Free cash flow conversion rate

 

103%

Note: Table may not foot due rounding.

(a)

In Millions
Fiscal 2023
Net earnings, including earnings attributable to redeemable and noncontrolling
interests, as reported
$
2,609.6
Divestitures gain, net of tax
(371.4)
Mark-to-market effects, net of tax
224.8
Investment activity, net,
net of tax
66.0
Restructuring charges, net of tax
48.4
Product recall, net, net of tax
17.3
Acquisition integration costs, net of tax
4.6
Project related to actions designed to better align our organizational structure and resources with strategic initiatives, Asia & Latin America route-to-market and supply chain optimization actions, and previously announced restructuring actions. Please see Note 4 to the Consolidated Financial Statements in Item 8costs, net of this report.

(b)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

(c)Valuation adjustments and the gain on sale of certain corporate investments.

(d)Divestiture loss from the sale of our Laticínios Carolina business in Brazil. Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(e)Tax item related to amendments to reorganize certain U.S. retiree health and welfare benefit plans.

(f)Transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business.

(g)Gain related to Brazil indirect tax item.

(h)Net product recall adjustment related to our international Green Giant business.

(i)

1.6
CPW restructuring charges, related to previously announced restructuring actions.

See our reconciliation belownet of the effective income tax rate as reported to the adjusted effective income tax rate for the tax impact

1.0
Transaction costs, net of each item affecting comparability.

tax

35

0.2

Net Debt-to-Adjusted Earnings before Net Interest, Income Taxes, Depreciation and Amortization (EBITDA) Ratio

We believe that this measure provides useful information to investors because it is an indicator of our ability to incur additional debt and to service our existing debt.

The reconciliation of adjusted EBITDA toAdjusted net earnings, including earnings attributable to redeemable and

noncontrolling interests its GAAP equivalent, as well as the calculation
$
2,602.2
Net cash provided by operating activities
2,778.6
Purchases of the net debt-to-adjusted EBITDA ratio are as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

Total debt (a)

$

12,612.0

$

13,539.5

Cash

 

1,505.2

 

1,677.8

Net debt

$

11,106.8

$

11,861.7

 

 

 

 

 

Net earnings, including earnings attributable to

redeemable and noncontrolling interests, as reported

$

2,346.0

$

2,210.8

Income taxes

 

629.1

 

480.5

Interest, net

 

420.3

 

466.5

Depreciation and amortization

 

601.3

 

594.7

EBITDA

 

3,996.8

 

3,752.5

After-tax earnings from joint ventures

 

(117.7)

 

(91.1)

Restructuring charges (b)

 

172.7

 

50.2

Project-related costs (b)

 

-

 

1.5

Mark-to-market effects (c)

 

(138.8)

 

24.7

Investment activity, net (d)

 

(76.4)

 

8.4

Divestiture loss (e)

 

53.5

 

-

Transaction costs (f)

 

9.5

 

-

Non-income tax gain (g)

 

(8.8)

 

-

Product recall adjustment, net (h)

 

(3.5)

 

19.3

Adjusted EBITDA

$

3,887.4

$

3,765.6

 

 

 

 

 

Net debt-to-adjusted EBITDA ratio

 

2.9

 

3.2

land, buildings, and equipment

(689.5)
Free cash flow
$
2,089.1
Net cash provided by operating activities conversion rate
106%
Free cash flow conversion rate
80%
Note: Table may not foot due to rounding.

(a)Notes payable and long-term debt, including current portion.

(b)Restructuring charges related to actions designed to better align our organizational structure and resources with strategic initiatives, Asia & Latin America route-to-market and supply chain optimization actions, and previously announced restructuring actions in fiscal 2021. Restructuring and project-related charges for previously announced restructuring actions in fiscal 2020. Please see Note 4

For more information on the reconciling items, please refer to the Consolidated Financial Statements in Item 8Significant Items Impacting Comparability section above.
See our reconciliation
below of this report.

(c)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8the effective

income tax rate as
reported to the Consolidated Financial Statements in Item 8
adjusted effective income
tax rate for the
tax impact of this report.

(d)Valuation adjustments and the gain on sale of certain corporate investments in fiscal 2021. Valuation adjustments and the loss on sale of certain corporate investments in fiscal 2020.

(e)Divestiture loss from the sale of our Laticínios Carolina business in Brazil. Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(f)Transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business.

(g)Gain related to Brazil indirect tax item.

(h)Net product recall adjustment related to our international Green Giant business in fiscal 2021. Product recall costs related to our international Green Giant business in fiscal 2020.

36

each item affecting comparability.

34
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
Margin)

We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit margin
on a
comparable year-to-year basis.

Our adjusted operating profit margins are calculated as follows:

 

Fiscal Year

Percent of Net Sales

2021

2020

Operating profit as reported

$

3,144.8

17.3

%

$

2,953.9

16.8

%

Restructuring charges (a)

 

172.7

1.0

%

 

50.2

0.3

%

Project-related costs (a)

 

-

-

%

 

1.5

-

%

Mark-to-market effects (b)

 

(138.8)

(0.8)

%

 

24.7

0.1

%

Investment activity, net (c)

 

(76.4)

(0.4)

%

 

8.4

-

%

Divestiture loss (d)

 

53.5

0.3

%

 

-

-

%

Transaction costs (e)

 

9.5

0.1

%

 

-

-

%

Non-income tax gain (f)

 

(8.8)

-

%

 

-

-

%

Product recall adjustment, net (g)

 

(3.5)

-

%

 

19.3

0.1

%

Adjusted operating profit

$

3,153.2

17.4

%

$

3,058.0

17.3

%

Fiscal Year
Percent of Net Sales
2023
2022
Operating profit as reported
$
3,433.8
17.1
%
$
3,475.8
18.3
%
Divestitures gain, net
(444.6)
(2.2)
%
(194.1)
(1.0)
%
Mark-to-market effects
291.9
1.5
%
(133.1)
(0.7)
%
Investment activity, net
84.0
0.4
%
14.7
0.1
%
Restructuring charges (recoveries)
61.0
0.3
%
(23.2)
(0.1)
%
Product recall, net
22.5
0.1
%
-
-
%
Acquisition integration costs
5.9
-
%
22.4
0.1
%
Project-related costs
2.4
-
%
-
-
%
Transaction costs
0.4
-
%
72.8
0.4
%
Non-income tax recovery
-
-
%
(22.0)
(0.1)
%
Adjusted operating profit
$
3,457.3
17.2
%
$
3,213.3
16.9
%
Note: Table may not foot due to rounding.

(a)Restructuring charges related to actions designed to better align our organizational structure and resources with strategic initiatives, Asia & Latin America route-to-market and supply chain optimization actions, and previously announced restructuring actions in fiscal 2021. Restructuring and project-related charges for previously announced restructuring actions in fiscal 2020. Please see Note 4

For more information on the reconciling items, please refer to the Consolidated Financial Statements in Item 8 of this report.

(b)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

(c)Valuation adjustments and the gain on sale of certain corporate investments in fiscal 2021. Valuation adjustments and the loss on sale of certain corporate investments in fiscal 2020.

(d)Divestiture loss from the sale of our Laticínios Carolina business in Brazil. Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(e)Transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business.

(f)Gain related to Brazil indirect tax item.

(g)Net product recall adjustment related to our international Green Giant business in fiscal 2021. Product recall costs related to our international Green Giant business in fiscal 2020.

Significant Items Impacting Comparability section above.

37

35
Adjusted Effective Income Tax
Rates

We
believe
this
measure
provides
useful
information
to
investors
because
it
presents
the
adjusted
effective
income
tax
rate
on
a
comparable year-to-year basis.

Adjusted effective income tax rates are calculated as follows:

 

Fiscal Year Ended

 

2021

2020

In Millions

(Except Per Share Data)

Pretax Earnings (a)

Income Taxes

Pretax Earnings (a)

Income Taxes

As reported

$2,857.4

$629.1

$2,600.2

$480.5

Restructuring charges (b)

172.7

35.5

50.2

11.2

Project-related costs (b)

-

-

1.5

0.3

Mark-to-market effects (c)

(138.8)

(31.9)

24.7

5.7

Investment activity, net (d)

(76.4)

(15.6)

8.4

5.4

Divestiture loss (e)

53.5

0.4

-

-

Tax items (f)

-

(11.2)

-

53.1

Transaction costs (g)

9.5

2.3

-

-

Non-income tax gain (h)

(8.8)

(3.0)

-

-

Product recall adjustment, net (i)

(3.5)

(0.4)

19.3

2.2

As adjusted

$2,865.7

$605.2

$2,704.3

$558.5

Effective tax rate:

 

 

 

 

As reported

 

22.0%

 

18.5%

As adjusted

 

21.1%

 

20.7%

Sum of adjustments to income taxes

 

($24.0)

 

$78.0

Average number of common shares - diluted EPS

 

619.1

 

613.3

Impact of income tax adjustments on adjusted diluted EPS

 

$0.04

 

$(0.13)

Fiscal Year
Ended
2023
2022
In Millions
(Except Per Share Data)
Pretax
Earnings (a)
Income
Taxes
Pretax
Earnings (a)
Income
Taxes
As reported
$3,140.5
$612.2
$3,209.6
$586.3
Divestitures gain, net
(444.6)
(73.2)
(194.1)
(5.1)
Mark-to-market effects
291.9
67.1
(133.1)
(30.6)
Investment activity, net
84.0
18.0
14.7
8.5
Restructuring charges (recoveries)
61.0
12.6
(23.2)
(6.4)
Product recall, net
22.5
5.2
-
-
Acquisition integration costs
5.9
1.3
22.4
5.1
Project related costs
2.4
0.8
-
-
Transaction costs
0.4
0.2
72.8
16.4
Tax item
-
-
-
50.7
Non-income tax recovery
-
-
(22.0)
(7.5)
As adjusted
$3,164.0
$644.1
$2,947.1
$617.4
Effective tax rate:
As reported
19.5%
18.3%
As adjusted
20.4%
20.9%
Sum of adjustments to income taxes
$32.0
$31.1
Average number
of common shares - diluted EPS
601.2
612.6
Impact of income tax adjustments on adjusted diluted EPS
$(0.05)
$(0.05)
Note: Table may not foot due to rounding.

(a)
Earnings before income taxes and after-tax earnings from joint ventures.

(b)Restructuring charges related to actions designed to better align our organizational structure and resources with strategic initiatives, Asia & Latin America route-to-market and supply chain optimization actions, and previously announced restructuring actions in fiscal 2021. Restructuring and project-related charges for previously announced restructuring actions in fiscal 2020. Please see Note 4

For more information on the reconciling items, please refer to the Consolidated Financial Statements in Item 8 of this report.

(c)Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.

(d)Valuation adjustments and the gain on sale of certain corporate investments in fiscal 2021. Valuation adjustments and the loss on sale of certain corporate investments in fiscal 2020.

(e)Divestiture loss from the sale of our Laticínios Carolina business in Brazil. Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.

(f)Tax item related to amendments to reorganize certain U.S. retiree health and welfare benefit plans in fiscal 2021. Discrete tax benefit related to the reorganization of certain wholly owned subsidiaries in fiscal 2020. Please see Note 15 to the Consolidated Financial Statements in Item 8 of this report.

(g)Transaction costs related to our non-binding memorandum of understanding to sell our 51 percent controlling interest in our European Yoplait business and our planned acquisition of Tyson Foods’ pet treats business.

(h)Gain related to Brazil indirect tax item.

(i)Net product recall adjustment related to our international Green Giant business in fiscal 2021. Product recall costs related to our international Green Giant business in fiscal 2020.

Significant Items Impacting Comparability section above.

38

36
Constant-currency After-Tax
Earnings from Joint Ventures
Growth Rate

We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our joint
ventures by
excluding the
effect
that foreign
currency exchange
rate fluctuations
have on
year-to-year
comparability given
volatility in foreign currency exchange markets.

After-tax earnings from joint ventures growth rate on
a constant-currency basis are calculated as follows:

Fiscal 2021

Percentage change in after-tax earnings from joint ventures as reported

29

%

Impact of foreign currency exchange

3

pts

Percentage change in after-tax earnings from joint ventures on a constant-currency basis

26

%

Note: Table may not foot due to rounding.

Fiscal 2023
Percentage change in after-tax earnings from joint ventures as reported
(27)
%
Impact of foreign currency exchange
(10)
pts
Percentage change in after-tax earnings from joint ventures
on a constant-currency basis
(18)
%
Note: Table may not foot due to rounding.
Net Sales Growth Rate for Canada Operating Unit on a Constant-currency
Basis

We
believe
this
measure
of
our
Canada
operating
unit
net
sales
provides
useful
information
to
investors
because
it
provides
transparency to
the underlying
performance for
the Canada operating
unit within our
North America Retail
segment by
excluding the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility
in
foreign
currency
exchange markets.

Net sales growth rate for our Canada operating unit on a constant-currency
basis is calculated as follows:

Fiscal 2021

Percentage change in net sales as reported

6

%

Impact of foreign currency exchange

4

pts

Percentage change in net sales on a constant-currency basis

3

%

Note: Table may not foot due to rounding.

Fiscal 2023
Percentage change in net sales as reported
2
%
Impact of foreign currency exchange
(6)
pts
Percentage change in net sales on a constant-currency basis
8
%
Note: Table may not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates

We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our
segments
by
excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility in foreign currency exchange markets.

Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:

 

Fiscal 2021

 

Percentage Change in Operating Profit as Reported

Impact of Foreign Currency Exchange

Percentage Change in Operating Profit on Constant-Currency Basis

North America Retail

Flat

 

Flat

 

Flat

 

Europe & Australia

33

%

9

pts

24

%

Pet

6

%

Flat

 

6

%

Note: Table may not foot due to rounding.

 

 

 

 

 

 

Fiscal 2023
Percentage Change
in Operating Profit
as Reported
Impact of Foreign
Currency Exchange
Percentage Change
in Operating Profit
on Constant-
Currency Basis
North America Retail
18
%
Flat
18
%
International
(30)
%
(5)
pts
(25)
%
Pet
(5)
%
Flat
(5)
%
North America Foodservice
14
%
Flat
14
%
Note: Table may not foot due to rounding.
Forward-Looking Financial Measures

Our fiscal 2022 202
4
outlook for organic
net sales growth,
constant-currency adjusted
operating profit,
adjusted diluted
EPS, and free
cash
flow conversion
are non-GAAP financial
measures that
exclude, or
have otherwise
been adjusted
for, items
impacting comparability,
including
the
effect
of
foreign
currency
exchange
rate
fluctuations,
restructuring
charges
and
project-related
costs,
acquisition
transaction
and
integration
costs, acquisitions,
divestitures,
and
mark-to-market
effects.
We
are
not
able
to reconcile
these
forward-
looking
non-GAAP
financial
measures
to
their
most
directly
comparable
forward-looking non-GAAP
GAAP
financial
measures to their most directly comparable forward-looking GAAP financial measures
without
unreasonable
efforts
because we
are unable
to predict
with a
reasonable
degree of
certainty
the actual
impact
of
changes in
foreign
37
currency
exchange
rates
and
commodity
prices
or
the
timing
or
impact
of
acquisitions,
divestitures,
and
restructuring
actions
throughout fiscal 2022.2024. The unavailable information could have a significant
impact on our fiscal 2022 2024
GAAP financial results.

39

For
fiscal

2024,

For fiscal 2022,

we
currently expect:
foreign
currency
exchange
rates (based
(based
on
a blend
of
forward
and
forecasted
rates and
hedge
positions) and acquisitions and
divestitures completed prior to fiscal 2022
2024 to have an immaterial impact onreduce net sales growth; foreign currency exchange rates to have an immaterial impact on adjusted operating profit and adjusted diluted EPS growth;growth
by approximately one half of
one
percent; and restructuring charges and project-related costs related to actions previously announced to total approximately $10 $15
million to $60$20 million.
ITEM 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 controls
on these
activities. The
counterparties
in these
transactions are
generally
highly rated
institutions. We
establish
credit
limits for
each counterparty.
Our fiscalhedging
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
8
to
the
Consolidated
Financial Statements in Item 8 of this report.
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 28,
2023.
In Millions
May 28, 2023
Average During
Fiscal 2023
May 29, 2022 guidance does not incorporate the potential impacts
Analysis of any acquisitions and divestitures that have not yet been completed.

Change

40

Interest rate instruments

$

65.3
$
52.1
$
40.9
Higher Market Volatility
Foreign currency instruments
36.7
33.3
20.3
Exchange Rate Volatility
Commodity instruments
7.6
9.5
12.9
Reduced Market Volatility
Equity instruments
2.8
3.1
2.5
Higher Market Volatility
38
CAUTIONARY STATEMENT
RELEVANT
TO FORWARD-LOOKINGFORWARD
-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995

This report
contains or
incorporates by
reference
forward-looking
statements within
the meaning
of the
Private Securities
Litigation
Reform Act
of 1995
that are
based on
our current
expectations and
assumptions. We
also may
make written
or oral
forward-looking
statements, including statements contained in our filings with the
SEC and in our reports to shareholders.

The words or
phrases “will likely
result,” “are expected
to,” “will“may continue,” “is
“is anticipated,” “estimate,” “plan,
“plan,” “project,” or
similar
expressions identify “forward-looking
“forward-looking statements”
within the
meaning of
the Private
Securities Litigation
Reform Act
of 1995.
Such
statements are
subject to
certain risks
and uncertainties
that could
cause actual
results to
differ
materially from
historical results
and
those currently anticipated or projected. We
wish to caution you not to place undue reliance on any such forward-looking statements.

In connection
with the “safe
harbor” provisions
of the Private
Securities Litigation
Reform Act of
1995, we are
identifying important
factors
that could
affect
our financial
performance
and could
cause our
actual results
in future
periods
to differ
materially from
any
current opinions or statements.

Our
future
results
could
be
affected
by
a
variety
of
factors,
such
as:
disruptions
or
inefficiencies
in
the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the
supply chain, including any impact of the COVID-19 pandemic;
chain;
competitive
dynamics in the consumer
foods industry and the markets for
our products, including new product
introductions, advertising activities,
pricing actions, and promotional
activities of our competitors;
economic conditions, including
changes in inflation rates,
interest rates,
tax
rates,
or
the
availability
of
capital;
product
development
and
innovation;
consumer
acceptance
of
new
products
and
product
improvements;
consumer
reaction
to
pricing
actions
and
changes
in
promotion
levels;
acquisitions
or
dispositions
of
businesses
or assets,
assets; changes in capital structure;
changes in the legal and regulatory
environment, including tax legislation,
labeling and advertising
regulations, and litigation; impairments in the carrying
value of goodwill, other intangible assets, or other long-livedlong
-lived assets, or changes
in
the
useful
lives
of
other
intangible
assets;
changes
in
accounting
standards
and
the
impact
of
significant
accounting
estimates;
product quality
and safety
issues, including
recalls and product
liability; changes
in consumer
demand for our
products; effectiveness
of advertising,
marketing,
and promotional
programs;
changes
in consumer
behavior,
trends, and
preferences,
including
weight
loss
trends; consumer perception
of health-related issues,
including obesity; consolidation
in the retail environment;
changes in purchasing
and
inventory
levels
of
significant
customers;
fluctuations
in
the
cost
and
availability
of
supply
chain
resources,
including
raw
materials,
packaging,
energy,
and
transportation;
effectiveness
of
restructuring
and
cost
saving
initiatives;
volatility
in
the
market
value of
derivatives used to
manage price
risk for certain
commodities; benefit
plan expenses due
to changes
in plan asset
values and
discount rates used to determine plan liabilities; failure
or breach of our information technology systems;
foreign economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
and economic uncertainty due to terrorism or war.

You
should also consider the risk factors that we identify in Item 1A of this report, which could also
affect our future results.

We undertake
no obligation to publicly revise any forward-looking
statements to reflect events or circumstances
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.

ITEM 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 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 8 to the Consolidated Financial Statements in Item 8 of this report.

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

41

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 30, 2021.

 

 

In Millions

 

May 30, 2021

 

Average During Fiscal 2021

 

May 31, 2020

Interest rate instruments

$

37.4

$

64.1

$

78.8

Foreign currency instruments

 

25.6

 

26.7

 

19.3

Commodity instruments

 

4.2

 

4.5

 

2.6

Equity instruments

 

2.8

 

4.3

 

5.0

42

39

ITEM 8 - Financial Statements and Supplementary Data

REPORT OF MANAGEMENT RESPONSIBILITIES

The
management
of
General
Mills,
Inc.
is
responsible
for
the
fairness
and
accuracy
of
the
consolidated
financial
statements.
The
statements
have
been
prepared
in
accordance
with
accounting
principles
that
are
generally
accepted
in
the
United
States,
using
management’s
best estimates and judgments where
appropriate. The financial information throughout
this Annual Report on Form 10-K
10-
K is consistent with our consolidated financial statements.

Management
has established
a system
of internal
controls that
provides
reasonable
assurance that
assets are
adequately
safeguarded
and
transactions
are
recorded
accurately
in
all
material
respects,
in
accordance
with
management’s
authorization.
We
maintain
a
strong
audit program
that independently
evaluates
the adequacy
and effectiveness
of internal
controls. Our
internal controls
provide
for
appropriate
separation
of
duties
and
responsibilities,
and
there
are
documented
policies
regarding
use
of
our
assets
and
proper
financial reporting. These formally stated and regularly communicated
policies demand highly ethical conduct from all employees.

The Audit
Committee of
the Board
of Directors
meets regularly
with management,
internal auditors,
and our
independent registered
public
accounting
firm
to
review
internal
control,
auditing,
and
financial
reporting
matters.
The
independent
registered
public
accounting firm, internal auditors, and employees have full and free access to
the Audit Committee at any time.

The Audit
Committee reviewed
and approved
the Company’s
annual financial
statements. The
Audit Committee
recommended,
and
the Board
of Directors
approved, that
the consolidated
financial statements
be included
in the
Annual Report.
The Audit
Committee
also appointed KPMG LLP to serve as the Company’s
independent registered public accounting firm for fiscal 2022.

2024.

/s/ J. L. Harmening
/s/ K. A. Bruce

J. L. Harmening
K. A. Bruce

Chief Executive Officer
Chief Financial Officer

June 30, 2021

28, 2023

43

40
Report of Independent Registered Public Accounting Firm

To the Stockholders
and Board of Directors
General Mills, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control
Over Financial Reporting

We
have
audited
the
accompanying
consolidated
balance
sheets
of
General
Mills,
Inc. and
subsidiaries (the
(the
Company)
as
of
May 30, 202128, 2023, and May 31, 2020, 29, 2022,
the related consolidated statements of
earnings, comprehensive income, total equity
and redeemable
interest,
and
cash
flows
for
each
of
the
years
in
the
three-year
period
ended
May 30, 2021, 28, 2023,
and
the
related
notes
and
financial
statement schedule
II (collectively,
the consolidated
financial statements).
We
also have
audited the
Company’s
internal control
over
financial reporting as
of May 30, 2021,28, 2023, based
on criteria established
in
Internal Control
– Integrated Framework
(2013)
issued by the
Committee of Sponsoring Organizations of the Treadway
Commission.

In our
opinion, the
consolidated financial
statements referred
to above
present fairly,
in all material
respects, the
financial position
of
the Company
as of
May 30, 202128, 2023, and
May 31, 2020,29,
2022, and
the results
of its
operations and
its cash
flows for
each of
the years
in the
three-year
period
ended
May 30, 2021, 28, 2023,
in
conformity
with
U.S.
generally
accepted
accounting
principles.
Also
in
our
opinion,
the
Company maintained,
in all material
respects, effective
internal control
over financial
reporting as of
May 28, 2023, based
on criteria
established
in
Internal
Control
–
Integrated
Framework
(2013)
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway Commission.
Basis for Opinions
The Company’s
management is responsible
for these consolidated
financial statements, for
maintaining effective
internal control over
financial
reporting, as
and
for
its
assessment
of May 30, 2021 based
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying Management's
Report on criteria established in
Internal Control – Integrated Framework (2013) issued by
over Financial
Reporting. Our
responsibility is
to express
an opinion
on the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in note 2 to the

Company’s
consolidated financial
statements and an
opinion on
the Company has changed its method of accounting for leases as of May 27, 2019 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842), and related amendments.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective

internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting
based on
our
audits. We
are a
public accounting
firm registered
with the
Public Company
Accounting Oversight
Board (United
States) (PCAOB)
and are required to
be independent with
respect to the Company
in accordance with the
U.S. federal securities laws
and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted
our audits in accordance with the
standards of the PCAOB. Those standards require
that we plan and perform the audits
to obtain
reasonable assurance
about whether
the consolidated
financial statements
are free
of material
misstatement, whether
due to
error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.

Our audits of
the consolidated financial
statements included performing
procedures to assess
the risks of
material misstatement
of the
consolidated
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated
financial
statements. Our audits also included
evaluating the accounting principles
used and significant estimates made
by management, as well
as evaluating
the overall
presentation
of the
consolidated
financial
statements.
Our
audit of
internal
control over
financial
reporting
included obtaining an understanding
of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that
a material weakness exists,
and
testing and
evaluating the
design and
operating effectiveness
of internal
control based
on the
assessed risk.
Our audits
also included
performing
such other
procedures as
we considered
necessary in
the circumstances.
We
believe that
our audits
provide a
reasonable
basis for our opinions.

Definition and Limitations of Internal Control
Over Financial Reporting

A company’s
internal control over financial reporting is a
process designed to provide reasonable assurance
regarding the reliability of
financial reporting and
the preparation of
financial statements for
external purposes in
accordance with generally
accepted accounting
principles.
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(1)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
the
assets
of
the
company; (2) provide
reasonable assurance that
transactions are recorded
as necessary to permit
preparation of financial
statements in
accordance with
generally accepted
accounting principles,
and that
receipts and
expenditures of
the company
are being
made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

44

accordance
with

authorizations
of
management
and
directors
of
the
company;
and
(3)
provide
reasonable
assurance
regarding

prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s
assets that could have a material effect
on the financial statements.

Because of its inherent
limitations, internal control
over financial reporting may
not prevent or detect
misstatements. Also, projections
of any evaluation
of effectiveness to
future periods are
subject to the
risk that controls
may become inadequate
because of changes
in
conditions, or that the degree of compliance with the policies or procedures
may deteriorate.

41
Critical Audit Matter

The criticalaudit matter
communicated below is a
matter arising from the
current period audit of the
consolidated financial statements
that was communicated
or required to
be communicated to
the audit committee
and that: (1) relates
to accounts or
disclosures that are
material to
the consolidated
financial statements
and (2)
involved our
especially challenging,
subjective, or
complex judgments.
The
communication
of
a
critical
audit matter
does
not
alter
in any
way
our
opinion
on the
consolidated
financial
statements, taken
as a
whole, and
we are
not, by
communicating the
critical audit
matter does not alter in any way ourbelow,
providing a
separate opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit
matter or
on the accounts or disclosures to which it relates.

Valuation
of goodwill and brand intangible assets

As discussed in Note 6 to the consolidated financial statements, the goodwill
and brands and other indefinite-lived intangibles
balances
as
of
May 30, 2021
28,
2023,
were $14,062.4
$14,511.2
million
and $6,628.1
$6,712.4
million,
respectively.
The
impairment
tests
for
these
assets, which
are performed
annually and
whenever
events or
changes in
circumstances
indicate that
impairment may
have
occurred, require
the Company
to estimate
the fair
value of
the reporting
units to
which goodwill
is assigned
as well
as the
brands and
other indefinite-livedindefinite
-lived intangible
assets. The
fair value
estimates are
derived
from discounted
cash flow
analyses
that
require
the
Company
to make
judgments
about
highly subjective
matters,
including
future
operating
results,
including
revenue growth rates and operating margins,
and an estimate of the discount rates and royalty rates.

We
identified the
assessment of the
valuation of certain
goodwill and
brand intangible assets
as a critical
audit matter.
There
was
a
significant
degree
of
judgment
required
in
evaluating
audit
evidence,
which
consists
primarily
of
forward-looking
assumptions
about
future
operating
results,
specifically
the
revenue
growth
rates
and
operating
margins,
royalty
rates
and
subjective inputs used to estimate the discount rates.

The
following
are
the
primary
procedures
we
performed
to address
this critical
audit
matter.
We
evaluated
the
design
and
tested
the
operating
effectiveness
of
internal
controls
related
to
the valuation
of goodwill
and
brand
intangible
assets. This
included controls related
to the assumptions
about future operating
results and the discount
and royalty rates
used to measure
the fair value
of the reporting
units and brands
intangible fair values. assets.
We
performed sensitivity
analyses over
the revenue
growth
rates, operating margins, brand
royalty rates and discount rates
to assess the impact of
other points within a range
of potential
assumptions.
We
evaluated
the
revenue
growth
rates
and
operating
margin
assumptions
by
comparing
them
to
recent
financial performance
and external
market and
industry data.
We
evaluated whether
these assumptions
were consistent
with
evidence obtained
in other areas
of the audit.
We
involved professionals with
specialized skills and
knowledge, who assisted
in the evaluation
of the Company’s
discount rates and royalty rates by
comparing them
against rate ranges
that were independently
developed
using publicly available market data
for comparable entities.

entities and the royalty

rates by evaluating the methods, assumptions
and
market data used to estimate the royalty rates.
/s/
KPMG
LLP

We have served
as the Company’s auditor since 1928.

Minneapolis, Minnesota

June 30, 2021

28, 2023

45

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except per Share Data)

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

2021

 

2020

 

2019

Net sales

$

18,127.0

 

$

17,626.6

 

$

16,865.2

Cost of sales

 

11,678.7

 

 

11,496.7

 

 

11,108.4

Selling, general, and administrative expenses

 

3,079.6

 

 

3,151.6

 

 

2,935.8

Divestitures loss

 

53.5

 

 

0

 

 

30.0

Restructuring, impairment, and other exit costs

 

170.4

 

 

24.4

 

 

275.1

Operating profit

 

3,144.8

 

 

2,953.9

 

 

2,515.9

Benefit plan non-service income

 

(132.9)

 

 

(112.8)

 

 

(87.9)

Interest, net

 

420.3

 

 

466.5

 

 

521.8

Earnings before income taxes and after-tax earnings from joint ventures

 

2,857.4

 

 

2,600.2

 

 

2,082.0

Income taxes

 

629.1

 

 

480.5

 

 

367.8

After-tax earnings from joint ventures

 

117.7

 

 

91.1

 

 

72.0

Net earnings, including earnings attributable to redeemable and

noncontrolling interests

 

2,346.0

 

 

2,210.8

 

 

1,786.2

Net earnings attributable to redeemable and noncontrolling interests

 

6.2

 

 

29.6

 

 

33.5

Net earnings attributable to General Mills

$

2,339.8

 

$

2,181.2

 

$

1,752.7

Earnings per share — basic

$

3.81

 

$

3.59

 

$

2.92

Earnings per share — diluted

$

3.78

 

$

3.56

 

$

2.90

Dividends per share

$

2.02

 

$

1.96

 

$

1.96

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

46

Consolidated Statements of Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions)

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

2021

 

2020

 

2019

Net earnings, including earnings attributable to redeemable and

noncontrolling interests

$

2,346.0

 

$

2,210.8

 

$

1,786.2

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation

 

175.1

 

 

(169.1)

 

 

(82.8)

Net actuarial income (loss)

 

353.4

 

 

(224.6)

 

 

(253.4)

Other fair value changes:

 

 

 

 

 

 

 

 

Hedge derivatives

 

(20.7)

 

 

3.2

 

 

12.1

Reclassification to earnings:

 

 

 

 

 

 

 

 

Securities

 

0

 

 

0

 

 

(2.0)

Hedge derivatives

 

13.5

 

 

4.1

 

 

0.9

Amortization of losses and prior service costs

 

78.9

 

 

77.9

 

 

84.6

Other comprehensive income (loss), net of tax

 

600.2

 

 

(308.5)

 

 

(240.6)

Total comprehensive income

 

2,946.2

 

 

1,902.3

 

 

1,545.6

Comprehensive income (loss) attributable to redeemable and

noncontrolling interests

 

121.2

 

 

10.1

 

 

(10.7)

Comprehensive income attributable to General Mills

$

2,825.0

 

$

1,892.2

 

$

1,556.3

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

47

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except Par Value)

 

May 30, 2021

 

May 31, 2020

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

1,505.2

 

$

1,677.8

Receivables

 

1,638.5

 

 

1,615.1

Inventories

 

1,820.5

 

 

1,426.3

Prepaid expenses and other current assets

 

790.3

 

 

402.1

Total current assets

 

5,754.5

 

 

5,121.3

Land, buildings, and equipment

 

3,606.8

 

 

3,580.6

Goodwill

 

14,062.4

 

 

13,923.2

Other intangible assets

 

7,150.6

 

 

7,095.8

Other assets

 

1,267.6

 

 

1,085.8

Total assets

$

31,841.9

 

$

30,806.7

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

3,653.5

 

$

3,247.7

Current portion of long-term debt

 

2,463.8

 

 

2,331.5

Notes payable

 

361.3

 

 

279.0

Other current liabilities

 

1,787.2

 

 

1,633.3

Total current liabilities

 

8,265.8

 

 

7,491.5

Long-term debt

 

9,786.9

 

 

10,929.0

Deferred income taxes

 

2,118.4

 

 

1,947.1

Other liabilities

 

1,292.7

 

 

1,545.0

Total liabilities

 

21,463.8

 

 

21,912.6

Redeemable interest

 

604.9

 

 

544.6

Stockholders' equity:

 

 

 

 

 

Common stock, 754.6 shares issued, $0.10 par value

 

75.5

 

 

75.5

Additional paid-in capital

 

1,365.5

 

 

1,348.6

Retained earnings

 

17,069.8

 

 

15,982.1

Common stock in treasury, at cost, shares of 146.9 and 144.8

 

(6,611.2)

 

 

(6,433.3)

Accumulated other comprehensive loss

 

(2,429.2)

 

 

(2,914.4)

Total stockholders' equity

 

9,470.4

 

 

8,058.5

Noncontrolling interests

 

302.8

 

 

291.0

Total equity

 

9,773.2

 

 

8,349.5

Total liabilities and equity

$

31,841.9

 

$

30,806.7

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

48

Consolidated Statements of Total Equity and Redeemable Interest

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

2021

 

2020

 

2019

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

Total equity, beginning balance

 

 

$

8,349.5

 

 

 

$

7,367.7

 

 

 

$

6,492.4

Common stock, 1 billion shares authorized, $0.10 par value

754.6

 

 

75.5

 

754.6

 

 

75.5

 

754.6

 

 

75.5

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

1,348.6

 

 

 

 

1,386.7

 

 

 

 

1,202.5

Stock compensation plans

 

 

 

6.2

 

 

 

 

(12.1)

 

 

 

 

(96.4)

Unearned compensation related to stock unit awards

 

 

 

(78.0)

 

 

 

 

(85.7)

 

 

 

 

(71.3)

Earned compensation

 

 

 

88.5

 

 

 

 

92.8

 

 

 

 

82.8

Decrease (increase) in redemption value of

redeemable interest

 

 

 

0.2

 

 

 

 

(33.1)

 

 

 

 

269.1

Ending balance

 

 

 

1,365.5

 

 

 

 

1,348.6

 

 

 

 

1,386.7

Retained earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

15,982.1

 

 

 

 

14,996.7

 

 

 

 

14,459.6

Comprehensive income

 

 

 

2,339.8

 

 

 

 

2,181.2

 

 

 

 

1,752.7

Cash dividends declared ($2.02, $1.96, and $1.96 per share)

 

 

 

(1,246.4)

 

 

 

 

(1,195.8)

 

 

 

 

(1,181.7)

Adoption of revenue recognition accounting requirements

 

 

 

0

 

 

 

 

0

 

 

 

 

(33.9)

Adoption of current expected credit loss

accounting requirements

 

 

 

(5.7)

 

 

 

 

0

 

 

 

 

0

Ending balance

 

 

 

17,069.8

 

 

 

 

15,982.1

 

 

 

 

14,996.7

Common stock in treasury:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

(144.8)

 

 

(6,433.3)

 

(152.7)

 

 

(6,779.0)

 

(161.5)

 

 

(7,167.5)

Shares purchased

(5.0)

 

 

(301.4)

 

(0.1)

 

 

(3.4)

 

0

 

 

(1.1)

Stock compensation plans

2.9

 

 

123.5

 

8.0

 

 

349.1

 

8.8

 

 

389.6

Ending balance

(146.9)

 

 

(6,611.2)

 

(144.8)

 

 

(6,433.3)

 

(152.7)

 

 

(6,779.0)

Accumulated other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

(2,914.4)

 

 

 

 

(2,625.4)

 

 

 

 

(2,429.0)

Comprehensive income (loss)

 

 

 

485.2

 

 

 

 

(289.0)

 

 

 

 

(196.4)

Ending balance

 

 

 

(2,429.2)

 

 

 

 

(2,914.4)

 

 

 

 

(2,625.4)

Noncontrolling interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

291.0

 

 

 

 

313.2

 

 

 

 

351.3

Comprehensive income

 

 

 

38.0

 

 

 

 

10.3

 

 

 

 

0.4

Distributions to noncontrolling interest holders

 

 

 

(26.2)

 

 

 

 

(32.5)

 

 

 

 

(38.5)

Ending balance

 

 

 

302.8

 

 

 

 

291.0

 

 

 

 

313.2

Total equity, ending balance

 

 

$

9,773.2

 

 

 

$

8,349.5

 

 

 

$

7,367.7

Redeemable interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

$

544.6

 

 

 

$

551.7

 

 

 

$

776.2

Comprehensive income (loss)

 

 

 

83.2

 

 

 

 

(0.2)

 

 

 

 

(11.1)

Increase in investment in redeemable interest

 

 

 

0

 

 

 

 

0

 

 

 

 

55.7

(Decrease) increase in redemption value of

redeemable interest

 

 

 

(0.2)

 

 

 

 

33.1

 

 

 

 

(269.1)

Distributions to redeemable interest holder

 

 

 

(22.7)

 

 

 

 

(40.0)

 

 

 

 

0

Ending balance

 

 

$

604.9

 

 

 

$

544.6

 

 

 

$

551.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions)

 

Fiscal Year

 

2021

 

2020

 

2019

Cash Flows - Operating Activities

 

 

 

 

 

 

 

 

Net earnings, including earnings attributable to redeemable and noncontrolling interests

$

2,346.0

 

$

2,210.8

 

$

1,786.2

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

601.3

 

 

594.7

 

 

620.1

After-tax earnings from joint ventures

 

(117.7)

 

 

(91.1)

 

 

(72.0)

Distributions of earnings from joint ventures

 

95.2

 

 

76.5

 

 

86.7

Stock-based compensation

 

89.9

 

 

94.9

 

 

84.9

Deferred income taxes

 

118.8

 

 

(29.6)

 

 

93.5

Pension and other postretirement benefit plan contributions

 

(33.4)

 

 

(31.1)

 

 

(28.8)

Pension and other postretirement benefit plan costs

 

(33.6)

 

 

(32.3)

 

 

6.1

Divestitures loss

 

53.5

 

 

0

 

 

30.0

Restructuring, impairment, and other exit costs

 

150.9

 

 

43.6

 

 

235.7

Changes in current assets and liabilities, excluding the effects of divestitures

 

(155.9)

 

 

793.9

 

 

(7.5)

Other, net

 

(131.8)

 

 

45.9

 

 

(27.9)

Net cash provided by operating activities

 

2,983.2

 

 

3,676.2

 

 

2,807.0

Cash Flows - Investing Activities

 

 

 

 

 

 

 

 

Purchases of land, buildings, and equipment

 

(530.8)

 

 

(460.8)

 

 

(537.6)

Investments in affiliates, net

 

15.5

 

 

(48.0)

 

 

0.1

Proceeds from disposal of land, buildings, and equipment

 

2.7

 

 

1.7

 

 

14.3

Proceeds from divestitures

 

2.9

 

 

0

 

 

26.4

Other, net

 

(3.1)

 

 

20.9

 

 

(59.7)

Net cash used by investing activities

 

(512.8)

 

 

(486.2)

 

 

(556.5)

Cash Flows - Financing Activities

 

 

 

 

 

 

 

 

Change in notes payable

 

71.7

 

 

(1,158.6)

 

 

(66.3)

Issuance of long-term debt

 

1,576.5

 

 

1,638.1

 

 

339.1

Payment of long-term debt

 

(2,609.0)

 

 

(1,396.7)

 

 

(1,493.8)

Debt exchange participation incentive cash payment

 

(201.4)

 

 

0

 

 

0

Proceeds from common stock issued on exercised options

 

74.3

 

 

263.4

 

 

241.4

Purchases of common stock for treasury

 

(301.4)

 

 

(3.4)

 

 

(1.1)

Dividends paid

 

(1,246.4)

 

 

(1,195.8)

 

 

(1,181.7)

Investments in redeemable interest

 

0

 

 

0

 

 

55.7

Distributions to noncontrolling and redeemable interest holders

 

(48.9)

 

 

(72.5)

 

 

(38.5)

Other, net

 

(30.9)

 

 

(16.0)

 

 

(31.2)

Net cash used by financing activities

 

(2,715.5)

 

 

(1,941.5)

 

 

(2,176.4)

Effect of exchange rate changes on cash and cash equivalents

 

72.5

 

 

(20.7)

 

 

(23.1)

(Decrease) increase in cash and cash equivalents

 

(172.6)

 

 

1,227.8

 

 

51.0

Cash and cash equivalents - beginning of year

 

1,677.8

 

 

450.0

 

 

399.0

Cash and cash equivalents - end of year

$

1,505.2

 

$

1,677.8

 

$

450.0

Cash flow from changes in current assets and liabilities, excluding the effects of

divestitures:

 

 

 

 

 

 

 

 

Receivables

$

27.9

 

$

37.9

 

$

(42.7)

Inventories

 

(354.7)

 

 

103.1

 

 

53.7

Prepaid expenses and other current assets

 

(42.7)

 

 

94.2

 

 

(114.3)

Accounts payable

 

343.1

 

 

392.5

 

 

162.4

Other current liabilities

 

(129.5)

 

 

166.2

 

 

(66.6)

Changes in current assets and liabilities

$

(155.9)

 

$

793.9

 

$

(7.5)

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

50

42
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
2023
2022
2021
Net sales
$
20,094.2
$
18,992.8
$
18,127.0
Cost of sales
13,548.4
12,590.6
11,678.7
Selling, general, and administrative expenses
3,500.4
3,147.0
3,079.6
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
56.2
(26.5)
170.4
Operating profit
3,433.8
3,475.8
3,144.8
Benefit plan non-service income
(88.8)
(113.4)
(132.9)
Interest, net
382.1
379.6
420.3
Earnings before income taxes and after-tax earnings
from joint ventures
3,140.5
3,209.6
2,857.4
Income taxes
612.2
586.3
629.1
After-tax earnings from joint ventures
81.3
111.7
117.7
Net earnings, including earnings attributable to redeemable and
noncontrolling interests
2,609.6
2,735.0
2,346.0
Net earnings attributable to redeemable and noncontrolling interests
15.7
27.7
6.2
Net earnings attributable to General Mills
$
2,593.9
$
2,707.3
$
2,339.8
Earnings per share — basic
$
4.36
$
4.46
$
3.81
Earnings per share — diluted
$
4.31
$
4.42
$
3.78
Dividends per share
$
2.16
$
2.04
$
2.02
See accompanying notes to consolidated financial statements.
43
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
2023
2022
2021
Net earnings, including earnings attributable to redeemable and
noncontrolling interests
$
2,609.6
$
2,735.0
$
2,346.0
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(110.8)
(175.9)
175.1
Net actuarial (loss) income
(228.0)
101.6
353.4
Other fair value changes:
Hedge derivatives
1.3
7.0
(20.7)
Reclassification to earnings:
Foreign currency translation
(7.4)
342.2
-
Hedge derivatives
(18.7)
35.1
13.5
Amortization of losses and prior service costs
56.9
75.8
78.9
Other comprehensive (loss) income, net of tax
(306.7)
385.8
600.2
Total comprehensive
income
2,302.9
3,120.8
2,946.2
Comprehensive income (loss) attributable to redeemable and
noncontrolling interests
15.4
(45.2)
121.2
Comprehensive income attributable to General Mills
$
2,287.5
$
3,166.0
$
2,825.0
See accompanying notes to consolidated financial statements.
44
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
May 28, 2023
May 29, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
585.5
$
569.4
Receivables
1,683.2
1,692.1
Inventories
2,172.0
1,867.3
Prepaid expenses and other current assets
735.7
802.1
Assets held for sale
-
158.9
Total current
assets
5,176.4
5,089.8
Land, buildings, and equipment
3,636.2
3,393.8
Goodwill
14,511.2
14,378.5
Other intangible assets
6,967.6
6,999.9
Other assets
1,160.3
1,228.1
Total assets
$
31,451.7
$
31,090.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
4,194.2
$
3,982.3
Current portion of long-term debt
1,709.1
1,674.2
Notes payable
31.7
811.4
Other current liabilities
1,600.7
1,552.0
Total current
liabilities
7,535.7
8,019.9
Long-term debt
9,965.1
9,134.8
Deferred income taxes
2,110.9
2,218.3
Other liabilities
1,140.0
929.1
Total liabilities
20,751.7
20,302.1
Stockholders' equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,222.4
1,182.9
Retained earnings
19,838.6
18,532.6
Common stock in treasury,
at cost, shares of
168
.0 and
155.7
(8,410.0)
(7,278.1)
Accumulated other comprehensive loss
(2,276.9)
(1,970.5)
Total stockholders' equity
10,449.6
10,542.4
Noncontrolling interests
250.4
245.6
Total equity
10,700.0
10,788.0
Total liabilities and equity
$
31,451.7
$
31,090.1
See accompanying notes to consolidated financial statements.
45
Consolidated Statements of Total
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
2023
2022
2021
Shares
Amount
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
10,788.0
$
9,773.2
$
8,349.5
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,182.9
1,365.5
1,348.6
Stock compensation plans
34.5
17.9
6.2
Unearned compensation related to stock unit awards
(104.7)
(92.2)
(78.0)
Earned compensation
109.7
104.5
88.5
Decrease in redemption value of
redeemable interest
-
14.1
0.2
Reversal of cumulative redeemable interest
value adjustments
-
(207.4)
-
Acquisition of noncontrolling interest
-
(19.5)
-
Ending balance
1,222.4
1,182.9
1,365.5
Retained earnings:
Beginning balance
18,532.6
17,069.8
15,982.1
Net earnings attributable to General Mills
2,593.9
2,707.3
2,339.8
Cash dividends declared ($
2.16
, $
2.04
, and $
2.02
per share)
(1,287.9)
(1,244.5)
(1,246.4)
Adoption of current expected credit loss
accounting requirements
-
-
(5.7)
Ending balance
19,838.6
18,532.6
17,069.8
Common stock in treasury:
Beginning balance
(155.7)
(7,278.1)
(146.9)
(6,611.2)
(144.8)
(6,433.3)
Shares purchased
(18.0)
(1,403.6)
(13.5)
(876.8)
(5.0)
(301.4)
Stock compensation plans
5.7
271.7
4.7
209.9
2.9
123.5
Ending balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Accumulated other comprehensive loss:
Beginning balance
(1,970.5)
(2,429.2)
(2,914.4)
Comprehensive (loss) income
(306.4)
458.7
485.2
Ending balance
(2,276.9)
(1,970.5)
(2,429.2)
Noncontrolling interests:
Beginning balance
245.6
302.8
291.0
Comprehensive income (loss)
15.4
(16.0)
38.0
Distributions to noncontrolling interest holders
(15.7)
(129.8)
(26.2)
Reclassification from redeemable interest
-
561.6
-
Reversal of cumulative redeemable interest
value adjustments
-
207.4
-
Divestiture
5.1
(680.4)
-
Ending balance
250.4
245.6
302.8
Total equity,
ending balance
$
10,700.0
$
10,788.0
$
9,773.2
Redeemable interest:
Beginning balance
$
-
$
604.9
$
544.6
Comprehensive (loss) income
-
(29.2)
83.2
Decrease in redemption value of
redeemable interest
-
(14.1)
(0.2)
Distributions to redeemable interest holder
-
-
(22.7)
Reclassification to noncontrolling interest
-
(561.6)
-
Ending balance
$
-
$
-
$
604.9
See accompanying notes to consolidated financial statements.
46
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
2023
2022
2021
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling interests
$
2,609.6
$
2,735.0
$
2,346.0
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
546.6
570.3
601.3
After-tax earnings from joint ventures
(81.3)
(111.7)
(117.7)
Distributions of earnings from joint ventures
69.9
107.5
95.2
Stock-based compensation
111.7
98.7
89.9
Deferred income taxes
(22.2)
62.2
118.8
Pension and other postretirement benefit plan contributions
(30.1)
(31.3)
(33.4)
Pension and other postretirement benefit plan costs
(27.6)
(30.1)
(33.6)
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
24.4
(117.1)
150.9
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures
(48.9)
277.4
(155.9)
Other, net
71.1
(50.7)
(131.8)
Net cash provided by operating activities
2,778.6
3,316.1
2,983.2
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(689.5)
(568.7)
(530.8)
Acquisition, net of cash acquired
(251.5)
(1,201.3)
-
Investments in affiliates, net
(32.2)
15.4
15.5
Proceeds from disposal of land, buildings, and equipment
1.3
3.3
2.7
Proceeds from divestitures, net of cash divested
633.1
74.1
2.9
Other, net
(7.6)
(13.5)
(3.1)
Net cash used by investing activities
(346.4)
(1,690.7)
(512.8)
Cash Flows - Financing Activities
Change in notes payable
(769.3)
551.4
71.7
Issuance of long-term debt
2,324.4
2,203.7
1,576.5
Payment of long-term debt
(1,421.7)
(3,140.9)
(2,609.0)
Debt exchange participation incentive cash payment
-
-
(201.4)
Proceeds from common stock issued on exercised options
232.3
161.7
74.3
Purchases of common stock for treasury
(1,403.6)
(876.8)
(301.4)
Dividends paid
(1,287.9)
(1,244.5)
(1,246.4)
Distributions to noncontrolling and redeemable interest holders
(15.7)
(129.8)
(48.9)
Other, net
(62.6)
(28.0)
(30.9)
Net cash used by financing activities
(2,404.1)
(2,503.2)
(2,715.5)
Effect of exchange rate changes on cash and cash equivalents
(12.0)
(58.0)
72.5
Increase (decrease) in cash and cash equivalents
16.1
(935.8)
(172.6)
Cash and cash equivalents - beginning of year
569.4
1,505.2
1,677.8
Cash and cash equivalents - end of year
$
585.5
$
569.4
$
1,505.2
Cash flow from changes in current assets and liabilities, excluding the effects of acquisitions and
divestitures:
Receivables
$
(41.2)
$
(166.3)
$
27.9
Inventories
(319.0)
(85.8)
(354.7)
Prepaid expenses and other current assets
61.6
(35.3)
(42.7)
Accounts payable
199.8
456.7
343.1
Other current liabilities
49.9
108.1
(129.5)
Changes in current assets and liabilities
$
(48.9)
$
277.4
$
(155.9)
See accompanying notes to consolidated financial statements.
47
Notes to Consolidated Financial Statements

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTE 1. BASIS OF PRESENTATION
AND RECLASSIFICATIONS

Basis of Presentation

Our Consolidated Financial
Statements include the
accounts of General
Mills, Inc. and all
subsidiaries in which
we have a controlling
financial
interest.
Intercompany
transactions
and
accounts,
including
any
noncontrolling
and
redeemable
interests’
share
of
those
transactions, are eliminated in consolidation.

Our fiscal year ends on the last Sunday in May. Fiscal years 2021 and 2019 consisted of 52 weeks, while fiscal year 2020 consisted of 53 weeks.

Certain reclassifications to our previously reported financial information have been made to conform to the current period presentation. See Note 2 for additional information.

Change in Reporting Period

As part of a long-term plan to conform the fiscal year ends of all our operations, in fiscal 2020 we changed the reporting period of our Pet segment from an April fiscal year-end to a May fiscal year-end to match our fiscal calendar. Accordingly, our fiscal 2020 results include 13 months of Pet segment results compared to 12 months in fiscal 2021 and 2019. The impact of this change was not material to our consolidated results of operations and, therefore, we did not restate prior period financial statements for comparability.

Our India business is on an April fiscal year end.

Certain
reclassifications
to
our
previously
reported
financial
information
have
been
made
to
conform
to
the
current
period
presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Cash and Cash Equivalents

We consider all investments
purchased with an original maturity of three months or less to be cash equivalents.

Inventories

All
inventories
in
the
United
States
other
than
grain
are
valued
at
the
lower
of
cost,
using
the
last-in,
first-out
(LIFO)
method,
or
market. Grain inventories are
valued at net realizable
value, and all related cash
contracts and derivatives are valued
at fair value, with
all net changes in value recorded in earnings currently.

Inventories
outside
of the
United
States are
generally
valued
at
the lower
of
cost, using
the
first-in,
first-out
(FIFO) method,
or net
realizable value.

Shipping
costs associated
with the
distribution of
finished product
to our
customers are
recorded as
cost of
sales and
are recognized
when the related finished product is shipped to and accepted by the customer.

Land, Buildings, Equipment, and Depreciation

Land is recorded at historical cost.
Buildings and equipment, including
capitalized interest and internal engineering
costs, are recorded
at
cost
and
depreciated
over
estimated
useful
lives,
primarily
using
the
straight-line
method.
Ordinary
maintenance
and
repairs
are
charged
to
cost
of
sales.
Buildings
are
usually
depreciated
over
40
years,
and
equipment,
furniture,
and
software
are
usually
depreciated over estimated useful lives, primarily using the straight-line method. Ordinary maintenance and repairs are charged
3
to cost of sales. Buildings are usually depreciated over 40 years, and equipment, furniture, and software are usually depreciated over 3 to
10
years. Fully depreciated assets are retained
in buildings and equipment until disposal.
When an item is sold or
retired,
the
accounts
are
relieved
of
its
cost
and
related
accumulated
depreciation
and
the
resulting
gains
and
losses,
if
any,
are
recognized in earnings. As of May 30, 2021, assets held for sale were insignificant.

Long-lived assets
are reviewed
for impairment
whenever events
or changes
in circumstances
indicate that
the carrying
amount of
an
asset (or
(or
asset
group)
may
not
be
recoverable.
An
impairment
loss
would
be
recognized
when
estimated
undiscounted
future
cash
flows from
the operation
and disposition
of the
asset group
are less
than the
carrying amount
of the
asset group.
Asset groups
have
identifiable cash
flows and
are largely
independent of
other asset groups.
Measurement of
an impairment
loss would
be based
on the
excess
of
the
carrying
amount of
the
asset group
over
its fair
value.
Fair
value
is measured
using
a discounted
cash
flow model
or
independent appraisals, as appropriate.

Goodwill and Other Intangible Assets

Goodwill
is
not
subject
to
amortization
and
is
tested
for
impairment
annually
and
whenever
events
or
changes
in
circumstances
indicate that impairment may have
occurred. We
perform our annual goodwill and
indefinite-lived intangible assets impairment
test as
of the
first day
of the
second quarter
of the
fiscal year.
Impairment testing
is performed
for each
of our
reporting units.
We
compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit, which often requires allocation of shared or corporate items among reporting units. If the carrying amount of a reporting unit exceeds its fair value, impairment has occurred. We recognize an

51

the
carrying

value
of
a
reporting
unit,
including
goodwill,
to
the
fair
value
of
the
unit.
Carrying
value
is
based
on
the
assets
and

liabilities

associated
with
the
operations
of
that
reporting
unit,
which
often
requires
allocation
of
shared
or
corporate
items
among
reporting
units.
If
the
carrying
amount
of
a
reporting
unit
exceeds
its
fair
value,
impairment
has
occurred.
We
recognize
an
impairment charge
for the
amount by
which the carrying
amount of
the reporting
unit exceeds
its fair
value up
to the
total amount
of
goodwill allocated
to the
reporting unit.
Our estimates
of fair
value are
determined based
on a
discounted
cash flow
model. Growth
rates for sales and profits are determined using inputs from our long-range
planning process. We also make
estimates of discount rates,
perpetuity growth assumptions, market comparables, and other factors.

We evaluate the
useful lives of our other intangible assets, mainly brands, to
determine if they are finite or indefinite-lived.
Reaching a
determination
on
useful
life
requires
significant
judgments
and
assumptions
regarding
the
future
effects
of
obsolescence,
demand,
competition, other economic
factors (such as the
stability of the industry,
known technological advances,
legislative action that
results
48
in an uncertain or
changing regulatory environment,
and expected changes in
distribution channels), the level
of required maintenance
expenditures,
and
the
expected
lives
of
other
related
groups
of
assets.
Intangible
assets
that
are
deemed
to
have
finite
lives
are
amortized on a straight-line basis, over their useful lives, generally ranging
from
4
to
30
years.

Our indefinite-lived
intangible assets,
mainly intangible
assets primarily
associated with
the
Blue Buffalo
,
Pillsbury
,
Totino’s
,Yoplait,
Old El
Paso
,
Progresso
,
Annie’s
,Häagen-Dazs
Nudges
, and Yoki
Häagen-Dazs
brands, are also tested
for impairment annually
and whenever events or
changes
in circumstances
indicate that
their carrying
value may
not be
recoverable. Our
estimate of
the fair
value of
the brands
is based
on a
discounted
cash
flow
model
using
inputs
which
included
projected
revenues
from
our
long-range
plan,
assumed
royalty
rates
that
could be payable if we did not own the brands, and a discount rate.

Our finite-lived intangible
assets, primarily acquired franchise agreements and
customer relationships, are
reviewed for impairment
whenever events or
changes
in circumstances indicate
that the carrying amount
of an asset may not
be recoverable. An impairment
loss would be recognized
when
estimated undiscounted future cash
flows from the operation and disposition
of the asset are less than
the carrying amount of the asset.
Assets generally
have identifiable
cash flows
and are
largely independent
of other
assets. Measurement
of an
impairment loss
would
be
based on
the
excess of
the carrying
amount of
the asset
over
its fair
value.
Fair
value
is measured
using
a discounted
cash flow
model or other similar valuation model, as appropriate.

Leases

We
determine whether
an arrangement
is a lease
at inception.
When our
lease arrangements
include lease and
non-lease components,
we account for lease and non-lease components (e.g. common area maintenance)
separately based on their relative standalone prices.

Any
lease
arrangements
with
an
initial
term
of
12
months
or
less
are
not
recorded
on
our
Consolidated
Balance
Sheet,
and
we
recognize lease costs for these
lease arrangements on a straight-line
basis over the lease term. Many
of our lease arrangements provide
us with
options to
exercise one
or more
renewal terms
or to
terminate the
lease arrangement.
We
include these
options when
we are
reasonably certain
to exercise them
in the lease
term used to
establish our
right of use
assets and lease
liabilities. Generally,
our lease
agreements do not include an option to purchase the leased asset, residual value guarantees,
or material restrictive covenants.

We
have
certain
lease
arrangements
with
variable
rental
payments.
Our
lease
arrangements
for
our
Häagen-Dazs
retail
shops
often
include rental payments
that are based
on a percentage
of retail sales. We
have other lease
arrangements that are
adjusted periodically
based on
an inflation
index or rate.
The future
variability of these
payments and
adjustments are
unknown, and
therefore they are
not
included
as
minimum
lease
payments
used
to
determine
our
right
of
use
assets
and
lease
liabilities.
Variable
rental
payments
are
recognized in the period in which the obligation is incurred.

As
most
of
our
lease
arrangements
do
not
provide
an
implicit
interest
rate,
we
apply
an
incremental
borrowing
rate
based
on
the
information available at the commencement date of the lease arrangement
to determine the present value of lease payments.

Investments in Unconsolidated Joint Ventures

Our
investments
in
companies
over
which
we
have
the
ability
to
exercise
significant
influence
are
stated
at
cost
plus
our
share
of
undistributed
earnings
or
losses.
We
receive
royalty
income
from
certain
joint
ventures,
incur
various
expenses (primarily
(primarily
research
and
development),
and
record
the
tax
impact
of
certain
joint
venture
operations
that
are
structured
as
partnerships.
In
addition,
we
make
advances
to
our
joint
ventures
in
the
form
of
loans
or
capital
investments.
We
also
sell
certain
raw
materials,
semi-finished
goods, and finished goods to the joint ventures, generally at market prices.

In addition,
we assess our
investments in our
joint ventures if
we have reason
to believe an
impairment may have
occurred including,
but not
limited to,
as a
result of
ongoing operating
losses, projected
decreases in
earnings, increases
in the
weighted-average
cost of
capital,
or
significant
business
disruptions.
The
significant
assumptions
used
to
estimate
fair
value
include
revenue
growth
and
profitability,
royalty
rates,
capital
spending,
depreciation
and
taxes,
foreign
currency
exchange
rates,
and
a
discount
rate.
By
their
nature, these projections
and assumptions are uncertain.
If we were to
determine the current
fair value of our
investment was less than
the carrying value of
the investment, then we
would assess if the
shortfall was of a temporary
or permanent nature and
write down the
investment to its fair value if we concluded the impairment is other than temporary.

52

Redeemable Interest

We have a 51 percent controlling interest in Yoplait SAS, a consolidated entity. Sodiaal International (Sodiaal) holds the remaining 49 percent interest in Yoplait SAS. 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. This put option requires us to classify Sodiaal’s interest as a redeemable interest outside of equity on our Consolidated Balance Sheets for as long as the put is exercisable by Sodiaal. When the put is no longer exercisable, the redeemable interest will be reclassified to noncontrolling interests on our Consolidated Balance Sheets. 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. The significant assumptions used to estimate the redemption value include projected revenue growth and profitability from our long-range plan, capital spending, depreciation, taxes, foreign currency exchange rates, and a discount rate.

Revenue Recognition

Our revenues primarily result
from contracts with customers,
which are generally short-term
and have a single performance
obligation
– the
delivery of
product. We
recognize revenue
for the
sale of packaged
foods at the
point in
time when our
performance obligation
has been satisfied and control of the
product has transferred to our customer,
which generally occurs when the shipment
is accepted by
our customer.
Sales include
shipping and
handling charges
billed to
the customer
and are
reported
net of
variable consideration
and
consideration
payable
to
our
customers,
including
trade
promotion,
consumer
coupon
redemption
and
other
reductions
to
the
transaction
price,
including
estimated allowances
for
returns, unsalable
product,
and
prompt
pay
discounts.
Sales, use,
value-added,
and
other
excise
taxes
are
not
included
in
revenue.
Trade
promotions
are
recorded
using
significant
judgment
of
estimated
participation and
performance levels
for offered
programs at
the time
of sale.
Differences between
estimated and
actual reductions
to
the
transaction
price
are
recognized
as
a
change
in
estimate
in
a
subsequent
period.
We
generally
do
not
allow
a
right
of
return.
49
However,
on a
limited case-by-case
basis with
prior
approval, we
may
allow customers
to return
product. In
limited circumstances,
product
returned
in
saleable
condition
is
resold
to
other
customers
or
outlets.
Receivables
from
customers
generally
do
not
bear
interest. Payment terms and
collection patterns vary around
the world and by
channel, and are short-term,
and as such, we do
not have
any significant financing components.
Our allowance for doubtful
accounts represents our estimate of
expected credit losses related
to
our
trade
receivables.
We
pool
our
trade
receivables
based
on
similar
risk
characteristics,
such
as
geographic
location,
business
channel, and other
account data. To
estimate our allowance
for doubtful
accounts, we leverage
information on historical
losses, asset-specific asset-
specific
risk
characteristics,
current
conditions,
and reasonable
and
supportable
forecasts of
future
conditions.
Account
balances
are
written off
against the
allowance when
we deem
the amount
is uncollectible.
Please see
Note 17
for a
disaggregation of
our revenue
into
categories
that
depict
how
the
nature,
amount,
timing,
and
uncertainty
of
revenue
and
cash
flows
are
affected
by
economic
factors. We do
not have material contract assets or liabilities arising from our contracts with customers.

Environmental Costs

Environmental costs
relating to
existing conditions
caused by
past operations
that do
not contribute
to current
or future
revenues are
expensed. Liabilities
for anticipated
remediation costs
are recorded
on an
undiscounted basis
when they
are probable
and reasonably
estimable, generally no later than the completion of feasibility studies or our commitment
to a plan of action.

Advertising Production Costs

We expense the
production costs of advertising the first time that the advertising takes place.

Research and Development

All expenditures for research and development
(R&D) are charged against earnings in the period
incurred. R&D includes expenditures
for
new
product
and
manufacturing
process
innovation,
and
the
annual
expenditures
are
comprised
primarily
of
internal
salaries,
wages, consulting, and supplies
attributable to R&D activities.
Other costs include depreciation
and maintenance of research
facilities,
including assets at facilities that are engaged in pilot plant activities.

Foreign Currency Translation

For
all
significant
foreign
operations,
the
functional
currency
is
the
local
currency.
Assets
and
liabilities
of
these
operations
are
translated
at
the
period-end
exchange
rates.
Income
statement
accounts
are
translated
using
the
average
exchange
rates
prevailing
during the period. Translation
adjustments are reflected within
accumulated other comprehensive
loss (AOCI) in stockholders’
equity.
Gains
and
losses
from
foreign
currency
transactions
are
included
in
net
earnings
for
the
period,
except
for
gains
and
losses
on
investments
in
subsidiaries
for
which
settlement
is not
planned
for
the period, except for foreseeable
future and
foreign
exchange
gains and
losses on investments in subsidiaries for which settlement is not planned for the foreseeable future and foreign exchange gains and losses on
instruments designated as net investment hedges. These gains and losses are recorded
in AOCI.

Derivative Instruments

All derivatives are recognized
on our Consolidated
Balance Sheets at fair
value based on quoted
market prices or our
estimate of their
fair value,
and are
recorded in
either current
or noncurrent
assets or
liabilities based
on their
maturity.
Changes in
the fair
values of
derivatives are
recorded in
net earnings
or other
comprehensive income,
based on
whether the
instrument is
designated and
effective as a hedge transaction and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in AOCI are

53

as
a

hedge
transaction
and,
if
so,
the
type
of
hedge
transaction.
Gains
or
losses
on
derivative
instruments
reported
in
AOCI
are

reclassified

to
earnings
in
the
period
the
hedged
item
affects
earnings.
If
the
underlying
hedged
transaction
ceases
to
exist,
any
associated amounts reported in AOCI are reclassified to earnings at that time.

Stock-based Compensation

We generally
measure compensation expense for grants of restricted stock
units and performance share units using the value of
a share
of
our
stock
on
the
date
of
grant.
We
estimate
the
value
of
stock
option
grants
using
a
Black-Scholes
valuation
model.
Generally,
stock-based
compensation
is recognized
straight
line over
the
vesting
period.
Our stock-based
compensation
expense is
recorded
in
selling, general
,
and administrative
(SG&A) expenses
and cost
of sales
in our
Consolidated Statements
of Earnings
and allocated
to
each reportable segment in our segment results.

Certain equity-based compensation plans contain provisions
that accelerate vesting of awards upon retirement, termination,
or death of
eligible
employees
and
directors.
We
consider
a
stock-based
award
to
be vested
when
the employee’s
or
director’s
retention
of
the
award
is no
longer
contingent
on
providing
subsequent
service.
Accordingly,
the
related
compensation
cost
is generally
recognized
immediately
for
awards
granted
to
retirement-eligible
individuals
or
over
the
period
from
the
grant
date
to
the
date
retirement
eligibility is achieved, if less than the stated vesting period.

We report the
benefits of tax deductions in excess of recognized compensation cost as an operating
cash flow.

Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
Benefit Plans

We
sponsor
several domestic
and foreign
defined
benefit plans
to provide
pension, health
care, and
other welfare
benefits to
retired
employees. Under
certain circumstances,
we also
provide accruable
benefits, primarily
severance, to
former or
inactive employees
in
the
United
States,
Canada,
and
Mexico.
We
recognize
an
obligation
for
any
of
these
benefits
that
vest
or
accumulate
with
service.
50
Postemployment benefits
that do not
vest or
accumulate with
service (such
as severance
based solely
on annual pay
rather than years
of service) are charged to expense when incurred. Our postemployment
benefit plans are unfunded.

We
recognize the underfunded
or overfunded status
of a defined
benefit pension plan
as an asset
or liability and
recognize changes in
the funded status in the year in which the changes occur through AOCI.

Use of Estimates

Preparing
our
Consolidated
Financial
Statements
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
requires
us to
make estimates
and assumptions
that affect
reported amounts
of assets
and
liabilities, disclosures
of contingent
assets
and liabilities disclosures of contingent assets and liabilities
at the
date of
the financial
statements, and
the reported
amounts of
revenues and
expenses during
the reporting
period.
These
estimates
include
our
accounting
for
revenue
recognition,
valuation
of
long-lived
assets,
intangible
assets, redeemable interest,
stock-based
compensation,
income
taxes,
and
defined
benefit
pension,
other
postretirement
benefit
and
postemployment
benefit
plans.
Actual
results could differ from our estimates.

New Accounting Standards

In the
first quarter
of fiscal
2021,
we adopted
new accounting
requirements
related
to the
measurement
of credit
losses on
financial
instruments, including
trade receivables.
The new
standard and
subsequent
amendments replace
the incurred
loss impairment
model
with a
forward-looking
expected credit
loss model,
which will
generally
result in
earlier recognition
of credit
losses. Our
allowance
for doubtful
accounts represents
our estimate
of expected
credit losses related
to our trade
receivables. We
pool our trade
receivables
based on similar risk characteristics,
such as geographic location,
business channel, and other
account data. To
estimate our allowance
for
doubtful
accounts,
we
leverage
information
on
historical
losses,
asset-specific
risk
characteristics,
current
conditions,
and
reasonable and
supportable forecasts
of future
conditions. Account
balances are
written off
against the
allowance when
we deem
the
amount
is
uncollectible.
We
adopted
the
requirements
of
the
new
standard
and
subsequent
amendments
using
the
modified
retrospective transition approach, and recorded a decrease to retained
earnings of $5.7 $
5.7
million after-tax.

In after-tax

.
NOTE 3. ACQUISITION AND DIVESTITURES
During
the fourth first
quarter
of fiscal 2020,
2023,
we adopted new accounting requirements related to
acquired
TNT Crust,
a
manufacturer
of high-quality
frozen pizza
crusts
for
regional
and
national pizza
chains, foodservice
distributors, and
retail outlets,
for a
purchase price
of $
253.0
million. We
financed the
transaction
with U.S. commercial paper.
We consolidated
the annual disclosure requirements for defined benefit pension and other postretirement benefit plans. The standard modifies specific disclosures to improve usefulness to financial statement users. We adopted the requirements of the new standard using a retrospective approach. The adoption of this guidance did not impact our results of operations or financial position.

In the first quarter of fiscal 2020, we adopted new accounting requirements for hedge accounting. The standard amends the hedge accounting recognition and presentation requirements to better align an entity’s risk management activities and financial reporting. The new standard also simplifies the application of hedge accounting guidance. The adoption did not have a material impact on our results of operations or financial position.

In the first quarter of fiscal 2020, we adopted new requirements for the accounting, presentation, and classification of leases. This results in certain leases being capitalized as a right of use asset with a related liability on TNT Crust business into

our Consolidated Balance Sheet. We adopted this guidance utilizing
Sheets and recorded goodwill
of
$
156.8
million. The
goodwill is
included in
the cumulative effect adjustment approach, which required applicationNorth
America Foodservice
segment and
is not
deductible for
tax purposes.
The pro
forma
effects
of
this
acquisition
were
not
material.
We
have
conducted
a
preliminary
assessment
of
the
fair
value
of
the
acquired
assets
and
liabilities
of
the
TNT
Crust
business
and
will
continue
to
review
these
items
during
the
measurement
period.
If
new
information is obtained
about facts and circumstances
that existed at the
acquisition date, the
acquisition accounting
will be revised to
reflect the resulting adjustments to
current estimates of these items.
The consolidated results of the guidance at
TNT Crust business are reported
in
our North America Foodservice segment on a one-month lag.
During the adoption date, and elected certain practical expedients permitted under the transition guidance, including not reassessing whether existing contracts

54

contain leases and carrying forward the historical classification of those leases. In addition, we elected not to recognize leases with an initial term of 12 months or less on our Consolidated Balance Sheet and to continue our historical treatment of land easements, under permitted elections. This guidance did not have a material impact on retained earnings, our Consolidated Statements of Earnings, or our Consolidated Statements of Cash Flows.

In the first quarter

of fiscal 2019,
2023,
we adopted new accounting requirements related to completed
the presentation sale
of net periodic defined benefit pension expense, net periodic postretirement benefit expense,our
Helper main
meals and net periodic postemployment benefit expense (collectively “net periodic benefit expense”). The new standard requires the service cost component of net periodic benefit expense
Suddenly
Salad side
dishes business
to be recorded in the same line items as other employee compensation costs within our Consolidated Statements of Earnings. Other components of net periodic benefit expense must be presented separately outside of operating profit in our Consolidated Statements of Earnings. In addition, the new standard requires that only the service cost component of net periodic benefit expense is eligible
Eagle Family Foods Group for capitalization. The standard required retrospective adoption of the presentation of net periodic benefit expense and prospective application of the capitalization of the service cost component. The impact of the adoption of this standard on our results of operations was a decrease to our operating profit of $87.9 $
606.8
million and a corresponding increase to benefit plan non-service income of $87.9 million for fiscal 2019. There were no changes to our reported segment operating profit.

In the first quarter of fiscal 2019, we adopted new accounting requirements for the recognition of revenue from contracts with customers. Under the standard, we apply a principles-based five step model to recognize revenue upon the transfer of control of promised goods to customers and in an amount that reflects the consideration for which we expect to be entitled to in exchange for those goods. We did not identify any material differences resulting from applying the new requirements to our revenue contracts. Additionally, we did not identify any significant changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new guidance. We adopted the requirements of the standard and subsequent amendments to all contracts in the first quarter of fiscal 2019 using the cumulative effect approach. We recorded a $33.9 million cumulative effect adjustment net of income tax effects to the opening balance of fiscal 2019 retained earnings, a decrease to deferred income taxes of $11.4 million, and an increase to other current liabilities of $45.3 million related to the timing of recognition of certain promotional expenditures.

NOTE 3. Acquisition and DIVESTITURES

During the fourth quarter of fiscal 2021, we recorded a pre-tax loss of $53.5 million related to the sale of our Laticínios Carolina business in Brazil.

During the fourth quarter of fiscal 2021, we entered into a definitive agreement to acquire Tyson Foods’ pet treats business for $1.2 billion in cash. We expect to close on the acquisition in the first quarter of fiscal 2022. We intend to fund the acquisition with cash and short-term debt.

During the third quarter of fiscal 2019, we sold our La Salteña fresh pasta and refrigerated dough business in Argentina, and recorded a pre-tax loss of $35.4 million. During the fourth quarter of fiscal 2019, we sold our yogurt business in China and simultaneously entered into a new Yoplait license agreement with the purchaser for their use of the Yoplait brand. We recorded a pre-tax gain of $5.4 $

442.2
million.

In fiscal 2022, we sold our European dough businesses and recorded
a net pre-tax gain on sale of $
30.4
million.
During
the
third
quarter
of
fiscal
2022,
we
sold
our
interests
in
Yoplait
SAS,
Yoplait
Marques
SNC,
and
Liberté
Marques
Sàrl
to
Sodiaal International (Sodiaal) in
exchange for Sodiaal’s
interest in our Canadian yogurt business, a
modified agreement for the use of
Yoplait
and
Liberté
brands in the
United States and
Canada, and cash.
We
recorded a net
pre-tax gain of
$
163.7
million on the
sale of
these businesses.
During
the
first
quarter
of
fiscal
2022,
we
acquired
Tyson
Foods’
pet
treats
business
for
$
1.2
billion
in
cash.
We
financed
the
transaction
with
a
combination
of
cash
on
hand
and
short-term
debt.
We
consolidated
Tyson
Foods’
pet
treats
business
into
our
Consolidated
Balance
Sheets
and
recorded
goodwill
of
$
762.3
million,
indefinite-lived
intangible
assets
for
the
Nudges
,
Top
Chews
, and
True
Chews
brands
totaling
$
330.0
million
in
aggregate,
and
a
finite-lived
customer
relationship
asset
of
$
40.0
million.
The goodwill is included in
the Pet reporting unit and is
deductible for tax purposes. The
pro forma effects of
this acquisition were not
material.
During
the
fourth
quarter
of
fiscal
2021,
we
recorded
a
pre-tax
loss
of
$
53.5
million
related
to
the
sale
of
our
Laticínios
Carolina
business in Brazil.
51
NOTE 4. RESTRUCTURING, IMPAIRMENT,
AND OTHER EXIT COSTS

ASSET IMPAIRMENTS

In fiscal 2019, we recorded a $192.6 million charge related to the impairment of our Progresso, Food Should Taste Good,and Mountain High brand intangible assets in restructuring, impairment, and other exit costs.

In fiscal 2019, we recorded a $14.8 million charge in restructuring, impairment, and other exit costs related to the impairment of certain manufacturing assets in our North America Retail and Asia & Latin America segments.

RESTRUCTURING INITIATIVES

We view
our restructuring activities as actions
that help us meet our long-term
growth targets and are evaluated
against internal rate of
return and net
present value targets.
Each restructuring
action normally takes
one to two
years to complete.
At completion (or
as each
major stage
is completed
in the
case of
multi-year programs),
the project
begins to
deliver cash
savings and/or
reduced depreciation.
These activities
result in
various restructuring
costs, including
asset write-offs,
exit charges
including severance,
contract termination
fees, and decommissioning
and other costs.
Accelerated depreciation
associated with restructured
assets, as used
in the context
of our
disclosures
regarding
restructuring
activity,
refers
to
the
increase
in
depreciation
expense
caused
by
shortening
the
useful
life
or
updating
the salvage
value
of depreciable
fixed
assets to
coincide
with the
end of
production
under an
approved
restructuring
plan.
Any impairment of the asset is recognized immediately in the period
the plan is approved.

55

ChargesRestructuring charges recorded in fiscal 20212023 were

as follows:

Expense, in Millions

 

 

Global organizational structure and resource alignment

$

157.3

Asia & Latin America route-to-market and supply chain optimization

 

13.0

Charges associated with restructuring actions previously announced

 

2.4

Total

$

172.7

In fiscal 2021, we approved

Expense, in Millions
Global supply chain actions
$
36.2
Network optimization actions
6.4
Charges associated with restructuring actions designed previously
announced
18.4
Total restructuring
charges
$
61.0
In fiscal
2023,
we approved
restructuring actions
to better alignenhance
the efficiency
of our organizational structure and resources with strategic initiatives.
global supply
chain structure.
We
expect to
incur
approximately $170
$
52
million
of
restructuring
charges
and
project-related
costs
related
to $220 million
these
actions,
of restructuring charges related to these global actions, of
which
approximately $130 million to $180
$
35
million will be
cash. These charges
are expected
to consist primarily of severance and other benefits costs and other charges, including consulting and professional fees, contract termination costs, and fixed asset write-offs. We recognized $148.8
approximately $
26
million of severance
and $
26
million of other benefits
costs,
primarily
$
8
million
of
asset
impairment
and $8.5
$
11
million
of
other
asset
write-offs.
We
recognized
$
25.8
million
of
severance
and
$
10.4
million of other costs in fiscal 2021 related to these actions.2023. We
expect these actions to be completed by the end of fiscal 2023.

2025.

In fiscal 2021, 2023, we approved restructuring actions to leverage more efficient and effective route-to-market models andin
our International segment to optimize our supply chain in our Asia & Latin America segment.Häagen-Dazs
shops network. We
expect
to incur
approximately $17 $
10
million of
restructuring charges
and project-related
costs related
to these
actions, of
which approximately $10
$
9
million will be
cash. These charges
are expected to
consist of approximately $9
$
6
million of severance
and $8 $
4
million of other costs, primarily asset write-offs.
costs.
We
recognized $8.8 $
5.6
million of
severance and $4.2
$
0.8
million of
other costs
in fiscal 2021 related to these actions.
2023. We
expect these
actions to
be completed
by
theend of the first quarter of fiscal 2022.

The charges associated with restructuring actions previously announced primarily relate to actions to drive efficiencies in targeted areas of our global supply chain. We expect these actions to be completed by the

end of fiscal 20232024
.

Certain actions are subject to union negotiations and works counsel consultations,
where required.

We paid net $21.8
$
36.6
million of cash related to restructuring actions in fiscal 2021.2023. We
paid net $6.6 $
93.9
million of cash in fiscal 2020.

In fiscal 2020, we did not undertake any new restructuring actions and recorded $50.2 million of restructuring2022.

Restructuring charges for previously announced restructuring actions.

Charges recorded in fiscal 20192022 were

as follows:

Expense, in Millions

 

 

Targeted actions in global supply chain

$

80.2

Charges associated with restructuring actions previously announced

 

(2.6)

Total

$

77.6

Expense, in Millions
International manufacturing and logistics operations
$
15.0
Net recoveries associated with restructuring actions previously announced
(38.2)
Total net restructuring
recoveries
$
(23.2)
Restructuring charges recorded in fiscal 2021 were
as follows:
Expense, in Millions
Global organizational structure and resource alignment
$
157.3
International route-to-market and supply chain optimization
13.0
Charges associated with restructuring actions previously
announced
2.4
Total restructuring
charges
$
172.7
52
Restructuring and impairment charges and project-related
costs are classified in our Consolidated Statements of Earnings as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Restructuring, impairment, and other exit costs

$

170.4

$

24.4

$

275.1

Cost of sales

 

2.3

 

25.8

 

9.9

Total restructuring and impairment charges

 

172.7

 

50.2

 

285.0

Project-related costs classified in cost of sales

$

0

$

1.5

$

1.3

56

Fiscal Year

In Millions

2023
2022
2021
Restructuring, impairment, and other exit costs (recoveries)
$
56.2
$
(26.5)
$
170.4
Cost of sales
4.8
3.3
2.3
Total restructuring
and impairment charges (recoveries)
61.0
(23.2)
172.7
Project-related costs classified in cost of sales
$
2.4
$
-
$
-
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:

In Millions

 

Severance

 

Contract Termination

 

Other Exit Costs

 

Total

Reserve balance as of May 27, 2018

$

66.0

$

0.1

$

0.7

$

66.8

Fiscal 2019 charges, including foreign currency translation

 

7.7

 

2.5

 

1.4

 

11.6

Utilized in fiscal 2019

 

(37.2)

 

(2.6)

 

(2.1)

 

(41.9)

Reserve balance as of May 26, 2019

 

36.5

 

0

 

0

 

36.5

Fiscal 2020 charges, including foreign currency translation

 

(5.0)

 

0.8

 

1.7

 

(2.5)

Utilized in fiscal 2020

 

(13.7)

 

(0.8)

 

(1.7)

 

(16.2)

Reserve balance as of May 31, 2020

 

17.8

 

0

 

0

 

17.8

Fiscal 2021 charges, including foreign currency translation

 

142.3

 

0.3

 

1.3

 

143.9

Utilized in fiscal 2021

 

(12.8)

 

(0.1)

 

0

 

(12.9)

Reserve balance as of May 30, 2021

$

147.3

$

0.2

$

1.3

$

148.8

In Millions
Severance
Other Exit
Costs
Total
Reserve balance as of May 31, 2020
$
17.8
$
-
$
17.8
Fiscal 2021 charges, including foreign currency translation
142.3
1.6
143.9
Utilized in fiscal 2021
(12.8)
(0.1)
(12.9)
Reserve balance as of May 30, 2021
147.3
1.5
148.8
Fiscal 2022 charges, including foreign currency translation
2.2
1.2
3.4
Reserve adjustment
(34.0)
-
(34.0)
Utilized in fiscal 2022
(80.1)
(1.3)
(81.4)
Reserve balance as of May 29, 2022
35.4
1.4
36.8
Fiscal 2023 charges, including foreign currency translation
41.6
0.1
41.7
Utilized in fiscal 2023
(29.4)
(1.4)
(30.8)
Reserve balance as of May 28, 2023
$
47.6
$
0.1
$
47.7
The charges
recognized in
the roll forward
of our reserves
for restructuring
and other exit
costs do not
include items
charged
directly
to expense (e.g., asset impairment charges,
the gain or loss on the sale of restructured assets, and the
write-off of spare parts) and other
periodic
exit
costs
recognized
as
incurred,
as
those
items
are
not
reflected
in
our
restructuring
and
other
exit
cost
reserves
on
our
Consolidated Balance Sheets.

NOTE 5. INVESTMENTS IN UNCONSOLIDATED
JOINT VENTURES

We
have a
50
percent interest
in Cereal
Partners Worldwide
(CPW), which
manufactures and
markets ready-to-eat
cereal products
in more than 120
approximately
130
countries
outside
the
United
States
and
Canada.
CPW
also
markets
cereal
bars
in several
European
countries
and
manufactures private label cereals for
customers in the United Kingdom.
We have
guaranteed a portion of CPW’s
debt and its pension
obligation in the United Kingdom.

We
also have
a
50
percent interest
in Häagen-Dazs
Japan, Inc.
(HDJ). This joint
venture manufactures
and markets
Häagen-Dazs
ice
cream products and frozen novelties.

Results from our CPW and HDJ joint ventures are reported for the
12 months
ended March 31.

Joint venture related balance sheet activity is as follows:

In Millions

 

May 30, 2021

 

May 31, 2020

Cumulative investments

$

486.2

$

481.4

Goodwill and other intangibles

 

505.7

 

460.5

Aggregate advances included in cumulative investments

 

294.2

 

279.5

In Millions
May 28, 2023
May 29, 2022
Cumulative investments
$
401.5
$
416.4
Goodwill and other intangibles
444.1
444.9
Aggregate advances included in cumulative investments
275.6
254.4
53
Joint venture earnings and cash flow activity is as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Sales to joint ventures

$

6.7

$

5.9

$

4.2

Net (repayments) advances

 

(15.5)

 

48.0

 

(0.1)

Dividends received

 

95.2

 

76.5

 

86.7

57

Fiscal Year

In Millions

2023
2022
2021
Sales to joint ventures
$
5.8
$
6.3
$
6.7
Net advances (repayments)
32.2
(15.4)
(15.5)
Dividends received
69.9
107.5
95.2
Summary combined financial information for the joint ventures on
a 100 percent basis is as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Net sales:

 

 

 

 

 

 

CPW

$

1,766.8

$

1,654.3

$

1,647.7

HDJ

 

422.4

 

391.3

 

396.2

Total net sales

 

2,189.2

 

2,045.6

 

2,043.9

Gross margin

 

882.9

 

785.3

 

744.4

Earnings before income taxes

 

247.8

 

214.0

 

155.4

Earnings after income taxes

 

201.7

 

176.5

 

111.9

In Millions

May 30, 2021

May 31, 2020

Current assets

$

877.4

$

870.0

Noncurrent assets

 

927.2

 

781.4

Current liabilities

 

1,424.4

 

1,365.6

Noncurrent liabilities

 

142.2

 

104.2

Fiscal Year
In Millions
2023
2022
2021
Net sales:
CPW
$
1,618.9
$
1,706.5
$
1,766.8
HDJ
338.5
427.8
422.4
Total net sales
1,957.4
2,134.3
2,189.2
Gross margin
667.7
803.1
882.9
Earnings before income taxes
169.3
249.9
247.8
Earnings after income taxes
126.9
201.0
201.7
In Millions
May 28, 2023
May 29, 2022
Current assets
$
817.7
$
823.9
Noncurrent assets
772.7
839.8
Current liabilities
1,300.0
1,298.8
Noncurrent liabilities
100.3
106.5
NOTE 6. GOODWILL AND OTHER INTANGIBLE
ASSETS

The components of goodwill and other intangible assets are as follows:

In Millions

 

May 30, 2021

 

May 31, 2020

Goodwill

$

14,062.4

$

13,923.2

Other intangible assets:

 

 

 

 

Intangible assets not subject to amortization:

 

 

 

 

Brands and other indefinite-lived intangibles

 

6,628.1

 

6,561.4

Intangible assets subject to amortization:

 

 

 

 

Franchise agreements, customer relationships, and other finite-lived intangibles

 

823.4

 

777.8

Less accumulated amortization

 

(300.9)

 

(243.4)

Intangible assets subject to amortization

 

522.5

 

534.4

Other intangible assets

 

7,150.6

 

7,095.8

Total

$

21,213.0

$

21,019.0

In Millions
May 28, 2023
May 29, 2022
Goodwill
$
14,511.2
$
14,378.5
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,712.4
6,725.8
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
386.3
400.3
Less accumulated amortization
(131.1)
(126.2)
Intangible assets subject to amortization
255.2
274.1
Other intangible assets
6,967.6
6,999.9
Total
$
21,478.8
$
21,378.4
Based on
the carrying
value of
finite-lived intangible
assets as of
May 30, 2021,28,
2023, amortization
expense for
each of
the next five
fiscal
years is estimated to be approximately $40 million.

$

58

20

million.
54
The changes in the carrying amount of goodwill for fiscal 2019, 2020,2021, 2022, and 2021 2023
are as follows:

In Millions

North America Retail

Pet

 

Convenience Stores & Foodservice

 

Europe & Australia

 

Asia & Latin America

 

Joint Ventures

 

Total

Balance as of May 27, 2018

$

6,410.6

$

5,294.9

 

$

918.8

 

$

729.9

 

$

285.0

 

$

425.8

 

$

14,065.0

Divestitures

 

0

 

0

 

 

0

 

 

0

 

 

(0.5)

 

 

0

 

 

(0.5)

Purchase accounting

adjustment

 

0

 

5.6

 

 

0

 

 

0

 

 

0

 

 

0

 

 

5.6

Other activity, primarily foreign

currency translation

 

(4.1)

 

0

 

 

0

 

 

(29.5)

 

 

(24.3)

 

 

(16.4)

 

 

(74.3)

Balance as of May 26, 2019

 

6,406.5

 

5,300.5

 

 

918.8

 

 

700.4

 

 

260.2

 

 

409.4

 

 

13,995.8

Other activity, primarily foreign

currency translation

 

(2.8)

 

0

 

 

0

 

 

(9.7)

 

 

(56.4)

 

 

(3.7)

 

 

(72.6)

Balance as of May 31, 2020

 

6,403.7

 

5,300.5

 

 

918.8

 

 

690.7

 

 

203.8

 

 

405.7

 

 

13,923.2

Divestiture

 

0

 

0

 

 

0

 

 

0

 

 

(1.2)

 

 

0

 

 

(1.2)

Other activity, primarily foreign

currency translation

 

15.6

 

0

 

 

0

 

 

74.8

 

 

10.1

 

 

39.9

 

 

140.4

Balance as of May 30, 2021

$

6,419.3

$

5,300.5

 

$

918.8

 

$

765.5

 

$

212.7

 

$

445.6

 

$

14,062.4

In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Joint
Ventures
Total
Balance as of May 31, 2020
$
6,673.7
$
5,300.5
$
648.8
$
894.5
$
405.7
$
13,923.2
Divestiture
-
-
-
(1.2)
-
(1.2)
Other activity, primarily
foreign
currency translation
15.6
-
-
84.9
39.9
140.4
Balance as of May 30, 2021
6,689.3
5,300.5
648.8
978.2
445.6
14,062.4
Acquisition
-
762.3
-
-
-
762.3
Divestitures
-
-
-
(201.8)
-
(201.8)
Reclassified to assets held for sale
(130.0)
-
-
-
-
(130.0)
Other activity, primarily
foreign
currency translation
(6.4)
-
-
(54.8)
(53.2)
(114.4)
Balance as of May 29, 2022
6,552.9
6,062.8
648.8
721.6
392.4
14,378.5
Acquisition
-
-
156.8
-
-
156.8
Divestitures
(2.0)
-
-
(0.4)
-
(2.4)
Other activity, primarily
foreign
currency translation
(8.5)
-
-
(12.8)
(0.4)
(21.7)
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
The changes in the carrying amount of other intangible assets for fiscal 2019, 2020,2021, 2022, and 2021
2023 are as follows:

In Millions

 

Total

Balance as of May 27, 2018

$

7,445.1

Impairment charge

 

(192.6)

Other activity, primarily amortization and foreign currency translation

 

(85.7)

Balance as of May 26, 2019

 

7,166.8

Other activity, primarily amortization and foreign currency translation

 

(71.0)

Balance as of May 31, 2020

 

7,095.8

Divestiture

 

(5.3)

Other activity, primarily amortization and foreign currency translation

 

60.1

Balance as of May 30, 2021

$

7,150.6

Our annual goodwill

In Millions
Total
Balance as of May 31, 2020
$
7,095.8
Divestiture
(5.3)
Other activity, primarily
amortization and indefinite-livedforeign currency translation
60.1
Balance as of May 30, 2021
7,150.6
Acquisition
370.0
Divestitures
(621.8)
Intellectual property intangible assets impairment test was performed on the first dayasset
210.4
Other activity, primarily
amortization and foreign currency translation
(109.3)
Balance as of the second quarterMay 29, 2022
6,999.9
Acquisition
3.8
Divestiture
(3.6)
Other activity, primarily
amortization and foreign currency translation
(32.5)
Balance as of May 28, 2023
$
6,967.6
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2021,
2023,
and
we
determined
there
was
no
impairment
of
our
intangible
assets
as
their
related
fair
values
were
substantially
in
excess of the
carrying values.

Whilevalues,

except for
the
Uncle Toby’s
brand intangible
asset. In addition,
while having
significant coverage
as of
our fiscal 2021 2023
assessment date, the Europe & Australia reporting unit
Progresso
and the Progresso, Green Giant, and
EPIC
brand intangible assets had
risk of decreasing coverage.
We
will continue to
monitor these businesses for potential impairment.

We did not
identify any indicators of impairment for any goodwill or indefinite-lived
intangible assets as of May 30, 2021.

In fiscal 2019, as a result of lower sales projections in our long-range plans for the businesses supporting the Progresso, Food Should Taste Good, and Mountain High brand intangible assets, we recorded a $192.6 million impairment charge in restructuring, impairment, and other exit costs. Significant assumptions used in these assessments included our long-range cash flow projections for the businesses, royalty rates, weighted-average cost of capital rates, and tax rates.

28, 2023.

NOTE 7. LEASES

Our lease portfolio primarily
consists of operating lease
arrangements for certain
warehouse and distribution space,
office space, retail
shops,
production
facilities,
rail
cars,
production
and
distribution
equipment,
automobiles,
and
office
equipment.
Our
lease
costs
associated with finance
leases and
sale-leaseback transactions
and our
lease income associated
with lessor and
sublease arrangements
are not material to our Consolidated Financial Statements.

59

55
Components of our lease cost are as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

Operating lease cost

$

132.7

$

133.5

Variable lease cost

 

21.8

 

14.4

Short-term lease cost

 

15.4

 

23.3

Rent expense under all operating leases from continuing operations was $184.9 million in fiscal 2019.

Fiscal Year
In Millions
2023
2022
2021
Operating lease cost
$
127.6
$
129.7
$
132.7
Variable
lease cost
6.1
8.5
21.8
Short-term lease cost
30.0
29.1
23.4
Maturities of our operating and finance lease obligations by fiscal year are
as follows:

In Millions

 

Operating Leases

 

Finance Leases

Fiscal 2022

$

123.3

$

0.7

Fiscal 2023

 

103.5

 

0.7

Fiscal 2024

 

80.9

 

0.4

Fiscal 2025

 

50.2

 

0

Fiscal 2026

 

32.6

 

0

After fiscal 2026

 

36.7

 

0

Total noncancelable future lease obligations

$

427.2

$

1.8

Less: Interest

 

(32.8)

 

0

Present value of lease obligations

$

394.4

$

1.8

The

In Millions
Operating Leases
Finance Leases
Fiscal 2024
$
111.9
$
1.0
Fiscal 2025
86.4
0.6
Fiscal 2026
64.3
0.6
Fiscal 2027
42.9
0.3
Fiscal 2028
28.6
-
After fiscal 2028
68.6
-
Total noncancelable
future lease payments presented in the table above exclude $87.8 millionobligations
$
402.7
$
2.5
Less: Interest
(43.8)
(0.2)
Present value of minimum lease obligations
$
358.9
$
2.3
The
lease
payments
presented
in
the
table
above
exclude
$
107.2
million
of
minimum
lease
payments
for
operating
leases
we
have
committed to but have not yet commenced as of May 30, 2021.

28, 2023.

The weighted-average remaining lease term and weighted-average
discount rate for our operating leases are as follows:

 

May 30, 2021

May 31, 2020

Weighted-average remaining lease term

4.5

years

4.6

years

Weighted-average discount rate

3.7

%

4.1

%

May 28, 2023
May 29, 2022
Weighted-average
remaining lease term
5.2
years
4.5
years
Weighted-average
discount rate
4.4
%
3.8
%
Supplemental operating cash flow information and non-cash activity related
to our operating leases are as follows:

 

Fiscal Year

In Millions

 

2021

 

2020

Cash paid for amounts included in the measurement of lease liabilities

$

132.0

$

131.0

Right of use assets obtained in exchange for new lease liabilities

$

120.2

$

46.3

Fiscal Year
In Millions
2023
2022
Cash paid for amounts included in the measurement of lease liabilities
$
129.9
$
128.7
Right of use assets obtained in exchange for new lease liabilities
$
124.4
$
84.6
NOTE 8. FINANCIAL INSTRUMENTS, RISK MANAGEMENT ACTIVITIES,
AND FAIR VALUES

FINANCIAL INSTRUMENTS

The
carrying
values
of
cash
and
cash
equivalents,
receivables,
accounts
payable,
other
current
liabilities,
and
notes
payable
approximate fair
value. Marketable
securities are
carried at
fair value.
As of
May 30, 2021,28,
2023, and
May 31, 2020,29,
2022, a
comparison of
cost
and market values of our marketable debt and equity securities is as follows:

 

Cost

 

Fair Value

 

Gross Gains

 

Gross Losses

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

In Millions

 

2021

 

2020

 

 

2021

 

2020

 

 

2021

 

2020

 

 

2021

 

2020

Available for sale

debt securities

$

76.9

$

56.7

 

$

76.9

$

56.7

 

$

0

$

0

 

$

0

$

0

Equity securities

 

360.3

 

0.3

 

 

365.6

 

4.9

 

 

5.3

 

4.6

 

 

0

 

0

Total

$

437.2

$

57.0

 

$

442.5

$

61.6

 

$

5.3

$

4.6

 

$

0

$

0

60

Cost

Fair Value

Gross Unrealized Gains
Gross Unrealized Losses
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
Available for
sale
debt securities
$
2.3
$
2.3
$
2.3
$
2.3
$
-
$
-
$
-
$
-
Equity securities
117.5
250.1
122.7
255.3
5.2
5.2
10.0
15.1
Total
$
119.8
$
252.4
$
125.0
$
257.6
$
5.2
$
5.2
$
10.0
$
15.1
As of May 28, 2023, the fair value and carrying value
of equity securities restricted for payment of active employee
health and welfare
benefits were $
117.2
million.
56
There were 0
no
realized gains or losses from sales
of marketable securities in
fiscal 2021. During fiscal 2020, we received $16.0 million of proceeds2023 and recorded $4.0 million of realized losses from the sale of marketable securities. 2022.
Gains and losses are determined
by
specific identification.
Classification
of
marketable
securities
as
current
or
noncurrent
is
dependent
upon
our
intended
holding
period
and
the
security’s
maturity date. The
aggregate unrealized gains
and losses on available-for-saleavailable
for sale debt securities,
net of tax effects,
are classified in AOCI
within stockholders’ equity.

Scheduled maturities of our marketable securities are as follows:

 

 

Marketable Securities

In Millions

 

Cost

 

Fair Value

Under 1 year (current)

$

76.9

$

76.9

Equity securities

 

360.3

 

365.6

Total

$

437.2

$

442.5

Marketable Securities
In Millions
Cost
Fair Value
Under 1 year (current)
$
2.3
$
2.3
Equity securities
117.5
122.7
Total
$
119.8
$
125.0
As of May 30, 2021, $360.0 million of equity securities were restricted for payment of active employee health and welfare benefits.

As of May 30, 2021,28, 2023, we had $2.4 $

2.2
million of marketable debt securities pledged as collateral for derivative contracts. As of May 30, 2021, $28.2 million of certain accounts receivable were pledged as collateral against a foreign uncommitted line of credit.

The fair value and carrying amounts of long-term debt, including the current portion, were $13,194.4 million and $12,250.7 million, respectively, as of May 30, 2021. 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.

RISK MANAGEMENT ACTIVITIES

As a
part of
our ongoing
operations, we
are exposed
to market
risks such
as changes
in interest
and foreign
currency exchange
rates
and commodity and
equity prices. To
manage these risks, we
may enter into various
derivative transactions (e.g.,
futures, options, and
swaps) pursuant to our established policies.

COMMODITY PRICE RISK

Many commodities we
use in the
production and distribution
of our products
are exposed to
market price risks.
We
utilize derivatives
to manage price risk for our principal
ingredients and energy costs, including
grains (oats, wheat, and corn), oils (principally
(principally soybean),
dairy products, natural
gas, and diesel fuel.
Our primary objective
when entering into
these derivative contracts
is to achieve
certainty
with
regard
to
the
future
price
of
commodities
purchased
for
use
in
our
supply
chain.
We
manage
our
exposures
through
a
combination of purchase orders, long-term
contracts with suppliers, exchange-traded
futures and options, and over-the-counter
options
and swaps.
We
offset
our exposures
based on
current and
projected market
conditions and
generally seek
to acquire
the inputs
at as
close as possible to or below our planned cost.

We
use derivatives
to manage
our exposure
to changes
in commodity
prices. We
do not
perform the
assessments required
to achieve
hedge
accounting
for
commodity
derivative
positions.
Accordingly,
the
changes
in
the
values
of
these
derivatives
are
recorded
currently in cost of sales in our Consolidated Statements of Earnings.

Although we do
not meet the
criteria for
cash flow hedge
accounting, we believe
that these instruments
are effective
in achieving our
objective of providing certainty
in the future price of commodities purchased
for use in our supply chain.
Accordingly, for
purposes of
measuring
segment
operating
performance
these
gains
and
losses
are
reported
in
unallocated
corporate
items
outside
of
segment
operating results
until such
time that
the exposure
we are
managing affects
earnings. At
that time
we reclassify
the gain
or loss
from
unallocated
corporate
items
to
segment
operating
profit,
allowing
our
operating
segments
to
realize
the
economic
effects
of
the
derivative without experiencing any resulting mark-to-market volatility,
which remains in unallocated corporate items.

61

Unallocated corporate items for fiscal 2023, 2022, and 2021 2020, and 2019 included:

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Net gain (loss) on mark-to-market valuation of commodity positions

$

138.2

 

$

(63.0)

 

$

(39.0)

Net (gain) loss on commodity positions reclassified from unallocated corporate

items to segment operating profit

 

(8.8)

 

 

35.6

 

 

10.0

Net mark-to-market revaluation of certain grain inventories

 

9.4

 

 

2.7

 

 

(7.0)

Net mark-to-market valuation of certain commodity positions recognized in

unallocated corporate items

$

138.8

 

$

(24.7)

 

$

(36.0)

As of May 30,

Fiscal Year
In Millions
2023
2022
2021 the net notional value
Net (loss) gain on mark-to-market valuation of commodity derivatives was $337.0 million,positions
$
(154.4)
$
303.3
$
138.2
Net gain on commodity positions reclassified from unallocated corporate
items to segment operating profit
(89.5)
(188.0)
(8.8)
Net mark-to-market revaluation of certain grain inventories
(48.0)
17.8
9.4
Net mark-to-market valuation of certain commodity positions recognized
in
unallocated corporate items
$
(291.9)
$
133.1
$
138.8
57
As
of
May
28,
2023,
the
net
notional
value
of
commodity
derivatives
was
$
406.8
million,
of
which $276.1
$
257.9
million
related
to
agricultural inputs and $60.9 $
148.9
million related to energy inputs. These contracts relate to inputs
that generally will be utilized within the
next
12
months.

INTEREST RATE RISK

We
are
exposed
to
interest
rate
volatility
with
regard
to
future
issuances
of
fixed-rate
debt,
and
existing
and
future
issuances
of
floating-rate debt. Primary exposures include U.S. Treasury
rates, LIBOR,SOFR, Euribor, and
commercial paper rates in the United States and
Europe.
We
use
interest
rate
swaps,
forward-starting
interest
rate
swaps,
and
treasury
locks
to
hedge
our
exposure
to
interest
rate
changes,
to
reduce
the
volatility
of
our
financing
costs,
and
to
achieve
a
desired
proportion
of fixed rate
fixed-rate
versus
floating-rate
debt,
based
on
current
and
projected
market
conditions.
Generally
under
these
swaps,
we
agree
with
a
counterparty
to
exchange
the
difference between fixed-rate and floating-rate
interest amounts based on an agreed upon notional principal amount.

Floating Interest
Rate Exposures
— Floating-to-fixed
interest rate
swaps are
accounted for
as cash
flow hedges,
as are
all hedges
of
forecasted
issuances
of
debt.
Effectiveness
is
assessed
based
on
either
the
perfectly
effective
hypothetical
derivative
method
or
changes in the
present value of
interest payments on
the underlying debt.
Effective gains
and losses deferred
to AOCI are
reclassified
into earnings over the life of the associated debt.

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
derivatives,
using
incremental
borrowing
rates
currently
available on loans with similar terms and maturities.

In

During the fourth quarter of fiscal 2023, in advance of planned debt financing,
we entered into $750.0 €
750.0
million notional amountof forward-starting
swaps. The forward-starting swap agreements were terminated during
the fourth quarter of fiscal 2023, in conjunction with the
Company’s issuance of
a €
750.0
million
6
-year fixed-rate note. Upon termination, a loss of $
5.0
million was recognized in AOCI and
will be amortized through interest expense over the respective term of
the debt.
During the fourth quarter of fiscal 2023, in advance of planned debt
financing, we entered into $
500.0
million of treasury locks due April 2, 2020 with an average fixed rate of 0.67 percent. All of these locks. The
treasury locks were cash settled for $1.4 millionterminated during the fourth quarter of fiscal 2020, concurrent2023, in
conjunction with the Company’s issuance
of our $750.0 a $
1,000.0
million
10
-year fixed-rate note. Upon termination, a loss of $
1.4
million 10-year fixed rate notes.

In advancewas recognized in AOCI and will be amortized through

interest expense over the respective term of planned debt financing, in the fourth quarter of fiscal 2020, we entered into $300.0 million notional amount of treasury locks due January 13, 2022 with an average fixed rate of 0.85 percent.

During the third quarter of fiscal 2020, we entered into a €600.0 million notional amount interest rate swap to convert our €600.0 million fixed rate notes due January 15, 2026, to a floating rate.

debt.

During the second quarter of fiscal 2020,2023, we entered
into a $500.0 $
500.0
million notional amount interest rate swap to convert a portion of our $850.0 $
500.0
million floating-rate
fixed rate notes due April 16, 2021,
November 18, 2025
, to a fixedfloating rate.

62

As of May 30, 2021,28,

2023, the pre-tax
amount of cash-settled
interest rate hedge
gain or loss
remaining in AOCI,
which will be
reclassified
to earnings over the remaining term of the related underlying debt, follows:

In Millions

Gain/(Loss)

3.15% notes due December 15, 2021

$

(5.3)

2.6% notes due October 12, 2022

1.0

1.0% notes due April 27, 2023

(0.5)

3.7% notes due October 17, 2023

(0.8)

3.65% notes due February 15, 2024

4.9

4.0% notes due April 17, 2025

(2.3)

3.2% notes due February 10, 2027

9.7

1.5% notes due April 27, 2027

(1.9)

4.2% notes due April 17, 2028

(7.0)

4.55% notes due April 17, 2038

(9.2)

5.4% notes due June 15, 2040

(10.6)

4.15% notes due February 15, 2043

8.5

4.7% notes due April 17, 2048

(12.8)

Net pre-tax hedge loss in AOCI

$

(26.3)

In Millions
Gain/(Loss)
3.65
% notes due
February 15, 2024
$
1.3
4.0
% notes due
April 17, 2025
(1.1)
3.2
% notes due
February 10, 2027
6.3
1.5
% notes due
April 27, 2027
(1.3)
4.2
% notes due
April 17, 2028
(5.0)
3.907
% notes due
April 13, 2029
(4.9)
2.25
% notes due
October 14, 2031
16.5
4.95
% notes due
March 29, 2033
(1.4)
4.55
% notes due
April 17, 2038
(8.1)
5.4
% notes due
June 15, 2040
(9.5)
4.15
% notes due
February 15, 2043
7.8
4.7
% notes due
April 17, 2048
(11.8)
Net pre-tax hedge loss in AOCI
$
(11.2)
58
The
following
table
summarizes
the
notional
amounts
and
weighted-average
interest
rates
of
our
interest
rate
derivatives.
Average
floating rates are based on rates as of the end of the reporting period.

In Millions

 

May 30, 2021

 

 

 

May 31, 2020

 

Pay-floating swaps - notional amount

$

731.5

 

 

$

666.1

 

Average receive rate

 

0.4

%

 

 

0.4

%

Average pay rate

 

0.1

%

 

 

0.3

%

Pay-fixed swaps - notional amount

$

0

 

 

$

500.0

 

Average receive rate

 

0

%

 

 

1.7

%

Average pay rate

 

0

%

 

 

2.1

%

In Millions
May 28, 2023
May 29, 2022
Pay-floating swaps - notional amount
$
1,143.4
$
644.1
Average receive
rate
2.6
%
0.4
%
Average pay rate
2.5
%
0.1
%
The floating ratefloating-rate swap contracts outstanding as of May 30, 2021,28, 2023, mature
in fiscal
2026
.

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 30, 2021,28, 2023, the net notional value of foreign exchange derivatives
was $1,176.8 $
933.0
million.

We
also have
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.
As of
May 30, 2021,
28,
2023,
we
hedged
a
portion
of
these net
investments
with €2,510.4 €
2,949.9
million of
euro denominated
bonds.
As of
May 30, 2021, 28,
2023,
we had
deferred
net foreign
currency
transaction lossesgains of $216.6 $
71.9
million in AOCI associated with net investment hedging activity.

EQUITY INSTRUMENTS

Equity
price
movements
affect
our
compensation
expense
as
certain
investments
made
by
our
employees
in
our
deferred
compensation plan
are revalued. We
use equity swaps
to manage this
risk. As of May 30, 2021,
28, 2023, the
net notional amount
of our equity
swaps was $201.1 $
177.5
million. In fiscal 2024, $
165.4
million of which $191.2 swap contracts will mature,
and $
12.1
million of swap contracts mature
in
fiscal 2022 and $9.9 million of swap contracts mature in fiscal 2023.

2025.

63

59
FAIR VALUE
MEASUREMENTS AND FINANCIAL STATEMENT
PRESENTATION

The
fair
values
of
our
assets,
liabilities,
and
derivative
positions
recorded
at
fair
value
and
their
respective
levels
in
the
fair
value
hierarchy as of May 30, 2021,28, 2023, and May 31, 2020,29, 2022, were as follows:

 

May 30, 2021

 

May 30, 2021

 

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)

$

0

$

28.8

$

0

$

28.8

 

$

0

$

0

$

0

$

0

Foreign exchange contracts (a) (c)

 

0

 

2.3

 

0

 

2.3

 

 

0

 

(36.3)

 

0

 

(36.3)

Total

 

0

 

31.1

 

0

 

31.1

 

 

0

 

(36.3)

 

0

 

(36.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging

instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts (a) (c)

 

0

 

2.5

 

0

 

2.5

 

 

0

 

(1.6)

 

0

 

(1.6)

Commodity contracts (a) (d)

 

11.1

 

20.5

 

0

 

31.6

 

 

(0.8)

 

(0.5)

 

0

 

(1.3)

Grain contracts (a) (d)

 

0

 

12.0

 

0

 

12.0

 

 

0

 

(0.9)

 

0

 

(0.9)

Total

 

11.1

 

35.0

 

0

 

46.1

 

 

(0.8)

 

(3.0)

 

0

 

(3.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets and liabilities reported at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable investments (a) (e)

 

365.6

 

76.9

 

0

 

442.5

 

 

0

 

0

 

0

 

0

Total

 

365.6

 

76.9

 

0

 

442.5

 

 

0

 

0

 

0

 

0

Total assets, liabilities, and derivative positions

recorded at fair value

$

376.7

$

143.0

$

0

$

519.7

 

$

(0.8)

$

(39.3)

$

0

$

(40.1)

May 28, 2023
May 28, 2023
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)
$
-
$
-
$
-
$
-
$
-
$
(62.2)
$
-
$
(62.2)
Foreign exchange contracts (a) (c)
-
10.3
-
10.3
-
(2.5)
-
(2.5)
Total
-
10.3
-
10.3
-
(64.7)
-
(64.7)
Derivatives not designated as hedging
instruments:
Foreign exchange contracts (a) (c)
-
0.2
-
0.2
-
(5.6)
-
(5.6)
Commodity contracts (a) (d)
-
0.5
-
0.5
-
(29.3)
-
(29.3)
Grain contracts (a) (d)
-
2.3
-
2.3
-
(11.8)
-
(11.8)
Total
-
3.0
-
3.0
-
(46.7)
-
(46.7)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e) (f)
122.7
2.3
34.8
159.8
-
-
-
-
Long-lived assets (g)
-
1.0
-
1.0
-
-
-
-
Total
122.7
3.3
34.8
160.8
-
-
-
-
Total assets, liabilities, and
derivative positions
recorded at fair value
$
122.7
$
16.6
$
34.8
$
174.1
$
-
$
(111.4)
$
-
$
(111.4)
(a)
These contracts and investments
are recorded as prepaid
expenses and other current
assets, other assets, other
current liabilities or
other liabilities,
as appropriate,
based on
whether in
a gain
or loss
position. Certain
marketable investments
are recorded
as cash
and cash equivalents.

(b)
Based on LIBOREURIBOR and
swap rates. As
of May 30, 2021, 28, 2023,
the carrying amount of
hedged debt designated
as the hedged item
in a
fair value
hedge was $736.9
$
589.7
million and
was classified
on the
Consolidated Balance
Sheet within
long-term debt.
As of
May 30, 2021,28,
2023, the cumulative amount of fair value hedging basis adjustments was $5.4 $
53.7
million.

(c)
Based on observable market transactions of spot currency rates and forward
currency prices.

(d)
Based on prices of futures exchanges and recently reported transactions in
the marketplace.

(e)
Based on prices of common stock, mutual fund net asset values, and bond matrix pricing.

64

(f)
The level 3

marketable investment represents
an equity security
without a readily
determinable fair value.
During fiscal 2023,
we

 

May 31, 2020

 

May 31, 2020

 

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)

$

0

$

5.6

$

0

$

5.6

 

$

0

$

(7.8)

$

0

$

(7.8)

Foreign exchange contracts (a) (c)

 

0

 

19.8

 

0

 

19.8

 

 

0

 

(3.8)

 

0

 

(3.8)

Total

 

0

 

25.4

 

0

 

25.4

 

 

0

 

(11.6)

 

0

 

(11.6)

Derivatives not designated as hedging

instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts (a) (c)

 

0

 

18.8

 

0

 

18.8

 

 

0

 

(0.2)

 

0

 

(0.2)

Commodity contracts (a) (d)

 

4.6

 

1.6

 

0

 

6.2

 

 

(3.4)

 

(26.7)

 

0

 

(30.1)

Grain contracts (a) (d)

 

0

 

5.0

 

0

 

5.0

 

 

0

 

(1.2)

 

0

 

(1.2)

Total

 

4.6

 

25.4

 

0

 

30.0

 

 

(3.4)

 

(28.1)

 

0

 

(31.5)

Other assets and liabilities reported at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable investments (a) (e)

 

4.9

 

56.7

 

0

 

61.6

 

 

0

 

0

 

0

 

0

Total

 

4.9

 

56.7

 

0

 

61.6

 

 

0

 

0

 

0

 

0

Total assets, liabilities, and derivative positions

recorded at fair value

$

9.5

$

107.5

$

0

$

117.0

 

$

(3.4)

$

(39.7)

$

0

$

(43.1)

recorded

an impairment
charge
of $
32.4
million resulting
from the
determination of
fair value
utilizing level
3 inputs
including
revised projections of future operating results and observable transaction data
for similar instruments.
(g)
We recorded
$
8.6
million in non-cash impairment charges
in fiscal 2023 to write down
certain long-lived assets to their
fair value.
Fair value
was based
on recently
reported transactions
for similar
assets in the
marketplace. These
assets had
a carrying value
of
$
9.6
million and were associated with the restructuring actions described in Note 4.
60
May 29, 2022
May 29, 2022
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)
$
-
$
-
$
-
$
-
$
-
$
(29.8)
$
-
$
(29.8)
Foreign exchange contracts (a) (c)
-
26.9
-
26.9
-
(4.7)
-
(4.7)
Total
-
26.9
-
26.9
-
(34.5)
-
(34.5)
Derivatives not designated as hedging
instruments:
Foreign exchange contracts (a) (c)
-
8.4
-
8.4
-
(15.1)
-
(15.1)
Commodity contracts (a) (d)
10.7
96.9
-
107.6
-
(0.2)
-
(0.2)
Grain contracts (a) (d)
-
28.7
-
28.7
-
(3.0)
-
(3.0)
Total
10.7
134.0
-
144.7
-
(18.3)
-
(18.3)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e) (f)
255.3
2.3
67.2
324.8
-
-
-
-
Total
255.3
2.3
67.2
324.8
-
-
-
-
Total assets, liabilities, and
derivative positions
recorded at fair value
$
266.0
$
163.2
$
67.2
$
496.4
$
-
$
(52.8)
$
-
$
(52.8)
(
a)
These contracts and investments
are recorded as prepaid
expenses and other current
assets, other assets, other
current liabilities or
other liabilities,
as appropriate,
based on
whether in
a gain
or loss
position. Certain
marketable investments
are recorded
as cash
and cash equivalents.

(b)
Based on LIBOREURIBOR and
swap rates. As
of May 31, 2020,29, 2022, the
carrying amount of hedged
debt designated as
the hedged item in
a
fair value
hedge was $670.9
$
615.7
million and
was classified
on the
Consolidated Balance
Sheet within
long-term debt.
As of
May 31, 2020,29,
2022, the cumulative amount of fair value hedging basis adjustments was $4.8
$
28.4
million.

(c)
Based on observable market transactions of spot currency rates and forward
currency prices.

(d)
Based on prices of futures exchanges and recently reported transactions in the marketplace.

(e)
Based on prices of common stock, mutual fund net asset values, and bond matrix
pricing.

(f)
The level 3
marketable investment represents
an equity security
without a readily
determinable fair value.
During fiscal 2022,
we
recorded
an impairment
charge
of $
34.0
million resulting
from the
determination of
fair value
utilizing level
3 inputs
including
revised projections of future operating results and observable transaction data
for similar instruments.
We did not
significantly change our valuation techniques from prior periods.

65

The
fair value

of our
long-term
debt
is estimated
using
Level 2
inputs based
on quoted
prices
for
those
instruments. Where
quoted

Information related to our cash flow hedges,prices are not available, fair value is estimated using

discounted cash flows and market-based expectations
for interest rates, credit risk
and
the
contractual
terms
of
the
debt
instruments.
As
of
May
28,
2023,
the
fair
value
and
carrying
amount
of
our
long-term
debt,
including the
current portion,
were $
10,929.6
million and
$
11,674.2
million, respectively.
As of
May 29,
2022, the
carrying amount
and fair value of our long-term debt, including the current portion, were
$
10,508.8
million and $
10,809.0
million, respectively.
61
Information
related
to our
cash flow
hedges,
fair value
hedges, and
other
derivatives
not designated
as hedging
instruments for
the
fiscal years ended May 30, 2021,28, 2023, and May 31, 2020,29, 2022, follows:

 

 

Interest Rate Contracts

 

Foreign Exchange Contracts

 

Equity Contracts

 

Commodity Contracts

 

Total

 

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

In Millions

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Derivatives in Cash Flow Hedging Relationships:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of gain (loss) recognized in other

comprehensive income (OCI)

$

31.2

$

(6.9)

$

(58.7)

$

11.3

$

0

$

0

$

0

$

0

$

(27.5)

$

4.4

Amount of net (loss) gain reclassified from

AOCI into earnings (a)

 

(9.4)

 

(9.5)

 

(9.8)

 

4.6

 

0

 

0

 

0

 

0

 

(19.2)

 

(4.9)

Derivatives in Fair Value Hedging Relationships:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of net loss recognized

in earnings (b)

 

(0.3)

 

(4.9)

 

0

 

0

 

0

 

0

 

0

 

0

 

(0.3)

 

(4.9)

Derivatives Not Designated as

Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of net (loss) gain recognized

in earnings (c)

 

0

 

(1.4)

 

4.2

 

15.7

 

47.7

 

8.6

 

134.6

 

(55.6)

 

186.5

 

(32.7)

(a)(Loss)

Interest Rate
Contracts
Foreign
Exchange
Contracts
Equity
Contracts
Commodity
Contracts
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Derivatives in Cash Flow Hedging
Relationships:
Amount of (loss) gain recognized in
other comprehensive income (OCI)
$
(6.4)
$
(5.4)
$
9.4
$
13.2
$
-
$
-
$
-
$
-
$
3.0
$
7.8
Amount of net gain (loss) reclassified
from AOCI into earnings (a)
2.2
(4.7)
22.0
(19.5)
-
-
-
-
24.2
(24.2)
Derivatives in Fair Value
Hedging
Relationships:
Amount of net loss recognized
in earnings (b)
(4.9)
(2.1)
-
-
-
-
-
-
(4.9)
(2.1)
Derivatives Not Designated as
Hedging Instruments:
Amount of net (loss) gain recognized
in earnings (c)
-
-
(46.2)
(32.8)
(3.4)
(8.0)
(152.6)
257.2
(202.2)
216.4
(a)
(Loss) gain reclassified
from AOCI into earnings
is reported in interest,
net for interest rate
swaps and in cost
of sales and SG&A
expenses for foreign
exchange contracts. For the
fiscal year ended May 30, 2021,28,
2023, the amount of loss
gain reclassified from AOCI
into
cost of
sales was $9.3
$
21.1
million and
the amount
of gain
reclassified from
AOCI into
SG&A was
$
0.9
million. For
the fiscal
year
ended
May 29,
2022,
the
amount
of
loss
reclassified
from
AOCI
into
cost
of
sales
was
$
11.1
million
and
the
amount
of
loss
reclassified from AOCI into SG&A was $0.5 $
8.4
million. For the fiscal year ended May 31, 2020, the amount of gain reclassified from AOCI into
(b)
Loss recognized
in earnings is
reported in
interest, net
for interest rate
contracts, in
cost of sales was $5.1 million and the amount of loss reclassified from AOCI into SG&A was $0.5 million.

(b)Loss recognized in earnings is reported in interest, net for interest rate contracts, in cost of sales

for commodity
contracts, and
in
SG&A expenses for equity contracts and foreign exchange contracts

contracts.

(c)Gain (loss)
(Loss) gain recognized in earnings
is related to the ineffective
portion of the hedging relationship, reported
in SG&A expenses for
foreign
exchange
contracts
and
interest,
net
for
interest rate
contracts.
No
amounts
were reported
as a
result
of being
excluded
from the assessment of hedge effectiveness.

66

The following

tables reconcile
the net
fair values
of assets
and
liabilities subject
to offsetting
arrangements
that are
recorded
in our
Consolidated Balance Sheets to the net fair values that could be reported
in our Consolidated Balance Sheets:

 

 

May 30, 2021

 

 

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

$

31.6

$

0

$

31.6

$

(1.3)

$

(9.1)

$

21.2

 

$

(1.3)

$

0

$

(1.3)

$

1.3

$

0

$

0

Interest rate contracts

 

29.8

 

0

 

29.8

 

0

 

0

 

29.8

 

 

0

 

0

 

0

 

0

 

0

 

0

Foreign exchange contracts

 

4.8

 

0

 

4.8

 

(4.1)

 

0

 

0.7

 

 

(37.9)

 

0

 

(37.9)

 

4.1

 

0

 

(33.8)

Equity contracts

 

2.2

 

0

 

2.2

 

0

 

0

 

2.2

 

 

0

 

0

 

0

 

0

 

0

 

0

Total

$

68.4

$

0

$

68.4

$

(5.4)

$

(9.1)

$

53.9

 

$

(39.2)

$

0

$

(39.2)

$

5.4

$

0

$

(33.8)

 

 

May 31, 2020

 

 

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

$

6.2

$

0

$

6.2

$

(4.2)

$

0

$

2.0

 

$

(30.1)

$

0

$

(30.1)

$

4.2

$

15.9

$

(10.0)

Interest rate contracts

 

6.0

 

0

 

6.0

 

(0.8)

 

0

 

5.2

 

 

(8.0)

 

0

 

(8.0)

 

0.8

 

0

 

(7.2)

Foreign exchange contracts

 

38.6

 

0

 

38.6

 

(3.7)

 

0

 

34.9

 

 

(4.0)

 

0

 

(4.0)

 

3.7

 

0

 

(0.3)

Equity contracts

 

8.6

 

0

 

8.6

 

0

 

0

 

8.6

 

 

0

 

0

 

0

 

0

 

0

 

0

Total

$

59.4

$

0

$

59.4

$

(8.7)

$

0

$

50.7

 

$

(42.1)

$

0

$

(42.1)

$

8.7

$

15.9

$

(17.5)

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 assets and liabilities reported on a gross basis in our Consolidated Balance Sheets.

62
May 29, 2022
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
$
107.5
$
-
$
107.5
$
(0.2)
$
(62.8)
$
44.5
$
(0.2)
$
-
$
(0.2)
$
0.2
$
-
$
-
Interest rate contracts
-
-
-
-
-
-
(30.7)
-
(30.7)
-
10.6
(20.1)
Foreign exchange contracts
35.3
-
35.3
(6.4)
-
28.9
(19.7)
-
(19.7)
6.4
-
(13.3)
Equity contracts
0.4
-
0.4
(0.3)
-
0.1
(4.0)
-
(4.0)
0.3
-
(3.7)
Total
$
143.2
$
-
$
143.2
$
(6.9)
$
(62.8)
$
73.5
$
(54.6)
$
-
$
(54.6)
$
6.9
$
10.6
$
(37.1)
(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 assets and liabilities reported on a gross basis in our Consolidated Balance Sheets.
AMOUNTS RECORDED IN ACCUMULATED
OTHER COMPREHENSIVE LOSS

As of May 30, 2021,28, 2023, the after-tax amounts of unrealized
gains and losses in AOCI related to hedge derivatives follows:

In Millions

 

After-Tax Gain/(Loss)

Unrealized gains from interest rate cash flow hedges

$

0.4

Unrealized losses from foreign currency cash flow hedges

 

(18.9)

After-tax loss in AOCI related to hedge derivatives

$

(18.5)

In Millions
After-Tax
Gain/(Loss)
Unrealized losses from interest rate cash flow hedges
$
(7.8)
Unrealized gains from foreign currency cash flow hedges
13.7
After-tax gains in AOCI related to hedge derivatives
$
5.9
The net amount
of pre-tax gains and
losses in AOCI as
of May 30, 2021,28,
2023, that we expect
to be reclassified
into net earnings
within the
next 12 months is a $12.5 $
19.8
million net loss.

gain.

CREDIT-RISK-RELATED
CONTINGENT FEATURES

Certain of our
derivative instruments contain
provisions that require
us to maintain an
investment grade credit rating
on our debt from
each
of
the
major
credit
rating
agencies.
If
our
debt
were
to
fall
below
investment
grade,
the
counterparties
to
the
derivative
instruments
could
request
full
collateralization
on
derivative
instruments
in
net
liability
positions.
The
aggregate
fair
value
of
all
derivative
instruments
with
credit-risk-related
contingent
features
that
were
in
a
liability
position
on
May 30, 2021,
28,
2023,
was $11.0
$
100.1
million. We have
posted 0$
60.5
million of collateral under these contracts. If the credit-risk-related contingent features underlying these agreements had been triggered on May 30, 2021, we would have been required to post $11.0 million of collateral to counterparties.

67

CONCENTRATIONS OF

CREDIT AND COUNTERPARTY
CREDIT RISK

During fiscal 2021,2023, customer concentration was as follows:

Percent of total

Consolidated

North America Retail

Convenience Stores & Foodservice

Europe & Australia

Asia & Latin America

Pet

Walmart (a):

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

20

%

29

%

7

%

0

%

5

%

13

%

Accounts receivable

 

 

28

%

6

%

0

%

5

%

14

%

Five largest customers:

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

53

%

42

%

32

%

11

%

71

%

(a) Includes Walmart Inc. and its affiliates.

 

 

 

 

 

 

 

 

 

Percent of total
Consolidated
North America
Retail
North America
Foodservice
International
Pet
Walmart (a):
Net sales
21
%
28
%
8
%
2
%
16
%
Accounts receivable
22
%
8
%
3
%
15
%
Five largest customers:
Net sales
51
%
48
%
12
%
67
%
(a)
Includes Walmart Inc.
and its affiliates.
No customer other than Walmart
accounted for
10
percent or more of our consolidated net sales.

We
enter
into
interest
rate,
foreign
exchange,
and
certain
commodity
and
equity
derivatives,
primarily
with
a
diversified
group
of
highly rated
counterparties. We
continually monitor
our positions and
the credit ratings
of the counterparties
involved and,
by policy,
limit
the
amount
of
credit
exposure
to
any
one
party.
These
transactions
may
expose
us
to
potential
losses
due
to
the
risk
of
nonperformance
by
these
counterparties;
however,
we
have
not
incurred
a
material
loss.
We
also
enter
into
commodity
futures
transactions through various regulated exchanges.

63
The amount
of loss due
to the credit
risk of the
counterparties, should
the counterparties
fail to
perform according
to the terms
of the
contracts,
is $55.8 million,$
4.5
million. We
have
no
collateral
held against which we hold $9.1 million of collateral.
these contracts.
Under the
terms of
our swap
agreements,
some of
our
transactions
require
collateral
or
other
security
to
support
financial
instruments
subject
to
threshold
levels
of
exposure
and
counterparty
credit
risk.
Collateral
assets
are
either
cash
or
U.S.
Treasury
instruments
and
are
held
in
a
trust
account
that
we
may
access if the counterparty defaults.

We
offer
certain
suppliers
access
to
third-party
services
that
allow
them
to
view
our
scheduled
payments
online.
The
third-party
services also
allow suppliers
to third-party services that allow them to view finance
advances on
our scheduled payments online. The third-party services also allow suppliers to finance advances on our scheduled
payments at
the sole
discretion of
the supplier
and the third
party.
We
have no
economic interest
in these
financing arrangements
and no
direct relationship
with the
suppliers, the
third parties,
or any
financial
institutions
concerning
this
service.
All
of
our
accounts
payable
remain
as
obligations
to
our
suppliers
as
stated
in
our
supplier agreements.
As of
May 28,
2023, $
1,430.1
million of
our accounts
payable remain as obligationswas
payable to our
suppliers as stated in our supplier agreements. who
utilize these
third-
party services.
As of
May 30, 2021, $1,411.3 29,
2022, $
1,429.6
million of
our accounts
payable was
payable to
suppliers who
utilize these
third-party
services. As of May 31, 2020, $1,328.9 million of our accounts payable was payable to suppliers who utilize these third-party services.

NOTE 9. DEBT

NOTES PAYABLE

The components of notes payable and their respective weighted-average
interest rates at the end of the periods were as follows:

 

 

May 30, 2021

 

 

 

May 31, 2020

 

In Millions

 

Notes Payable

 

Weighted- Average Interest Rate

 

 

 

Notes Payable

 

Weighted- Average Interest Rate

 

U.S. commercial paper

$

0

 

0

%

 

$

99.9

 

3.6

%

Financial institutions

 

361.3

 

3.4

%

 

 

179.1

 

5.1

%

Total

$

361.3

 

3.4

%

 

$

279.0

 

4.6

%

May 28, 2023
May 29, 2022
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
U.S. commercial paper
$
-
-
%
$
694.8
1.1
%
Financial institutions
31.7
10.5
%
116.6
4.4
%
Total
$
31.7
10.5
%
$
811.4
5.5
%
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe. We also have uncommitted and asset-backed credit lines that support our foreign operations.

68

The following table details the fee-paid committed and uncommitted credit

lines we had available as of May 30, 2021:

In Billions

 

Facility Amount

 

 

Borrowed Amount

Credit facility expiring:

 

 

 

 

 

April 2026

$

2.7

 

$

0

September 2022

 

0.2

 

 

0

Total committed credit facilities

 

2.9

 

 

0

Uncommitted credit facilities

 

0.6

 

 

0.4

Total committed and uncommitted credit facilities

$

3.5

 

$

0.4

28, 2023:

In the fourth quarter of fiscal 2021, we entered into a $2.7 billion fee-paid committedBillions
Facility
Amount
Borrowed
Amount
Committed credit facility that is scheduled to expire inexpiring April 2026. Concurrent with the execution of this2026
$
2.7
$
-
Uncommitted credit facility, we terminated our existing $2.7 billionfacilities
0.6
-
Total committed
and uncommitted credit facility.

facilities

$
3.3
$
-
The
credit
facilities
contain
covenants,
including
a
requirement
to
maintain
a
fixed
charge
coverage
ratio
of
at
least
2.5
times.
We
were in compliance with all credit facility covenants as of May 30, 2021.

28, 2023.

64
LONG-TERM DEBT

In the fourth quarter
of fiscal 2021,2023, we repaid $600.0
issued €
250.0
million of 3.2 percent fixed-ratefloating-rate notes and $850.0
due
November 10, 2023
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes with cash on hand.

due

May 16, 2023
.
In the
fourth quarter
of fiscal
2023, we
issued €
750.0
million of
3.907
percent fixed-rate
notes due
April 13, 2029
. We
used the
net
proceeds to repay
€
500.0
million of
1.0
percent fixed-rate notes
due
April 27, 2023
and €
250.0
million of floating-rate
notes due
May
16, 2023
.
In the third fourth
quarter of fiscal 2021,
2023, we completed an offer to exchange certain series of outstanding notes for a combination of newly
issued notes and cash. Holders exchanged $603.9 $
1,000.0
million of notes previously issued with rates between 4.15 percent and 5.4 percent for $605.2 million of newly issued 3.0
4.95
percent fixed-rate
notes due February 1, 2051 and $201.4 million of cash, representing a participation incentive.

In the second quarter of fiscal 2021, we issued €500.0 million principal amount of 0.0 percent fixed-rate notes due November 16, 2021.

March 29, 2033
. We
used the net
proceeds to repay €200.0 our outstanding commercial paper and for general
corporate purposes.
In the second
quarter of fiscal
2023, we issued
$
500.0
million of 0.0
5.241
percent fixed-rate notes and for general corporate purposes.

In the first quarter of fiscal 2021, we issued €500.0 million principal amount of 0.0 percent fixed-rate notes

due August 21, 2021.
November 18, 2025
. We
used the net proceeds, together with cash on hand, to repay €500.0 million of 2.1 percent fixed-rate notes.

Subsequent to the end of fiscal 2021, we repaid €200.0 million of 2.2 percent fixed-rate notes due June 24, 2021 using proceeds from the issuance of €50.0 million of 2.2 percent fixed-rate notes due November 29, 2021 and borrowings under a committed credit facility.

In the fourth quarter of fiscal 2020, we issued $750.0 million of 2.875 percent fixed-rate notes due April 15, 2030. We used the

net proceeds to repay a portion of our outstanding commercial paper and for general
corporate purposes.

In the
second quarter
of fiscal
2023, we
issued €
250.0
million of
floating-rate notes
due
May 16, 2023
. We
used the
net proceeds
to
repay €
250.0
million of
0.0
percent fixed-rate notes due
November 11, 2022
.
In the
second quarter
of fiscal
2023,
we repaid
$
500.0
million of
2.6
percent fixed-rate
notes due
October 12, 2022
, using
proceeds
from the issuance of commercial paper.
In the thirdfourth quarter of fiscal 2020,2022, we issued €600.0 repaid $
850.0
million of 0.45
3.7
percent fixed-rate notes due January
October 17, 2023
using proceeds from
the issuance of commercial paper.
In the
fourth quarter
of fiscal
2022, we
issued €
250.0
million
0.0
percent fixed-rate
notes due
November 11, 2022
. We
used the
net
proceeds for general corporate purposes.
In the second
quarter of fiscal
2022, we issued
€
500.0
million of
0.125
percent fixed-rate notes
due
November 15, 2026 and €200.0 2025
. We
used the
net proceeds to repay a portion of our €
500.0
million of
0.0
percent fixed-rate notes due
November 16, 2020. We used the net proceeds, together with cash on hand, to repay €500.0 million of floating-rate notes2021
, and €300.0 million of 0.0 percent fixed-rate notes.

for general corporate

purposes.
In the second quarter of fiscal 2020,2022, we repaid $500.0 issued €
250.0
million of 2.2 floating-rate notes due
May 16, 2023
. We used the net proceeds
to
repay a portion of our €
500.0
million of
0.0
percent fixed-rate notes due
November 16, 2021
.
In the second
quarter of fiscal
2022, we issued
$
500.0
million of
2.25
percent fixed-rate notes
due
October 14, 2031
. We
used the net
proceeds,
together with
proceeds from
the issuance
of commercial paper.

paper,
to repay
$

69

1,000.0

million
of
3.15
percent fixed-rate
notes
due
December 15, 2021
.
In the first quarter of fiscal 2022, we issued €
500.0
million of floating-rate notes due
July 27, 2023
. We used the net proceeds to
repay
€
500.0
million of
0.0
percent fixed-rate notes due
August 21, 2021
.
In the first quarter
of fiscal 2022, we
repaid €
200.0
million of
2.2
percent fixed-rate notes due
June 24, 2021
, using proceeds from
the
issuance of €
50.0
million of
2.2
percent fixed-rate notes due
November 29, 2021
, and borrowings under a committed credit facility.
65
A summary of our long-term debt is as follows:

In Millions

 

May 30, 2021

 

May 31, 2020

4.2% notes due April 17, 2028

$

1,400.0

$

1,400.0

3.15% notes due December 15, 2021

 

1,000.0

 

1,000.0

3.7% notes due October 17, 2023

 

850.0

 

850.0

Floating-rate notes due April 16, 2021

 

0

 

850.0

4.0% notes due April 17, 2025

 

800.0

 

800.0

3.2% notes due February 10, 2027

 

750.0

 

750.0

2.875% notes due April 15, 2030

 

750.0

 

750.0

Euro-denominated 0.45% notes due January 15, 2026

 

731.5

 

666.1

4.7% notes due April 17, 2048

 

446.2

 

650.0

3.2% notes due April 16, 2021

 

0

 

600.0

Euro-denominated 2.1% notes due November 16, 2020

 

0

 

555.1

Euro-denominated 1.0% notes due April 27, 2023

 

609.6

 

555.1

4.55% notes due April 17, 2038

 

282.4

 

500.0

2.6% notes due October 12, 2022

 

500.0

 

500.0

5.4% notes due June 15, 2040

 

382.5

 

500.0

4.15% notes due February 15, 2043

 

434.9

 

500.0

3.65% notes due February 15, 2024

 

500.0

 

500.0

Euro-denominated 1.5% notes due April 27, 2027

 

487.7

 

444.0

Floating-rate notes due October 17, 2023

 

400.0

 

400.0

Euro-denominated 2.2% notes due June 24, 2021

 

243.9

 

222.0

Euro-denominated 0.0% notes due November 16, 2020

 

0

 

222.0

Medium-term notes, 0.56% to 6.41%, due fiscal 2023 or later

 

104.0

 

104.2

Euro-denominated 0.0% notes due August 21, 2021

 

609.6

 

0

Euro-denominated 0.0% notes due November 16, 2021

 

609.6

 

0

3.0% notes due February 1, 2051

 

605.2

 

0

Other, including debt issuance costs, debt exchange participation premium, and finance leases

 

(246.4)

 

(58.0)

 

 

12,250.7

 

13,260.5

Less amount due within one year

 

(2,463.8)

 

(2,331.5)

Total long-term debt

$

9,786.9

$

10,929.0

In Millions
May 28, 2023
May 29, 2022
4.2
% notes due
April 17, 2028
$
1,400.0
$
1,400.0
4.95
% notes due
March 29, 2033
1,000.0
-
Euro-denominated
3.907
% notes due
April 13, 2029
804.2
-
4.0
% notes due
April 17, 2025
800.0
800.0
3.2
% notes due
February 10, 2027
750.0
750.0
2.875
% notes due
April 15, 2030
750.0
750.0
Euro-denominated
0.45
% notes due
January 15, 2026
643.4
644.1
3.0
% notes due
February 1, 2051
605.2
605.2
Euro-denominated
0.125
% notes due
November 15, 2025
536.2
536.7
Euro-denominated floating rate notes due
July 27, 2023
536.2
537.9
3.65
% notes due
February 15, 2024
500.0
500.0
2.25
% notes due
October 14, 2031
500.0
500.0
5.241
% notes due
November 18, 2025
500.0
-
4.7
% notes due
April 17, 2048
446.2
446.2
4.15
% notes due
February 15, 2043
434.9
434.9
Euro-denominated
1.5
% notes due
April 27, 2027
428.9
429.4
Floating rate notes due
October 17, 2023
400.0
400.0
5.4
% notes due
June 15, 2040
382.5
382.5
4.55
% notes due
April 17, 2038
282.4
282.4
Euro-denominated floating rate notes due
November 10, 2023
268.1
-
Medium-term notes,
0.56
% to
6.41
%, due fiscal
2024
or later
4.0
103.9
Euro-denominated
1.0
% notes due
April 27, 2023
-
536.8
2.6
% notes due
October 12, 2022
-
500.0
Euro-denominated
0.0
% notes due
November 11, 2022
-
268.3
Euro-denominated
0.0
% notes due
May 16, 2023
-
268.3
Other
(298.0)
(267.6)
11,674.2
10,809.0
Less amount due within one year
(1,709.1)
(1,674.2)
Total long-term debt
$
9,965.1
$
9,134.8
Principal payments
due on
long-term debt
and finance
leases in
the next
five fiscal
years based
on stated
contractual maturities,
our
intent to redeem, or put rights of certain note holders are as follows:

In Millions

 

 

 

Fiscal 2022

$

2,463.8

 

Fiscal 2023

 

1,210.3

 

Fiscal 2024

 

1,754.4

 

Fiscal 2025

 

800.0

 

Fiscal 2026

 

731.5

 

In Millions
Fiscal 2024
$
1,709.1
Fiscal 2025
800.5
Fiscal 2026
1,680.1
Fiscal 2027
1,179.3
Fiscal 2028
1,400.0
Certain of our
long-term debt agreements
contain restrictive
covenants.
As of May 28, 2023, we were in compliance with all of these
covenants.
As of
May 28,
2023,
the $
11.2
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 2024 is a $
0.7
million pre-tax gain.
66
NOTE 10. REDEEMABLE AND NONCONTROLLING INTERESTS
Our principal noncontrolling interest relates to our General Mills Cereals, LLC (GMC) subsidiar
y.
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). The floating
preferred return
rate on
GMC’s
Class A
interests is
the sum
of the
three-month Term SOFR
plus
186
basis points. The
preferred return rate
is adjusted every
three years
through a negotiated
agreement with the
Class
A
Interest
holder or through a remarketing auction.
During
the
third
quarter
of
fiscal
2022,
we
completed
the
sale
of
our
interests
in
Yoplait
SAS,
Yoplait
Marques
SNC
and
Liberté
Marques
Sàrl
to
Sodiaal
in
exchange
for
Sodiaal’s
interest
in
our
Canadian
yogurt
business,
a
modified
agreement
for
the
use
of
Yoplait
and
Liberté
brands in the United States and Canada, and cash. Please see Note 3 to the Consolidated
Financial Statements.
Up to
the date
of the
divestiture, Sodiaal
held the remaining
interests in
each of
the entities.
On the
acquisition date,
we recorded
the
fair
value
of
Sodiaal’s
49
percent
euro-denominated
interest
in
Yoplait
SAS
as
a
redeemable
interest
on
our
Consolidated
Balance
Sheets. Sodiaal had
the right to
put all or
a portion of
its redeemable interest
to us at
fair value until
the divestiture closed
in the third
quarter of
fiscal 2022.
In connection
with the
divestiture, cumulative
adjustments made
to the
redeemable
interest related
to the
fair
value put feature were
reversed against additional paid-in
capital, where changes in the
redemption amount were historically recorded,
and the resulting carrying value of the noncontrolling interests were included
in the calculation of the gain on divestiture.
We
paid dividends
of $
105.1
million in
fiscal 2022
and $
40.3
million in
fiscal 2021
to Sodiaal
under the
terms of
the Yoplait
SAS,
Yoplait
Marques SNC, and Liberté Marques Sàrl shareholder agreements.
A subsidiary of
Yoplait
SAS had an
exclusive milk supply agreement
for its European operations
with Sodiaal through
November 28,
2021. Net purchases totaled $
99.5
million for the six-month period ended November 28, 2021.
For
financial
reporting
purposes,
the
assets,
liabilities,
results
of
operations,
and
cash
flows
of
our
non-wholly
owned
consolidated
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 30, 2021,28, 2023, we were in compliance with all of these covenants.

As of May 30, 2021, the $26.3 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 2022 is a $4.8 million pre-tax loss.

NOTE 10. REDEEMABLE AND NONCONTROLLING INTERESTS

Our principal redeemable and noncontrolling interests relate to our Yoplait SAS, Yoplait Marques SNC, Liberté Marques Sàrl, and General Mills Cereals, LLC (GMC) subsidiaries.

70

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 30, 2021, the redemption value of the euro-denominated redeemable interest was $604.9 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.

We paid dividends of $40.3 million in fiscal 2021 and $56.9 million in fiscal 2020 to Sodiaal under the terms of the Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl 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 May 31, 2022. Net purchases totaled $212.1 million for fiscal 2021 and $201.8 million for fiscal 2020.

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, 2021, the floating preferred return rate on GMC’s Class A interests was reset to the sum of three-month LIBOR plus 160 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 consolidated 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 30, 2021, we were in compliance with all of these covenants.

NOTE 11. STOCKHOLDERS’

EQUITY

Cumulative preference stock of
5.0
million shares, without par value, is authorized but unissued.

On May 6, 2014,June 27, 2022, 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.

Share repurchases were as follows:

 

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Shares of common stock

 

5.0

 

0.1

 

0

Aggregate purchase price

$

301.4

$

3.4

$

1.1

71

Fiscal Year

In Millions

2023
2022
2021
Shares of common stock
18.0
13.5
5.0
Aggregate purchase price
$
1,403.6
$
876.8
$
301.4
67
The following tables provide details of total comprehensive income:

 

Fiscal 2021

 

General Mills

 

Noncontrolling Interests

 

Redeemable Interest

In Millions

 

Pretax

 

Tax

 

Net

 

Net

 

Net

Net earnings, including earnings attributable to

redeemable and noncontrolling interests

 

 

 

 

$

2,339.8

$

6.5

$

(0.3)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

$

(6.1)

$

64.9

 

58.8

 

31.5

 

84.8

Net actuarial gain

 

464.9

 

(111.5)

 

353.4

 

0

 

0

Other fair value changes:

 

 

 

 

 

 

 

 

 

 

Hedge derivatives

 

(25.8)

 

6.5

 

(19.3)

 

0

 

(1.4)

Reclassification to earnings:

 

 

 

 

 

 

 

 

 

 

Hedge derivatives (a)

 

19.1

 

(5.7)

 

13.4

 

0

 

0.1

Amortization of losses and prior service costs (b)

 

102.5

 

(23.6)

 

78.9

 

0

 

0

Other comprehensive income

 

554.6

 

(69.4)

 

485.2

 

31.5

 

83.5

Total comprehensive income

 

 

 

 

$

2,825.0

$

38.0

$

83.2

Fiscal 2023
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Net earnings, including earnings attributable to noncontrolling interests
$
2,593.9
$
15.7
Other comprehensive (loss) income:
Foreign currency translation
$
(110.2)
(0.3)
(110.5)
(0.3)
Net actuarial loss
(295.5)
67.5
(228.0)
-
Other fair value changes:
Hedge derivatives
3.8
(2.5)
1.3
-
Reclassification to earnings:
Foreign currency translation (a)Loss
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(24.7)
6.0
(18.7)
-
Amortization of losses and prior service costs (c)
72.9
(16.0)
56.9
-
Other comprehensive loss
(361.1)
54.7
(306.4)
(0.3)
Total comprehensive
income
$
2,287.5
$
15.4
(a)
Gain reclassified from AOCI into earnings is reported in the divestitures gain.
(b)
Gain reclassified
from AOCI
into earnings
is reported
in interest,
net for
interest rate
swaps and
in cost
of sales
and SG&A
expenses for foreign exchange contracts.

(b)

(c)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
income. Please refer
Fiscal 2022
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Net
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$
2,707.3
$
10.2
$
17.5
Other comprehensive income (loss):
Foreign currency translation
$
(188.5)
$
85.8
(102.7)
(26.2)
(47.0)
Net actuarial gain
132.4
(30.8)
101.6
-
-
Other fair value changes:
Hedge derivatives
30.1
(23.6)
6.5
-
0.5
Reclassification to Note 2.

 

Fiscal 2020

 

General Mills

 

Noncontrolling Interests

 

Redeemable Interest

In Millions

 

Pretax

 

Tax

 

Net

 

Net

 

Net

Net earnings, including earnings attributable to

redeemable and noncontrolling interests

 

 

 

 

$

2,181.2

$

12.9

$

16.7

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

$

(149.1)

$

0

 

(149.1)

 

(2.6)

 

(17.4)

Net actuarial loss

 

(290.2)

 

65.6

 

(224.6)

 

0

 

0

Other fair value changes:

 

 

 

 

 

 

 

 

 

 

Hedge derivatives

 

4.4

 

(1.2)

 

3.2

 

0

 

0

Reclassification to earnings:

 

 

 

 

 

 

 

 

 

 

Hedge derivatives (a)

 

4.3

 

(0.7)

 

3.6

 

0

 

0.5

Amortization of losses and prior service costs (b)

 

101.3

 

(23.4)

 

77.9

 

0

 

0

Other comprehensive loss

 

(329.3)

 

40.3

 

(289.0)

 

(2.6)

 

(16.9)

Total comprehensive income (loss)

 

 

 

 

$

1,892.2

$

10.3

$

(0.2)

earnings:

Foreign currency translation (a)
342.2
-
342.2
-
-
Hedge derivatives (b)
23.7
11.6
35.3
-
(0.2)
Amortization of losses and prior service costs (c)
97.4
(21.6)
75.8
-
-
Other comprehensive income (loss)
437.3
21.4
458.7
(26.2)
(46.7)
Total comprehensive
income (loss)
$
3,166.0
$
(16.0)
$
(29.2)
(a)
Loss reclassified from
AOCI into earnings
is reported in
divestitures gain related
to the divestiture
of our interests
in Yoplait
SAS, Yoplait
Marques SNC, and Liberte Marques Sarl to Sodiaal in the third quarter
of fiscal 2022.
(b)
Loss (gain)
reclassified from
AOCI into
earnings is
reported in
interest, net
for interest
rate swaps
and
in cost
of sales
and
SG&A expenses for foreign exchange contracts.

(b)

(c)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
income. Please refer
68
Fiscal 2021
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Net
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$
2,339.8
$
6.5
$
(0.3)
Other comprehensive income (loss):
Foreign currency translation
$
(6.1)
$
64.9
58.8
31.5
84.8
Net actuarial gain
464.9
(111.5)
353.4
-
-
Other fair value changes:
Hedge derivatives
(25.8)
6.5
(19.3)
-
(1.4)
Reclassification to Note 2.

earnings:

72

Hedge derivatives (a)

 

Fiscal 2019

 

General Mills

 

Noncontrolling Interests

 

Redeemable Interest

In Millions

 

Pretax

 

Tax

 

Net

 

Net

 

Net

Net earnings, including earnings attributable to

redeemable and noncontrolling interests

 

 

 

 

$

1,752.7

$

13.9

$

19.6

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

$

(38.3)

$

0

 

(38.3)

 

(13.5)

 

(31.0)

Net actuarial loss

 

(325.6)

 

72.2

 

(253.4)

 

0

 

0

Other fair value changes:

 

 

 

 

 

 

 

 

 

 

Hedge derivatives

 

15.9

 

(3.7)

 

12.2

 

0

 

(0.1)

Reclassification to earnings:

 

 

 

 

 

 

 

 

 

 

Securities (a)

 

(2.6)

 

0.6

 

(2.0)

 

0

 

0

Hedge derivatives (b)

 

0.1

 

0.4

 

0.5

 

0

 

0.4

Amortization of losses and prior service costs (c)

 

107.5

 

(22.9)

 

84.6

 

0

 

0

Other comprehensive (loss)

 

(243.0)

 

46.6

 

(196.4)

 

(13.5)

 

(30.7)

Total comprehensive income (loss)

 

 

 

 

$

1,556.3

$

0.4

$

(11.1)

19.1

(5.7)
13.4
-
0.1
Amortization of losses and prior service costs (b)
102.5
(23.6)
78.9
-
-
Other comprehensive income
554.6
(69.4)
485.2
31.5
83.5
Total comprehensive
income
$
2,825.0
$
38.0
$
83.2
(a)Gain
Loss reclassified
from AOCI
into earnings
is reported
in interest,
net for securities.

(b)Loss reclassified from AOCI into earnings is reported in interest, net for

interest rate
swaps and
in cost
of sales
and SG&A
expenses for foreign exchange contracts.

(c)

(b)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
income. Please refer
In
fiscal
2023,
2022,
and
2021,
except
for
certain
reclassifications
to Note 2.

In fiscal 2021, 2020, and 2019, except for reclassifications to

earnings,
changes
in other
comprehensive
income (loss)
were
primarily non-cash items.

Accumulated other comprehensive loss balances, net of tax effects,
were as follows:

In Millions

 

May 30, 2021

 

 

May 31, 2020

Foreign currency translation adjustments

$

(830.2)

 

$

(889.0)

Unrealized loss from hedge derivatives

 

(18.5)

 

 

(12.6)

Pension, other postretirement, and postemployment benefits:

 

 

 

 

 

Net actuarial loss

 

(1,718.4)

 

 

(2,022.5)

Prior service credits

 

137.9

 

 

9.7

Accumulated other comprehensive loss

$

(2,429.2)

 

$

(2,914.4)

In Millions
May 28, 2023
May 29, 2022
Foreign currency translation adjustments
$
(708.6)
$
(590.7)
Unrealized loss from hedge derivatives
5.9
23.3
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,670.6)
(1,513.4)
Prior service credits
96.4
110.3
Accumulated other comprehensive loss
$
(2,276.9)
$
(1,970.5)
NOTE 12. STOCK PLANS

We
use broad-based stock
plans to help
ensure that management’s
interests are aligned
with those of
our shareholders. As
of May 30, 2021, 28,
2023,
a total
of 23.5
35.1
million shares
were available
for grant
in the
form of
stock options,
restricted
stock, restricted
stock units,
and
shares
of unrestricted
stock under
the 2017 2022
Stock Compensation
Plan (2017
(2022
Plan). The 2017
2022
Plan
also provides
for
the issuance
of
cash-settled
share-based
units, stock
appreciation
rights, and
performance-based
stock awards.
Stock-based
awards now
outstanding
include
some
granted
under
the 2009 and 2011
2017
Stock
Compensation
Plan,
under
which
no
further
awards
may
be
granted.
The
stock
plans and the 2006, 2011, and 2016 compensation plans for non-employee directors, under which no further awards may be granted. The stock plans
provide for potential accelerated vesting of awards upon retirement,
termination, or death of eligible employees and directors.

73

69
Stock Options

The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Fiscal Year
2023
2022
2021
Estimated fair values of stock options granted and the assumptions used for the Black-Scholes option-pricing model were as follows:

 

Fiscal Year

 

2021

 

2020

 

2019

Estimated fair values of stock options granted

$

8.03

 

 

$

7.10

 

 

$

5.35

 

Assumptions:

 

 

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

0.7

%

 

 

2.0

%

 

 

2.9

%

Expected term

 

8.5

years

 

 

8.5

years

 

 

8.5

years

Expected volatility

 

19.5

%

 

 

17.4

%

 

 

16.3

%

Dividend yield

 

3.3

%

 

 

3.6

%

 

 

4.3

%

$
14.16
$
8.77
$
8.03
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
0.7
%
Expected term
8.5
years
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
19.5
%
Dividend yield
3.1
%
3.4
%
3.3
%
We estimate the fair value of each option on the grant date using a Black-Scholes option-pricing model, which requires us to make
predictive assumptions regarding future stock price volatility, employee exercise behavior, dividend yield, and the forfeiture rate. We
estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of
volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We also have considered, but did
not use, implied volatility in our estimate, because trading activity in options on our stock, especially those with tenors of greater than
6 months, is insufficient to provide a reliable measure of expected volatility.

Our
expected
term
represents
the
period
of
time
that
options
granted
are
expected
to
be
outstanding
based
on
historical
data
to
estimate option exercises and employee
terminations within the valuation
model. Separate groups of employees
have similar historical
exercise behavior and therefore
were aggregated into a
single pool for valuation
purposes. The weighted-average expected
term for all
employee groups is presented in the table
above. The risk-free interest rate for
periods during the expected term of
the options is based
on the U.S. Treasury zero-coupon yield curve in
effect at the time of grant.

Any corporate
income tax
benefit realized
upon exercise
or vesting
of an
award in
excess of
that previously
recognized in
earnings (referred
(referred to
as a
windfall tax
benefit) is
presented in
our Consolidated
Statements of
Cash Flows
as an
operating cash
flow.
Realized
windfall
tax
benefits
and
shortfall
tax
deficiencies
related
to
the
exercise
or
vesting
of
stock-based
awards
are
recognized
in
the
Consolidated Statement Statements
of Earnings. We recognized windfall
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings were as follows:
Fiscal Year
In Millions
2023
2022
2021
Windfall tax benefits from stock-based payments
$
32.3
$
18.4
$
12.4
As of $12.4 million in fiscal 2021, $27.3 million in fiscal 2020,
May 28,
2023, there
were
no
options granted
under the
2022 Plan.
Under the
2017 Stock
Compensation Plan,
options may
be
priced
at
100
percent
or
more
of
the
fair
market
value
on
the
date
of
grant,
and
generally
vest
four years
after
the
date
of
grant.
Options generally expire within
10 years and $24.5 million in fiscal 2019.

Options may be priced at 100 percent or more of the fair market value on the date of grant, and generally vest four years one month

after the date of grant. Options generally expire within 10 years and one month after the date of grant.

Information on stock option activity follows:

 

Options Outstanding (Thousands)

 

Weighted-Average Exercise Price Per Share

Weighted-Average Remaining Contractual Term (Years)

 

Aggregate Intrinsic Value (Millions)

Balance as of May 31, 2020

18,164.6

$

51.21

5.53

$

222.6

Granted

1,366.0

 

61.65

 

 

 

Exercised

(1,910.6)

 

39.15

 

 

 

Forfeited or expired

(222.5)

 

55.80

 

 

 

Outstanding as of May 30, 2021

17,397.5

$

53.29

5.26

$

174.4

Exercisable as of May 30, 2021

9,018.7

$

53.60

3.28

$

91.4

Options
Outstanding
(Thousands)
Weighted-Average
Exercise Price Per
Share
Weighted-Average
Remaining
Contractual Term
(Years)
Aggregate Intrinsic
Value (Millions)
Balance as of May 29, 2022
15,005.5
$
55.39
5.36
$
217.5
Granted
1,176.5
70.26
Exercised
(4,468.6)
53.84
Forfeited or expired
(138.2)
61.90
Outstanding as of May 28, 2023
11,575.2
$
57.43
5.59
$
309.5
Exercisable as of May 28, 2023
6,165.3
$
54.73
3.90
$
181.6
Stock-based compensation expense related to stock option awards was $11.2 million in fiscal 2021, $13.4 million in fiscal 2020, and $14.7 million in fiscal 2019.

as follows:

74

Net cash proceeds from the exercise of

70
Fiscal Year
In Millions
2023
2022
2021
Compensation expense related to stock option awards
$
12.3
$
12.1
$
11.2
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

 

2021

 

2020

 

2019

Net cash proceeds

$

74.3

$

263.4

$

241.4

Intrinsic value of options exercised

$

44.8

$

132.9

$

126.7

Fiscal Year
In Millions
2023
2022
2021
Net cash proceeds
$
232.3
$
161.7
$
74.3
Intrinsic value of options exercised
$
118.7
$
74.0
$
44.8
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
(as
determined
by
the
Compensation
Committee
of
the
Board
of
Directors),
may
be granted
to key
employees
under
the 2022
Plan.
As of
May
28,
2023,
there
were
no
stock-based awards
granted under the
2022 Plan. Under
the 2017 Plan. Restricted Stock
Compensation Plan, restricted
stock and restricted
stock units
generally vest
and become
unrestricted
four years
after the
date of
grant. Performance
share units
are earned
primarily based
on our
future
achievement
of three-year
goals for
average organic
net sales
growth
and
cumulative operating
cash flow
and cumulative free cash flow. a
relative
total
shareholder
return
modifier.
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 unit activity
follows:

 

Equity Classified

 

Liability Classified

 

Share-Settled Units (Thousands)

 

Weighted-Average Grant-Date Fair Value

 

Share-Settled Units (Thousands)

 

Weighted-Average Grant-Date Fair Value

Non-vested as of May 31, 2020

4,925.5

$

53.26

 

103.3

$

54.75

Granted

1,501.8

 

61.23

 

27.2

 

61.59

Vested

(1,199.3)

 

60.54

 

(28.0)

 

62.88

Forfeited or expired

(155.2)

 

55.47

 

(4.9)

 

55.82

Non-vested as of May 30, 2021

5,072.8

$

53.84

 

97.6

$

54.26

 

 

Fiscal Year

 

 

2021

 

 

2020

 

 

2019

Number of units granted (thousands)

 

1,529.0

 

 

1,947.6

 

 

1,848.2

Weighted-average price per unit

$

61.24

 

$

53.28

 

$

46.14

Equity Classified
Liability Classified
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Non-vested as of May 29, 2022
5,153.4
$
56.37
77.3
$
56.43
Granted
2,042.8
69.76
23.6
70.53
Vested
(1,976.1)
53.71
(24.7)
52.09
Forfeited or expired
(183.9)
63.08
(6.8)
61.14
Non-vested as of May 28, 2023
5,036.2
$
62.60
69.4
$
62.32
Fiscal Year
2023
2022
2021
Number of units granted (thousands)
2,066.4
1,989.0
1,529.0
Weighted-average
price per unit
$
69.77
$
60.02
$
61.24
The total grant-date
fair value of
restricted stock
unit awards that
vested was $74.4 $
107.4
million in fiscal
2023 and
$
82.7
million in fiscal
2022, and $
74.4
million in fiscal 2021 and $59.7 million in fiscal 2020.

2021.

As of May 30, 2021,
28, 2023, unrecognized
compensation expense
related to non-vested
stock options, restricted
stock units, and
performance
share units was $103.0 $
112.1
million. This expense will be recognized over 19
18 months
, on average.

Stock-based compensation expense related to restricted stock units
and performance share units was $78.7 million for fiscal as follows:
Fiscal Year
In Millions
2023
2022
2021 $81.5 million for fiscal 2020, and $70.2 million for fiscal 2019.
Compensation expense related to restricted stock units and performance
share units
$
99.4
$
94.2
$
78.7
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 2019.

year 2022.

75

71
NOTE 13. EARNINGS PER SHARE

Basic and diluted EPS were calculated using the following:

 

Fiscal Year

In Millions, Except per Share Data

 

2021

 

 

2020

 

 

2019

Net earnings attributable to General Mills

$

2,339.8

 

$

2,181.2

 

$

1,752.7

Average number of common shares - basic EPS

 

614.1

 

 

608.1

 

 

600.4

Incremental share effect from: (a)

 

 

 

 

 

 

 

 

Stock options

 

2.5

 

 

2.7

 

 

3.1

Restricted stock units and performance share units

 

2.5

 

 

2.5

 

 

1.9

Average number of common shares - diluted EPS

 

619.1

 

 

613.3

 

 

605.4

Earnings per share — basic

$

3.81

 

$

3.59

 

$

2.92

Earnings per share — diluted

$

3.78

 

$

3.56

 

$

2.90

(a)

Fiscal Year
In Millions, Except per Share Data
2023
2022
2021
Net earnings attributable to General Mills
$
2,593.9
$
2,707.3
$
2,339.8
Average number
of common shares - basic EPS
594.8
607.5
614.1
Incremental shares from stockshare effect from: (a)
Stock options restricted
3.6
2.5
2.5
Restricted stock units and performance share units
2.8
2.6
2.5
Average number
of common shares - diluted EPS
601.2
612.6
619.1
Earnings per share — basic
$
4.36
$
4.46
$
3.81
Earnings per share — diluted
$
4.31
$
4.42
$
3.78
a)
Incremental shares from
stock options, restricted
stock units, and performance
share units are computed
by the treasury stock
method.
Stock
options,
restricted
stock
units,
and
performance
share
units
excluded
from
our
computation
of
diluted
EPS
because they were not dilutive were as follows:

 

 

 

Fiscal Year

 

In Millions

 

2021

 

2020

 

2019

 

Anti-dilutive stock options, restricted stock units,

and performance share units

 

3.4

 

8.4

 

14.1

Fiscal Year
In Millions
2023
2022
2021
Anti-dilutive stock options, restricted stock units,
and performance share units
0.8
4.4
3.4
NOTE 14. RETIREMENT BENEFITS AND POSTEMPLOYMENT BENEFITS

Defined Benefit Pension Plans

We have
defined benefit pension plans covering
many employees in the United
States, Canada, Switzerland, France, and the
United Kingdom.
Benefits for salaried
employees are based
on length of service
and final average
compensation. Benefits for
hourly employees include
various monthly
amounts for each
year of credited
service. Our funding
policy is consistent
with the requirements
of applicable laws.
We made 0
no
voluntary contributions to our
principal U.S. plans in fiscal 2021
2023 or fiscal 2020. 2022.
We do
not expect to be required
to make
any
contributions
to
our
principal
U.S.
plans
in
fiscal 2022.
2024.
Our
principal
U.S.
retirement
plan
covering
salaried
employees
has
a
provision that any excess pension assets would be allocated to active participants
if the plan is terminated within
five years
of a change
in control.
All salaried employees
hired on
or after June 1,
2013, are eligible
for a retirement
program that
does not include
a defined
benefit pension plan.

Other Postretirement Benefit Plans

We
also
sponsor
plans
that
provide
health
care
benefits
to
many
of our
retirees
in
the United
States,
Canada,
and
Brazil.
The
U.S.
salaried
health
care
benefit
plan
is
contributory,
with
retiree
contributions
based
on
years
of
service.
We
make
decisions
to
fund
related trusts
for certain
employees and
retirees on an
annual basis.
We
made 0
no
voluntary contributions
to these
plans in fiscal 2021
2023
or fiscal 2020.2022. We
do not expect to be required to make any contributions to these plans in fiscal 2022.

2024.

In fiscal 2021, we approved
amendments to reorganize
certain U.S. retiree health and
welfare benefit plans. The General
Mills Retiree
Health
Plan
for
Union
Employees
was
divided
into
two
plans,
with
participants
under
age
65
remaining
within
its
coverage,
and
participants age 65 and over covered by The General Mills Retiree Health Plan
for Union Employees (65+). TheEffective
January 1, 2022,
the General
Mills Retiree
Health Plan
for Union
Employees (65+) will allow
allows certain
participants to
purchase individual
health insurance
policies on
a private
health care exchange effective January 1, 2022.
exchange. Additionally,
the Employees’
Benefit Plan
of General
Mills was
merged
into the
General
Mills
Retiree
Health
Plan
for
Union
Employees.
Separate
benefit
structures
and
plan
provisions
continue
to
apply
to
eligible
participants of
these merged
plans. A
portion of
the General
Mills Retiree
Health Plan
for Union Employees. Separate benefit structures and plan provisions continue to apply to eligible participants of these merged plans. A portion of the General Mills Retiree Health Plan for Union
Employees overfunded
plan assets
were
segregated
to offset
the cost
of
the
Employees’
Benefit Plan
of
General
Mills health
and
welfare
benefits.
The
segregation
of
assets
is
reported
as
a
negative
employer
contribution
in
the
change
in
other
postretirement
benefit
plan
assets.
The
amendments
facilitate targeted investment strategies that reflect each
plan’s unique liability characteristics.

72
In
fiscal
2021,
we
announced
changes
to
the design
of our
health
care
coverage
for
certain eligible
retirees
to
allow participants
to
purchase
individual
health
insurance
policies
on
a
private
health
care
exchange
effective
January
1,
2022.
These
changes will
provide
certain eligible retirees with greater flexibility in choosing health care coverage
that best fits their needs.

76

Health Care Cost Trend

Rates

Assumed health care cost trends are as follows:

 

Fiscal Year

 

 

2021

 

2020

Health care cost trend rate for next year

6.0% and 6.3%

 

6.2% and 6.5%

Rate to which the cost trend rate is assumed to decline (ultimate rate)

4.5

%

 

4.5

%

Year that the rate reaches the ultimate trend rate

2029

 

 

2029

 

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

Fiscal Year
2023
2022
Health care cost trend rate is adjusted as necessaryfor next year
6.6
% and
6.6
%
5.9
% and
6.0
%
Rate to remain consistent with this review, recent experiences, and short-term expectations. Our initial health carewhich the cost trend rate assumption is 6.3 assumed to decline (ultimate rate)
4.5
%
4.5
%
Year
that the rate reaches the ultimate trend rate
2032
2031
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
care cost trend
rate is adjusted
as necessary to
remain consistent
with this
review,
recent experiences,
and short-term
expectations. Our
initial health
care cost
trend rate
assumption
is
6.6
percent for retirees age
65 and over and 6.0 percent for
retirees under age 65 at
the end of fiscal 2021. 2023.
Rates are graded down annually
until
the
ultimate
trend
rate
of
4.5
percent
is
reached
in 2029
2032
for
all
retirees.
The
trend
rates
are
applicable
for
calculations
only
if
the
retirees’ benefits increase
as a result of
health care inflation. The
ultimate trend rate is
adjusted annually,
as necessary,
to approximate
the current
economic
view on
the rate
of long-term
inflation plus
an appropriate
health
care cost
premium.
Assumed trend
rates for
health care costs have an important effect on the amounts reported
for the other postretirement benefit plans.

Postemployment Benefit Plans

Under certain
circumstances, we
also provide
accruable benefits,
primarily severance,
to former
or inactive
employees in
the United
States,
Canada,
and
Mexico.
We
recognize
an
obligation
for
any
of
these
benefits
that
vest
or
accumulate
with
service.
Postemployment benefits
that do not
vest or
accumulate with
service (such
as severance
based solely
on annual pay
rather than years
of service) are charged to expense when incurred. Our postemployment
benefit plans are unfunded.

77

73
Summarized
financial
information
about
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plans
is
presented below:

 

 

Defined Benefit Pension Plans

 

 

Other Postretirement Benefit Plans

 

 

Postemployment Benefit Plans

 

 

Fiscal Year

 

 

Fiscal Year

 

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

Change in Plan Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value at beginning of year

$

6,993.2

 

$

6,291.6

 

$

793.5

 

$

753.8

 

 

 

 

 

 

Actual return on assets

 

716.3

 

 

983.7

 

 

108.1

 

 

65.0

 

 

 

 

 

 

Employer contributions

 

33.8

 

 

32.9

 

 

(359.9)

 

 

0.1

 

 

 

 

 

 

Plan participant contributions

 

4.1

 

 

6.7

 

 

13.0

 

 

13.8

 

 

 

 

 

 

Benefits payments

 

(315.1)

 

 

(317.2)

 

 

(35.3)

 

 

(39.2)

 

 

 

 

 

 

Foreign currency

 

27.9

 

 

(4.5)

 

 

0

 

 

0

 

 

 

 

 

 

Fair value at end of year (a)

$

7,460.2

 

$

6,993.2

 

$

519.4

 

$

793.5

 

 

 

 

 

 

Change in Projected Benefit Obligation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

$

7,640.2

 

$

6,750.7

 

$

773.7

 

$

824.1

 

$

150.3

 

$

128.0

Service cost

 

104.4

 

 

92.7

 

 

8.5

 

 

9.4

 

 

9.3

 

 

8.3

Interest cost

 

192.1

 

 

230.5

 

 

18.0

 

 

27.1

 

 

1.7

 

 

2.6

Plan amendment

 

1.1

 

 

1.2

 

 

(138.7)

 

 

0

 

 

0

 

 

0

Curtailment/other

 

(5.8)

 

 

(1.2)

 

 

0

 

 

0

 

 

5.1

 

 

0

Plan participant contributions

 

4.1

 

 

6.7

 

 

13.0

 

 

13.8

 

 

0

 

 

0

Medicare Part D reimbursements

 

0

 

 

0

 

 

2.5

 

 

2.7

 

 

0

 

 

0

Actuarial loss (gain)

 

67.4

 

 

881.8

 

 

(15.8)

 

 

(38.3)

 

 

7.2

 

 

17.7

Benefits payments

 

(315.7)

 

 

(317.7)

 

 

(61.9)

 

 

(63.5)

 

 

(22.5)

 

 

(6.2)

Foreign currency

 

26.6

 

 

(4.5)

 

 

0.7

 

 

(1.6)

 

 

0.6

 

 

(0.1)

Projected benefit obligation at end of year (a)

$

7,714.4

 

$

7,640.2

 

$

600.0

 

$

773.7

 

$

151.7

 

$

150.3

Plan assets less than benefit obligation as of fiscal

year end

$

(254.2)

 

$

(647.0)

 

$

(80.6)

 

$

19.8

 

$

(151.7)

 

$

(150.3)

Defined Benefit Pension
Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
Change in Plan Assets:
Fair value at beginning of year
$
6,510.3
$
7,460.2
$
479.2
$
519.4
Actual return on assets
(413.5)
(618.7)
(6.6)
(18.0)
Employer contributions
30.0
31.2
0.1
0.1
Plan participant contributions
1.3
3.8
5.7
9.6
Benefits payments
(344.6)
(346.2)
(22.4)
(31.9)
Foreign currency
(4.9)
(20.0)
-
-
Fair value at end of year (a)
$
5,778.6
$
6,510.3
$
456.0
$
479.2
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year
$
6,528.3
$
7,714.4
$
469.6
$
600.0
$
138.5
$
151.7
Service cost
70.3
93.5
5.1
7.6
8.4
10.0
Interest cost
258.5
184.3
17.9
12.6
3.1
1.5
Plan amendment
-
3.7
-
(16.1)
-
-
Curtailment/other
(8.5)
(29.4)
-
(3.2)
10.4
12.0
Plan participant contributions
1.3
3.8
5.7
9.6
-
-
Medicare Part D reimbursements
-
-
0.7
1.7
-
-
Actuarial gain
(538.1)
(1,089.7)
(22.5)
(86.0)
(10.7)
(18.7)
Benefits payments
(336.1)
(334.7)
(45.5)
(56.9)
(18.5)
(17.7)
Foreign currency
(5.0)
(17.6)
(0.4)
0.3
(0.2)
(0.3)
Projected benefit obligation at end of year (a)
$
5,970.7
$
6,528.3
$
430.6
$
469.6
$
131.0
$
138.5
Plan assets (less) more than benefit obligation as of
fiscal year end
$
(192.1)
$
(18.0)
$
25.4
$
9.6
$
(131.0)
$
(138.5)
(a)
Plan assets and obligations are measured as of
May 31, 2021 2023
and
May 31, 2020.

2022

.
During
fiscal 2021,
2023
and
fiscal
2022,
the increase
decreases
in
defined
benefit
pension benefit
obligations was
and
other
postretirement
obligations
were
primarily driven by actuarial lossesgains due to a decreasean increase in the discount rate. The decrease rate
in each respective year.
As
of
May
28,
2023,
other
postretirement
benefit
plans
had
benefit
obligations
of
$
308.0
million
that
exceeded
plan
assets
of
$
274.2
million. As
of May
29, 2022,
other postretirement obligations was primarily driven by the reorganization of certain U.S. retiree health and welfare benefit plans.

During fiscal 2020, the increase in defined benefit pension benefit obligations was primarily driven by actuarial losses due to a decrease in the discount rate and an update in mortality rates. The decrease in other postretirement obligations was primarily driven by a decrease in expected future claims, partially offset by losses due to a decrease in the discount rate.

As of May 30, 2021, other postretirement

benefit plans
had benefit
obligations of $412.4
$
332.4
million that
exceeded
plan
assets
of $310.1
$
279.6
million. As
Postemployment
benefit
plans
are
not
funded
and
had
benefit
obligations
of May 31, 2020, other postretirement benefit plans had benefit obligations of $479.4
$
131.0
million that exceeded plan assets of $248.0 million. Postemployment benefit plans are not funded
and had benefit obligations of $151.7 million and $150.3
$
138.5
million as of May 30, 202128, 2023 and May 31, 2020,29, 2022, respectively.

The
accumulated
benefit
obligation
for
all
defined
benefit
pension
plans
was $7,402.1
$
5,807.9
million
as
of
May 28,
2023,
and
$
6,330.0
million as of May 30, 2021, and $7,285.2 million as of May 31, 2020.

29, 2022.

78

Amounts recognized in AOCI as of May 30, 202128, 2023 and May 31, 2020,29, 2022, are as follows:

 

Defined Benefit Pension Plans

 

Other Postretirement Benefit Plans

 

Postemployment Benefit Plans

 

Total

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

Net actuarial (loss) gain

$

(1,897.2)

 

$

(2,136.6)

 

$

200.8

 

$

129.5

 

$

(22.0)

 

$

(15.4)

 

$

(1,718.4)

 

$

(2,022.5)

Prior service (costs) credits

 

5.8

 

 

(6.0)

 

 

133.7

 

 

21.0

 

 

(1.6)

 

 

(5.3)

 

 

137.9

 

 

9.7

Amounts recorded in accumulated

other comprehensive loss

$

(1,891.4)

 

$

(2,142.6)

 

$

334.5

 

$

150.5

 

$

(23.6)

 

$

(20.7)

 

$

(1,580.5)

 

$

(2,012.8)

Defined Benefit Pension
Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
Net actuarial (loss) gain
$
(1,859.7)
$
(1,720.3)
$
186.9
$
208.5
$
2.2
$
(1.6)
$
(1,670.6)
$
(1,513.4)
Prior service (costs) credits
(4.8)
(7.6)
102.3
118.9
(1.1)
(1.0)
96.4
110.3
Amounts recorded in accumulated
other comprehensive loss
$
(1,864.5)
$
(1,727.9)
$
289.2
$
327.4
$
1.1
$
(2.6)
$
(1,574.2)
$
(1,403.1)
74
Plans with accumulated benefit obligations in excess of plan assets as of
May 30, 202128, 2023 and May 31, 202029, 2022 are as follows:

 

 

Defined Benefit Pension Plans

 

 

Fiscal Year

In Millions

 

2021

 

 

2020

Projected benefit obligation

$

615.3

 

$

3,512.9

Accumulated benefit obligation

 

556.2

 

 

3,200.1

Plan assets at fair value

 

26.7

 

 

2,569.9

Defined Benefit Pension Plans
Fiscal Year
In Millions
2023
2022
Projected benefit obligation
$
466.2
$
508.2
Accumulated benefit obligation
453.4
479.6
Plan assets at fair value
18.7
20.5
Components of net periodic benefit expense are as follows:

 

Defined Benefit Pension Plans

 

Other Postretirement Benefit Plans

 

Postemployment Benefit Plans

 

Fiscal Year

 

 

Fiscal Year

 

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

 

 

2021

 

2020

 

2019

 

 

2021

 

2020

 

2019

Service cost

$

104.4

$

92.7

$

94.6

 

$

8.5

$

9.4

$

9.9

 

$

9.3

$

8.3

$

7.6

Interest cost

 

192.1

 

230.5

 

248.0

 

 

18.0

 

27.1

 

33.1

 

 

1.7

 

2.6

 

3.0

Expected return on

plan assets

 

(420.9)

 

(449.9)

 

(445.8)

 

 

(34.7)

 

(42.1)

 

(40.4)

 

 

0

 

0

 

0

Amortization of losses

(gains)

 

108.3

 

106.0

 

109.8

 

 

(5.1)

 

(2.1)

 

0.6

 

 

2.6

 

0.4

 

0.1

Amortization of prior

service costs

(credits)

 

1.3

 

1.6

 

1.5

 

 

(5.5)

 

(5.5)

 

(5.5)

 

 

0.9

 

0.9

 

0.7

Other adjustments

 

0

 

0

 

0

 

 

0

 

0

 

0

 

 

8.4

 

17.7

 

6.7

Settlement or

curtailment losses

 

14.9

 

0

 

0.3

 

 

0

 

0

 

0

 

 

0

 

0

 

0

Net expense (income)

$

0.1

$

(19.1)

$

8.4

 

$

(18.8)

$

(13.2)

$

(2.3)

 

$

22.9

$

29.9

$

18.1

Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2021
2023
2022
2021
2023
2022
2021
Service cost
$
70.3
$
93.5
$
104.4
$
5.1
$
7.6
$
8.5
$
8.4
$
10.0
$
9.3
Interest cost
258.5
184.3
192.1
17.9
12.6
18.0
3.1
1.5
1.7
Expected return on
plan assets
(420.5)
(411.1)
(420.9)
(31.1)
(26.7)
(34.7)
-
-
-
Amortization of losses
(gains)
113.2
140.5
108.3
(19.3)
(10.9)
(5.1)
0.4
3.0
2.6
Amortization of prior
service costs
(credits)
1.5
1.0
1.3
(23.2)
(20.9)
(5.5)
0.3
0.4
0.9
Other adjustments
-
0.1
-
-
(0.1)
-
10.4
12.9
8.4
Settlement or
curtailment (gains)
losses
(0.7)
(18.4)
14.9
-
(5.5)
-
-
-
-
Net expense (income)
$
22.3
$
(10.1)
$
0.1
$
(50.6)
$
(43.9)
$
(18.8)
$
22.6
$
27.8
$
22.9
Assumptions

Weighted-average
assumptions used to determine fiscal year-end benefit obligations are
as follows:

 

Defined Benefit Pension Plans

 

Other Postretirement Benefit Plans

 

Postemployment Benefit Plans

 

Fiscal Year

 

Fiscal Year

 

Fiscal Year

 

2021

 

2020

 

 

2021

 

2020

 

 

2021

 

2020

 

Discount rate

3.17

%

3.20

%

 

3.03

%

3.02

%

 

2.04

%

1.85

%

Rate of salary increases

4.39

 

4.44

 

 

0

 

0

 

 

4.46

 

4.51

 

79

Defined Benefit Pension

Plans

Other Postretirement
Benefit Plans
Postemployment Benefit
Plans
Fiscal Year
Fiscal Year
Fiscal Year
2023
2022
2023
2022
2023
2022
Discount rate
5.18
%
4.39
%
5.19
%
4.36
%
4.55
%
3.62
%
Rate of salary increases
4.20
4.34
-
-
4.46
4.46
75
Weighted-average
assumptions used to determine fiscal year net periodic benefit expense are as follows:

 

Defined Benefit Pension Plans

 

 

Other Postretirement Benefit Plans

 

Postemployment Benefit Plans

 

Fiscal Year

 

 

Fiscal Year

 

Fiscal Year

 

2021

 

2020

 

2019

 

 

2021

 

2020

 

2019

 

 

2021

 

2020

 

2019

 

Discount rate

3.20

%

3.91

%

4.20

%

 

3.02

%

3.79

%

4.17

%

 

1.86

%

3.10

%

3.60

%

Service cost

effective rate

3.58

 

4.19

 

4.34

 

 

3.40

 

4.04

 

4.27

 

 

3.51

 

3.51

 

3.99

 

Interest cost

effective rate

2.55

 

3.47

 

3.92

 

 

2.29

 

3.28

 

3.80

 

 

2.83

 

2.84

 

3.37

 

Rate of

salary increases

4.44

 

4.17

 

4.27

 

 

0

 

0

 

0

 

 

4.47

 

4.47

 

4.44

 

Expected long-term

rate of return on

plan assets

5.72

 

6.95

 

7.25

 

 

4.57

 

5.67

 

5.67

 

 

0

 

0

 

0

 

Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
2023
2022
2021
2023
2022
2021
2023
2022
2021
Discount rate
4.39
%
3.17
%
3.20
%
4.36
%
3.03
%
3.02
%
3.62
%
2.04
%
1.86
%
Service cost
effective rate
4.57
3.56
3.58
4.41
3.34
3.40
3.69
2.46
3.51
Interest cost
effective rate
4.03
2.42
2.55
3.80
2.08
2.29
3.35
1.48
2.83
Rate of
salary increases
4.18
4.39
4.44
-
-
-
4.46
4.46
4.47
Expected long-term
rate of return on
plan assets
6.70
5.85
5.72
6.76
6.09
4.57
-
-
-
Discount Rates

We
estimate
the
service
and
interest
cost
components
of
the
net
periodic
benefit
expense
for
our
United
States
and
most
of
our
international
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plans
utilizing
a
full
yield
curve
approach
by applying
the specific
spot rates
along
the yield
curve used
to determine
the benefit
obligation
to the
relevant projected
cash flows. Our
discount rate assumptions
are determined annually
as of May 31
for our defined
benefit pension, other
postretirement
benefit, and
postemployment benefit
plan obligations.
We
also use
discount rates
as of
May 31 to
determine defined
benefit pension,
other
postretirement benefit,
and
postemployment
benefit plan
income and
expense for
the following
fiscal year.
We
work with
our
outside actuaries
to determine
the timing
and amount
of expected
future cash
outflows to
plan participants
and, using
the Aa
Above
Median corporate
bond yield,
to develop
a forward
interest rate
curve, including
a margin
to that
index based on
our credit
risk. This
forward interest rate curve is applied to our expected future cash outflows
to determine our discount rate assumptions.

80

76
Fair Value
of Plan Assets

The fair
values of
our pension
and postretirement
benefit plans’
assets and
their respective
levels in
the fair
value hierarchy
by asset
category were as follows:

 

May 31, 2021

 

May 31, 2020

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)

$

838.3

$

697.2

$

0

$

1,535.5

 

$

1,039.6

$

777.7

$

0

$

1,817.3

Fixed income (b)

 

1,993.5

 

1,936.3

 

0

 

3,929.8

 

 

1,833.3

 

1,667.4

 

0

 

3,500.7

Real asset investments (c)

 

277.9

 

0.2

 

0

 

278.1

 

 

223.4

 

0.1

 

0

 

223.5

Other investments (d)

 

0

 

0

 

0.1

 

0.1

 

 

0

 

0

 

0.2

 

0.2

Cash and accruals

 

180.0

 

0

 

0

 

180.0

 

 

180.3

 

0

 

0

 

180.3

Fair value measurement of pension

plan assets

$

3,289.7

$

2,633.7

$

0.1

$

5,923.5

 

$

3,276.6

$

2,445.2

$

0.2

$

5,722.0

Assets measured at net asset value (e)

 

 

 

 

 

 

 

1,536.7

 

 

 

 

 

 

 

 

1,271.2

Total pension plan assets

 

 

 

 

 

 

$

7,460.2

 

 

 

 

 

 

 

$

6,993.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value measurement of postretirement benefit plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity (a)

$

0.2

$

0

$

0

$

0.2

 

$

0

$

46.9

$

0

$

46.9

Fixed income (b)

 

117.3

 

0

 

0

 

117.3

 

 

157.5

 

268.4

 

0

 

425.9

Real asset investments (c)

 

0

 

0

 

0

 

0

 

 

0.1

 

0

 

0

 

0.1

Cash and accruals

 

14.8

 

0

 

0

 

14.8

 

 

16.7

 

0

 

0

 

16.7

Fair value measurement of

postretirement benefit

plan assets

$

132.3

$

0

$

0

$

132.3

 

$

174.3

$

315.3

$

0

$

489.6

Assets measured at net asset value (e)

 

 

 

 

 

 

 

387.1

 

 

 

 

 

 

 

 

303.9

Total postretirement benefit

plan assets

 

 

 

 

 

 

$

519.4

 

 

 

 

 

 

 

$

793.5

(a)Primarily publicly traded common stock for purposes

May 31, 2023
May 31, 2022
In Millions
Level 1
Level 2
Level 3
Total
Assets
Level 1
Level 2
Level 3
Total
Assets
Fair value measurement of total returnpension
plan assets:
Equity (a)
$
278.3
$
484.1
$
34.3
$
796.7
$
623.4
$
442.3
$
66.3
$
1,132.0
Fixed income (b)
1,603.4
1,866.3
-
3,469.7
1,958.7
1,723.4
-
3,682.1
Real asset investments (c)
92.8
-
-
92.8
159.8
-
-
159.8
Other investments (d)
-
-
0.1
0.1
-
-
0.1
0.1
Cash and accruals
295.1
0.2
-
295.3
133.6
0.3
-
133.9
Fair value measurement of pension
plan assets
$
2,269.6
$
2,350.6
$
34.4
$
4,654.6
$
2,875.5
$
2,166.0
$
66.4
$
5,107.9
Assets measured at net asset value (e)
1,124.0
1,402.4
Total pension plan
assets
$
5,778.6
$
6,510.3
Fair value measurement of
postretirement benefit plan assets:
Fixed income (b)
$
113.3
$
-
$
-
$
113.3
$
120.8
$
-
$
-
$
120.8
Cash and accruals
2.5
-
-
2.5
6.6
-
-
6.6
Fair value measurement of
postretirement benefit
plan assets
$
115.8
$
-
$
-
$
115.8
$
127.4
$
-
$
-
$
127.4
Assets measured at net asset value (e)
340.2
351.8
Total postretirement
benefit
plan assets
$
456.0
$
479.2
(a)
Primarily
publicly
traded
common
stock
for
purposes
of
total
return
and
to
maintain
equity
exposure
consistent
with
policy
allocations. Investments
include: United States
and international
public equity
securities, mutual funds,
and equity futures
valued
at closing prices from national exchanges, commingled funds valued
at fair value using the unit values provided by the investment
managers,
and certain
private equity
securities valued
using
a matrix
of pricing
inputs reflecting
assumptions
based on
the best
information available.
(b)
Primarily government
and corporate
debt securities
and futures
for purposes
of total
return, managing
fixed income
exposure to
policy allocations, and
duration targets. Investments
include: fixed income
securities and bond
futures generally valued
at closing
prices from
national exchanges,
fixed income
pricing models,
and independent
financial analysts;
and fixed
income commingled
funds valued at unit values provided by the investment managers, which
are based on the fair value of the underlying investments.

(b)Primarily government

(c)
Publicly
traded
common
stocks
in
energy,
real
estate,
and corporate debt
infrastructure
for
the
purpose
of
total
return.
Investments
include:
energy,
real
estate,
and
infrastructure
securities
generally
valued
at
closing
prices
from
national
exchanges,
and futures for purposes of total return, managing fixed income exposure to policy allocations, and duration targets. Investments include: fixed income securities and bond futures generally valued at closing prices from national exchanges, fixed income pricing models, and independent financial analysts; and fixed income
commingled
funds valued at unit values provided by the investment managers, which
are based on the fair value of the underlying investments.

(c)Publicly traded common stocks in energy, real estate,

(d)
Insurance and infrastructure
annuity contracts
to provide
a stable
stream of
income for the purpose of total return. Investments include: energy, real estate, and infrastructure securities generally valued at closing prices from national exchanges, and commingled funds valued at unit
pension retirees.
Fair values provided by the investment managers, which
are based
on the
fair value of the underlying investments.

(d)Insurance and annuity contracts to provide a stable stream of income for pension retirees. Fair values are based on the fair value

of the underlying investments and contract fair values established by the providers.

providers

.
(e)
Primarily private investments and limited
partnerships, trust-owned
life insurance,
common collective
trusts, and
certain private
equity securities
that are
measured at fair value using
the net asset value per
share (or its equivalent) practical
expedient and have not
been classified in the
fair value hierarchy.

There were
no material changes
transfers into
or out
of level
3 investments
in ourfiscal
2023.
During fiscal
2022, the
inclusion of
non-observable inputs
into the pricing of certain private equity securities resulted in the transfer of $
66.3
million into level 3 investments in fiscal 2021 and fiscal 2020.

investments.

Expected Rate of Return on Plan Assets

Our expected
rate of return
on plan assets
is determined
by our asset
allocation, our
historical long-term
investment performance,
our
estimate of future long-term returns
by asset class (using input from
our actuaries, investment services,
and investment managers), and
long-term inflation
assumptions. We
review this assumption
annually for
each plan; however,
our annual
investment performance
for
one particular year does not, by itself, significantly influence our evaluation.

81

77
Weighted-average
asset allocations for our defined benefit pension and other postretirement benefit plans are
as follows:

 

Defined Benefit Pension Plans

 

 

Other Postretirement Benefit Plans

 

Fiscal Year

 

 

Fiscal Year

 

2021

 

2020

 

 

2021

 

2020

 

Asset category:

 

 

 

 

 

 

 

 

 

United States equities

15.4

%

19.7

%

 

28.0

%

18.1

%

International equities

9.9

 

11.0

 

 

13.9

 

9.8

 

Private equities

9.3

 

6.2

 

 

15.1

 

4.4

 

Fixed income

54.6

 

52.8

 

 

43.0

 

64.8

 

Real assets

10.8

 

10.3

 

 

0

 

2.9

 

Total

100.0

%

100.0

%

 

100.0

%

100.0

%

Defined Benefit Pension Plans
Other Postretirement Benefit Plans
Fiscal Year
Fiscal Year
2023
2022
2023
2022
Asset category:
United States equities
8.3
%
12.1
%
28.6
%
27.9
%
International equities
4.8
7.8
13.4
13.5
Private equities
10.6
10.4
14.5
15.2
Fixed income
65.1
58.3
43.5
43.4
Real assets
11.2
11.4
-
-
Total
100.0
%
100.0
%
100.0
%
100.0
%
The investment
objective for
our defined
benefit pension
and other
postretirement benefit
plans is
to secure
the benefit
obligations to
participants
at
a
reasonable
cost
to
us.
Our
goal
is
to
optimize
the
long-term
return
on
plan
assets
at
a
moderate
level
of
risk.
The
defined benefit
pension plan
and other postretirement benefit plans is to secure the benefit obligations to participants at a reasonable cost to us. Our goal is to optimize the long-term return on plan assets at a moderate level of risk. The defined benefit pension plan and other postretirement
benefit plan
portfolios are
broadly diversified
across asset
classes. Within
asset
classes,
the
portfolios
are
further
diversified
across
investment
styles
and
investment
organizations.
For
the
U.S.
defined
benefit
pension
plans,
the
long-term
investment
policy
allocation
is: 15
9
percent
to
equities
in
the
United
States; 9
6
percent
to
international
equities; 8
7
percent to private equities; 57
68
percent to fixed income; and 12
10
percent to real assets (real estate,
energy,
and infrastructure).
For other U.S. postretirement benefit plans, the long-term investment
policy allocations are:
28
percent to equities in the United States;
14
percent to international equities;
14
percent to total private equities; and
44
percent to fixed income.
The actual allocations to these
asset classes may vary tactically around the long-term policy allocations based
on relative market valuations.

Contributions and Future Benefit Payments

We
do not
no
t
expect
to
be
required
to
make
contributions
to
our
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment benefit
plans in
fiscal 2022. 2024.
Actual fiscal 2022
2024 contributions
could exceed
our current
projections, as
influenced by
our decision
to undertake
discretionary funding
of our benefit
trusts and
future changes
in regulatory
requirements. Estimated
benefit
payments, which reflect expected future service, as appropriate, are
expected to be paid from fiscal 20222024 to fiscal 20312033 as follows:

In Millions

Defined Benefit Pension Plans

 

Other Postretirement Benefit Plans Gross Payments

 

Medicare Subsidy Receipts

 

Postemployment Benefit Plans

Fiscal 2022

$

332.6

 

$

40.2

 

$

1.9

 

$

29.0

Fiscal 2023

 

339.6

 

 

36.6

 

 

0

 

 

21.0

Fiscal 2024

 

347.1

 

 

36.9

 

 

0

 

 

19.3

Fiscal 2025

 

355.7

 

 

37.3

 

 

0

 

 

17.8

Fiscal 2026

 

364.5

 

 

37.7

 

 

0

 

 

16.5

Fiscal 2027-2031

 

1,944.0

 

 

168.0

 

 

0

 

 

66.8

In Millions
Defined Benefit
Pension Plans
Other
Postretirement
Benefit Plans
Gross Payments
Postemployment
Benefit Plans
Fiscal 2024
$
351.4
$
38.6
$
27.1
Fiscal 2025
357.6
37.5
20.0
Fiscal 2026
364.6
36.6
18.6
Fiscal 2027
371.6
36.1
16.7
Fiscal 2028
378.9
34.9
15.4
Fiscal 2029-2033
1,977.5
158.8
64.4
Defined Contribution Plans

The
General
Mills
Savings
Plan
is
a
defined
contribution
plan
that
covers
domestic
salaried,
hourly,
nonunion,
and
certain
union
employees.
This plan
is a defined contribution plan that covers domestic salaried, hourly, nonunion, and certain union employees. This plan is a
401(k)
savings plan
that includes
a number
of investment
funds, including
a Company
stock fund
and an
Employee Stock
Ownership Plan
(ESOP). We
sponsor another
money purchase
plan for
certain domestic
hourly employees
with net
assets of $22.5 $
19.2
million as of May 30, 2021,28, 2023, and $20.6 $
20.6
million as of May 31, 2020.29, 2022. We
also sponsor defined contribution plans in many
of
our
foreign
locations.
Our
total
recognized
expense
related
to
defined
contribution
plans
was $76.1
$
97.2
million
in
fiscal
2023,
$
90.1
million in fiscal 2021, $90.1 2022, and $
76.1
million in fiscal 2020, and $52.7 million in fiscal 2019.

2021.

We
match a
percentage of
employee contributions
to the
General Mills
Savings Plan.
The Company
match is
directed to
investment
options
of
the
participant’s
choosing.
The
number
of
shares
of
our
common
stock
allocated
to
participants
in
the
ESOP
was
3.7
million as
of the participant’s choosing. May
28, 2023,
and
4.0
million as
of May
29, 2022.
The number of shares ofESOP’s
only assets
are our
common stock allocated to participants in the ESOP was 4.3 million as of May 30, 2021, and 4.6 million as of May 31, 2020. The ESOP’s only assets are our common stock
and temporary
cash
balances.

The Company stock fund and the ESOP collectively held $433.0 $
498.7
million and $464.8 $
443.8
million of Company common stock as of May 30, 2021,28,
2023, and May 31, 2020,29, 2022, respectively.

82

78
NOTE 15. INCOME TAXES

The
components
of
earnings
before
income
taxes
and
after-tax
earnings
from
joint
ventures
and
the
corresponding
income
taxes
thereon are as follows:
Fiscal Year
In Millions
2023
2022
2021
Earnings before income taxes and after-tax earnings
from joint ventures:
United States
$
2,740.5
$
2,652.3
$
2,567.1
Foreign
400.0
557.3
290.3
Total earnings
before income taxes and after-tax earnings from joint ventures
$
3,140.5
$
3,209.6
$
2,857.4
Income taxes:
Currently payable:
Federal
$
487.1
$
384.2
$
369.8
State and the correspondinglocal
82.2
60.8
47.5
Foreign
65.1
79.1
93.0
Total current
634.4
524.1
510.3
Deferred:
Federal
9.6
75.0
117.9
State and local
(8.1)
18.3
13.6
Foreign
(23.7)
(31.1)
(12.7)
Total deferred
(22.2)
62.2
118.8
Total income
taxes thereon are as follows:

 

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Earnings before income taxes and after-tax earnings from joint ventures:

 

 

 

 

 

 

United States

$

2,567.1

$

2,402.1

$

1,788.2

Foreign

 

290.3

 

198.1

 

293.8

Total earnings before income taxes and after-tax earnings from joint ventures

$

2,857.4

$

2,600.2

$

2,082.0

Income taxes:

 

 

 

 

 

 

Currently payable:

 

 

 

 

 

 

Federal

$

369.8

$

381.0

$

151.9

State and local

 

47.5

 

55.3

 

35.3

Foreign

 

93.0

 

73.8

 

84.6

Total current

 

510.3

 

510.1

 

271.8

Deferred:

 

 

 

 

 

 

Federal

 

117.9

 

67.8

 

86.7

State and local

 

13.6

 

(56.6)

 

21.6

Foreign

 

(12.7)

 

(40.8)

 

(12.3)

Total deferred

 

118.8

 

(29.6)

 

96.0

Total income taxes

$

629.1

$

480.5

$

367.8

$
612.2
$
586.3
$
629.1
The following table reconciles the United States statutory income tax rate
with our effective income tax rate:

 

Fiscal Year

 

2021

 

2020

 

2019

 

United States statutory rate

21.0

%

21.0

%

21.0

%

State and local income taxes, net of federal tax benefits

1.7

 

2.0

 

2.5

 

Foreign rate differences

0.3

 

(0.8)

 

0

 

Provisional net tax benefit

0

 

0

 

(0.4)

 

Stock based compensation

(0.4)

 

(1.1)

 

(1.2)

 

Subsidiary reorganization (a)

0

 

(2.0)

 

0

 

Capital loss (b)

0

 

0

 

(3.7)

 

Other, net

(0.6)

 

(0.6)

 

(0.5)

 

Effective income tax rate

22.0

%

18.5

%

17.7

%

Fiscal Year
2023
2022
2021
United States statutory rate
21.0
%
21.0
%
21.0
%
State and local income taxes, net of federal tax benefits
1.5
2.1
1.7
Foreign rate differences
(1.0)
(1.1)
0.3
Stock based compensation
(1.0)
(0.6)
(0.4)
Capital loss (a)During fiscal 2020, we recorded a $53.1 million decrease to our deferred
-
(1.7)
-
Divestitures, net
(0.8)
(1.2)
-
Other, net
(0.2)
(0.2)
(0.6)
Effective income tax liabilities associated with the reorganization of certain wholly owned subsidiaries.

(b)rate

19.5
%
18.3
%
22.0
%
(a)
During fiscal 2019,
2022, we recorded
released a discrete benefit related
$
50.7
million valuation
allowance associated
with our capital
loss carryforward
expected to a capital loss carryback of $72.9 million.

be

83

used against divestiture gains.

79
The tax effects of temporary differences that
give rise to deferred tax assets and liabilities are as follows:

In Millions

 

May 30, 2021

 

May 31, 2020

Accrued liabilities

$

58.5

$

61.8

Compensation and employee benefits

 

198.7

 

171.4

Unrealized hedges

 

16.3

 

0

Pension

 

61.4

 

148.2

Tax credit carryforwards

 

22.7

 

12.5

Stock, partnership, and miscellaneous investments

 

46.3

 

80.2

Capital losses

 

67.3

 

65.9

Net operating losses

 

160.5

 

146.6

Other

 

93.4

 

87.0

Gross deferred tax assets

 

725.1

 

773.6

Valuation allowance

 

229.2

 

214.2

Net deferred tax assets

 

495.9

 

559.4

Brands

 

1,413.8

 

1,415.0

Fixed assets

 

412.7

 

378.3

Intangible assets

 

256.2

 

246.8

Tax lease transactions

 

18.8

 

21.5

Inventories

 

36.2

 

33.0

Stock, partnership, and miscellaneous investments

 

364.0

 

338.1

Unrealized hedges

 

0

 

22.4

Other

 

112.6

 

51.4

Gross deferred tax liabilities

 

2,614.3

 

2,506.5

Net deferred tax liability

$

2,118.4

$

1,947.1

In Millions
May 28, 2023
May 29, 2022
Accrued liabilities
$
51.2
$
46.2
Compensation and employee benefits
143.7
146.7
Pension
43.7
1.5
Tax credit carryforwards
38.7
34.9
Stock, partnership, and miscellaneous investments
2.4
17.9
Capitalized research and development
83.7
-
Capital losses
76.2
61.9
Net operating losses
221.3
178.0
Other
99.4
96.3
Gross deferred tax assets
760.3
583.4
Valuation
allowance
259.2
185.1
Net deferred tax assets
501.1
398.3
Brands
1,417.2
1,415.2
Fixed assets
402.7
392.6
Intangible assets
213.1
201.0
Tax lease transactions
8.5
14.9
Inventories
47.1
27.1
Stock, partnership, and miscellaneous investments
369.0
357.7
Unrealized hedges
34.3
98.7
Other
120.1
109.4
Gross deferred tax liabilities
2,612.0
2,616.6
Net deferred tax liability
$
2,110.9
$
2,218.3
We
have established a
valuation allowance against
certain of the
categories of deferred
tax assets described
above as current
evidence
does
not
suggest
we
will
realize
sufficient
taxable
income
of
the
appropriate
character (e.g.
(e.g.,
ordinary
income
versus
capital
gain
income) within the carryforward period to allow us to realize these deferred tax
benefits.

Information about our valuation allowance follows:

In Millions

 

May 30, 2021

Pillsbury acquisition losses

$

107.9

State and foreign loss carryforwards

 

29.1

Capital loss carryforwards

 

67.3

Other

 

24.9

Total

$

229.2

In Millions
May 28, 2023
Pillsbury acquisition losses
$
106.2
State and foreign loss carryforwards
27.1
Capital loss carryforwards
75.7
Other
50.2
Total
$
259.2
As of May 30, 2021,28, 2023, we believe it is more-likely-than-not that the remainder
of our deferred tax assets are realizable.

Information about our tax loss carryforwards follows:

In Millions

 

May 30, 2021

Foreign loss carryforwards

$

162.9

State operating loss carryforwards

 

8.2

Total tax loss carryforwards

$

171.1

follows

84

:

In Millions
May 28, 2023
Foreign loss carryforwards
$
202.0
Federal operating loss carryforwards
10.2
State operating loss carryforwards
9.0
Total tax loss carryforwards
$
221.2
80
Our foreign loss carryforwards expire as follows:

In Millions

 

May 30, 2021

Expire in fiscal 2022 and 2023

$

2.2

Expire in fiscal 2024 and beyond

 

20.7

Do not expire

 

140.0

Total foreign loss carryforwards

$

162.9

In Millions
May 28, 2023
Expire in fiscal 2024 and 2025
$
0.5
Expire in fiscal 2026 and beyond
15.0
Do not expire (a)
186.5
Total foreign loss carryforwards
$
202.0
(a)
Approximately
$
172
million
of
our
foreign
loss
carryforwards
are
held
in
Brazil
for
which
we
have
not
recorded
a
valuation
allowance.
On March 11, 2021, August
16, 2022,
the American Rescue PlanInflation
Reduction Act (ARPA)
(IRA) was
signed into
law.
The ARPA includes IRA
introduces
a provision expandingCorporate
Alternative Minimum
Tax
beginning
in
our
fiscal
2024
and
an
excise
tax
on
the
repurchase
of
corporate
stock
starting
after
January
1,
2023.
We
do
not
currently expect the IRA
to have a material impact
on our financial results, including
our annual estimated effective
tax rate, or on our
liquidity.
The amount
of excise
tax on
the repurchase
of corporate
stock was
immaterial in
fiscal 2023.
We
will continue
to monitor
and assess the impact the IRA may have on our business and financial results.
On
March
11,
2021,
the
American
Rescue
Plan
Act
(ARPA)
was
signed
into
law.
The
ARPA
includes
a
provision
expanding
the
limitations on
the deductibility
of certain
executive employee
compensation beginning
in our fiscal
2028. We
do not
currently expect
the ARPA to have
a material impact on our financial results, including our annual estimated effective
tax rate, or on our liquidity. We will continue to monitor and assess the impact the ARPA may have on our business and financial results.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act and related notices included several significant provisions, including delaying certain payroll tax payments into fiscal 2022 and fiscal 2023.

As of
May 30, 2021,28,
2023, we
have not
no
t recognized
a deferred
tax liability
for unremitted
earnings of
approximately $2.3 $
2.3
billion from
our
foreign operations
because we
currently believe
our subsidiaries
have invested
the undistributed
earnings indefinitely
or the
earnings
will be remitted
in a tax-neutral
transaction. It
is not practicable
for us to
determine the amount
of unrecognized
tax expense on
these
reinvested earnings.
Deferred taxes
are recorded
for earnings
of our
foreign operations
when we
determine that
such earnings
are no
longer indefinitely reinvested. All
earnings prior to fiscal 2018
remain permanently reinvested. Earnings
from fiscal 2018 and later
are
not permanently reinvested and local country withholding taxes are
recorded on earnings each year.

We are
subject to federal income
taxes in the United States
as well as various state, local,
and foreign jurisdictions. A
number of years
may elapse before an uncertain tax position is audited and finally resolved.
While it is often difficult to predict the final outcome or the
timing
of
resolution
of
any
particular
uncertain
tax
position,
we
believe
that
our
liabilities
for
income
taxes
reflect
the
most
likely
outcome.
We
adjust
these
liabilities,
as
well
as
the
related
interest,
in
light
of
changing
facts
and
circumstances.
Settlement
of
any
particular position would usually require the use of cash.

The number
of years
with open
tax audits
varies depending
on the
tax jurisdiction.
Our major
taxing jurisdiction
is the
United States (federal
(federal and state). Various
tax examinations by United States state taxing
authorities could be conducted for any
open tax year,
which
vary by jurisdiction, but are generally from
3
to
5
years.

The Internal
Revenue
Service (IRS)
is currently
auditing
our federal
tax returns
for
fiscal2016,
2018 and 2019
. Several
state and
foreign
examinations are currently in
progress. We
do not expect these examinations
to result in a material
impact on our results
of operations
or financial position. We
have effectively settled all issues with the IRS for fiscal years
2015 and prior.

During fiscal 2017, the

The Brazilian
tax authority,
Secretaria da
Receita Federal
do Brasil (RFB),
has concluded
audits of our
2012 and 2013
through 2018 tax
return
years. These
audits included
a review
of our
determinations of
amortization of
certain goodwill
arising from
the acquisition
of Yoki
Alimentos
S.A.
The
RFB
has
proposed
adjustments
that
effectively
eliminate
the
goodwill
amortization
benefits
related
to
this
transaction. During fiscal 2020, we received proposed adjustments related to the goodwill amortization benefits for our 2014 and 2015 tax return years. We
believe we have meritorious defenses and intend to continue to contest the disallowance.

disallowance

for all years.
We
apply a more-likely-than-not
threshold to the
recognition and derecognition
of uncertain tax
positions. Accordingly,
we recognize
the amount of
tax benefit that
has a greater
than 50 percent
likelihood of being
ultimately realized upon
settlement. Future changes
in
judgment related to the expected ultimate resolution of uncertain tax positions
will affect earnings in the period of such change.

85

81
The following table sets forth
changes in our total gross
unrecognized tax benefit liabilities,
excluding accrued interest,
for fiscal 2021 2023
and
fiscal 2020.
2022.
Approximately $75.6
$
90
million
of
this
total
in
fiscal 2021
2023
represents
the
amount
that,
if
recognized,
would
affect
our
effective income tax rate in future periods.
This amount differs from the gross unrecognized
tax benefits presented in the table because
certain
portions of
the liabilities
below
would
impact deferred
taxes if
recognized.
We
also would
record a
decrease
in U.S.
federal
income taxes upon recognition of the state tax benefits included therein.

 

Fiscal Year

In Millions

 

2021

 

 

2020

Balance, beginning of year

$

147.9

 

$

139.1

Tax positions related to current year:

 

 

 

 

 

Additions

 

20.1

 

 

18.7

Tax positions related to prior years:

 

 

 

 

 

Additions

 

6.3

 

 

2.3

Reductions

 

(7.2)

 

 

(6.0)

Settlements

 

(2.1)

 

 

(2.9)

Lapses in statutes of limitations

 

(19.7)

 

 

(3.3)

Balance, end of year

$

145.3

 

$

147.9

Fiscal Year
In Millions
2023
2022
Balance, beginning of year
$
160.9
$
145.3
Tax positions related
to current year:
Additions
29.9
21.6
Tax positions related
to prior years:
Additions
2.9
10.4
Reductions
(0.9)
(5.5)
Settlements
(4.7)
(2.4)
Lapses in statutes of limitations
(6.9)
(8.5)
Balance, end of year
$
181.2
$
160.9
As of
May 30, 2021,28,
2023, we do
no
t expect
to pay approximately $1.1 million unrecognized
tax benefit
liabilities and
accrued interest
within the
next 12
months. We
are not
able to
reasonably estimate
the timing
of future
cash flows
beyond 12
months due
to uncertainties
in the
timing of
tax audit
outcomes. Our unrecognized tax benefit liabilities and accrued interest within the next 12 months. We are not able to reasonably estimate the timing of future cash flows beyond 12 months due to uncertainties in the timing of tax audit outcomes. The remaining amount of our unrecognized tax liability was classified in other
liabilities.

We
report
accrued
interest
and
penalties
related
to
unrecognized
tax
benefit
liabilities
in
income
tax
expense.
For
fiscal
2023,
we
recognized $
4.7
million of tax-related
net interest and
penalties, and had
$
32.4
million of accrued
interest and penalties related to unrecognized tax benefit liabilities in income tax expense.
as of May 28,
2023. For
fiscal 2021, 2022,
we recognized $2.9
$
2.0
million of
tax-related net
interest and
penalties, and
had $24.9 $
26.6
million of
accrued interest
and penalties as of May 30, 2021. For fiscal 2020, we recognized $3.2 million of tax-related net interest and penalties, and had $27.9 million of accrued interest and penalties as of May 31, 2020.

29, 2022.

NOTE 16. COMMITMENTS AND CONTINGENCIES

As
of
May 30, 2021,
28,
2023,
we
have
issued
guarantees
and
comfort
letters
of $146.6
$
149.9
million
for
the
debt
and
other
obligations
of non-consolidated
non-
consolidated affiliates, mainly CPW.
Off-balance sheet arrangements were not material as of
May 30, 2021.

28, 2023.

During
fiscal
2020,
we
received
notice
from
the second quarter of fiscal 2020, we received notice from the
tax
authorities of
the
State of
São
Paulo,
Brazil
regarding
our
compliance
with
its
state sales tax requirements.
As a result, we
have been assessed additional
state sales taxes, interest,
and penalties. We
believe that we
have meritorious
defenses against
this claim
and will
vigorously defend
our position.
As of
May 30, 202128, 2023
, we
are unable
to estimate
any possible loss and have not recorded a loss contingency for this matter.

NOTE 17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

We
operate
in
the
packaged
foods
industry. Our
In
fiscal
2022,
we
completed
a
new
organization
structure
to
streamline
our
global
operations.
This
global
reorganization
required
us
to
reevaluate
our
operating
segments.
Under
our
new
organization
structure,
our
chief operating decision maker assesses performance
and makes decisions about resources to be allocated to
our operating segments are as
follows: North America Retail; Europe & Australia; Convenience Stores & Foodservice, Pet;Retail, International, Pet, and Asia & Latin America.

North America Foodservice.

Our North America Retail
operating segment reflects business
with a wide variety of
grocery stores, mass merchandisers, membership
stores,
natural
food
chains,
drug,
dollar
and
discount
chains,
convenience
stores,
and
e-commerce
grocery
providers.
Our
product
categories
in
this
business
segment are
include
ready-to-eat
cereals,
refrigerated
yogurt,
soup,
meal
kits,
refrigerated
and
frozen
dough
products,
dessert
and
baking
mixes,
frozen
pizza
and
pizza
snacks,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks and snack bars, bars.
Our
International
operating
segment
consists
of
retail
and refrigerated yogurt.

foodservice
businesses
outside
of
the
United
States
and
Canada.
Our Europe & Australia operating segment reflects retail and foodservice businesses in the greater Europe and Australia regions. Our
product categories include refrigerated yogurt,super-premium
ice cream and frozen desserts, meal kits, salty snacks,
snack bars, super-premium ice cream, refrigerated and frozen dough products, shelf stable vegetables, and dessert and baking mixes.mixes,
and
shelf
stable
vegetables.
We
also
sell
super-premium
ice
cream
and
frozen
desserts
directly
to
consumers
through
owned
retail
shops. Our
International segment
also includes
products manufactured
in the United
States for
export, mainly
to Caribbean
and Latin
American markets, as well as
products we manufacture
for sale to our international
joint ventures. Revenues from franchise fees
export activities are
reported in the region or country where the franchiseeend customer is located.

Our major product categories in our Convenience Stores & Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, baking mixes, and bakery flour. Many products we sell are branded to the consumer 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 in the United States.

86

Our Pet operating segment includes

pet food products sold primarily in the
United States and Canada in national
pet superstore chains,
e-commerce retailers,
grocery stores,
regional pet
store chains,
mass merchandisers,
and veterinary
clinics and
hospitals. Our
product
82
categories include dog and cat food (dry
foods, wet foods, and treats) made
with whole meats, fruits, and vegetables and
other high-quality
natural
ingredients.
Our
tailored
pet
product
offerings
address
specific
dietary,
lifestyle,
and
life-stage
needs
and
span
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
functions, and textures and cuts for wet foods.

Our Asia & Latin
North
America
Foodservice
segment
consists
of
foodservice
businesses
in
the
United
States
and
Canada.
Our
major
product
categories
in
our
North
America
Foodservice
operating
segment consists of retail
are
ready-to-eat
cereals,
snacks,
refrigerated
yogurt,
frozen
meals,
unbaked and foodservice businesses in the greater Asia and South America regions. Our product categories include super-premium ice cream and frozen desserts, meal kits, dessert and baking mixes, snack bars, salty snacks, refrigerated and
fully baked
frozen dough products,
baking mixes,
and wellness beverages. We also sell super-premium ice cream and frozen desserts directly to consumers through owned retail shops. Our Asia & Latin America segment also includes products manufactured in the United States for export, mainly to Caribbean and Latin American markets, as well asbakery
flour.
Many products we manufacture for sale to our international joint ventures. Revenues from export activities and franchise fees
sell are reported in the region or country where the end customer or franchisee is located.

Operating profit for these segments excludes unallocated corporate items, gain or loss on divestitures, and restructuring, impairment, and other exit costs. Unallocated corporate items include corporate overhead expenses, variances to planned North American employee benefits and incentives, contributions branded

to the General Mills Foundation, asset consumer
and liability remeasurement impact of hyperinflationary economies,nearly
all are
branded to
our customers.
We
sell to
distributors and
operators in
many customer
channels including
foodservice,
vending, and supermarket bakeries.
Operating profit
for these
segments excludes
unallocated corporate
items, gain
or loss
on divestitures,
and restructuring,
impairment,
and
other
exit
costs.
Unallocated
corporate
items
include
corporate
overhead
expenses,
variances
to
planned
North
American
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative
project-related
costs,
gains
and
losses
on
corporate investments,
and other
items that
are not
part of
our measurement
of segment
operating performance.
These include
gains
and
losses
arising
from
the
revaluation
of
certain
grain
inventories
and
gains
and
losses
from
mark-to-market
valuation
of
certain
commodity positions
until passed back
to our operating
segments. These items
affecting operating
profit are
centrally managed
at the
corporate
level
and
are
excluded
from
the
measure
of
segment
profitability
reviewed
by
executive
management.
Under
our
supply
chain organization, our manufacturing,
warehouse, and distribution activities are substantially integrated
across our operations in order
to maximize
efficiency
and productivity.
As a
result, fixed
assets and
depreciation and
amortization expenses
are neither
maintained
nor available by operating segment.

Our operating segment results were as follows:

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Net sales:

 

 

 

 

 

 

 

 

North America Retail

$

10,995.4

 

$

10,750.5

 

$

9,925.2

Europe & Australia

 

1,981.5

 

 

1,838.9

 

 

1,886.7

Convenience Stores & Foodservice

 

1,742.4

 

 

1,816.4

 

 

1,969.1

Pet

 

1,732.4

 

 

1,694.6

 

 

1,430.9

Asia & Latin America

 

1,675.3

 

 

1,526.2

 

 

1,653.3

Total

$

18,127.0

 

$

17,626.6

 

$

16,865.2

Operating profit:

 

 

 

 

 

 

 

 

North America Retail

$

2,623.2

 

$

2,627.0

 

$

2,277.2

Europe & Australia

 

151.0

 

 

113.8

 

 

123.3

Convenience Stores & Foodservice

 

306.0

 

 

337.2

 

 

419.5

Pet

 

415.0

 

 

390.7

 

 

268.4

Asia & Latin America

 

85.6

 

 

18.7

 

 

72.4

Total segment operating profit

$

3,580.8

 

$

3,487.4

 

$

3,160.8

Unallocated corporate items

 

212.1

 

 

509.1

 

 

339.8

Divestitures loss

 

53.5

 

 

0

 

 

30.0

Restructuring, impairment, and other exit costs

 

170.4

 

 

24.4

 

 

275.1

Operating profit

$

3,144.8

 

$

2,953.9

 

$

2,515.9

87

Fiscal Year

In Millions

2023
2022
2021
Net sales:
North America Retail
$
12,659.9
$
11,572.0
$
11,250.0
International
2,769.5
3,315.7
3,656.8
Pet
2,473.3
2,259.4
1,732.4
North America Foodservice
2,191.5
1,845.7
1,487.8
Total
$
20,094.2
$
18,992.8
$
18,127.0
Operating profit:
North America Retail
$
3,181.3
$
2,699.7
$
2,725.9
International
161.8
232.0
236.6
Pet
445.5
470.6
415.0
North America Foodservice
290.0
255.5
203.3
Total segment operating
profit
$
4,078.6
$
3,657.8
$
3,580.8
Unallocated corporate items
1,033.2
402.6
212.1
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
56.2
(26.5)
170.4
Operating profit
$
3,433.8
$
3,475.8
$
3,144.8
Net sales for our North America Retail operating units were as follows:

 

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

U.S. Meals & Baking

$

4,611.6

 

$

4,408.5

 

$

3,839.8

U.S. Cereal

 

2,455.2

 

 

2,434.1

 

 

2,255.4

U.S. Snacks

 

2,048.3

 

 

2,091.9

 

 

2,060.9

Canada

 

953.2

 

 

897.0

 

 

862.4

U.S. Yogurt and other

 

927.1

 

 

919.0

 

 

906.7

Total

$

10,995.4

 

$

10,750.5

 

$

9,925.2

Fiscal Year
In Millions
2023
2022
2021
U.S. Meals & Baking Solutions
$
4,426.3
$
4,023.8
$
4,042.2
U.S. Morning Foods
3,620.1
3,370.9
3,314.0
U.S. Snacks
3,611.0
3,191.4
2,940.5
Canada
1,002.5
985.9
953.3
Total
$
12,659.9
$
11,572.0
$
11,250.0
83
Net sales by class of similar products were as follows:

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Snacks

$

3,574.2

 

$

3,529.7

 

$

3,487.4

Convenient meals

 

3,030.2

 

 

2,814.3

 

 

2,538.6

Cereal

 

2,868.9

 

 

2,874.1

 

 

2,672.8

Yogurt

 

2,074.8

 

 

2,056.6

 

 

2,113.1

Dough

 

1,866.1

 

 

1,801.1

 

 

1,661.9

Pet

 

1,732.4

 

 

1,694.6

 

 

812.7

Baking mixes and ingredients

 

1,695.5

 

 

1,674.2

 

 

1,663.7

Super-premium ice cream

 

819.7

 

 

718.1

 

 

812.7

Vegetables and other

 

465.2

 

 

463.9

 

 

484.1

Total

$

18,127.0

 

$

17,626.6

 

$

16,865.2

Fiscal Year
In Millions
2023
2022
2021
Snacks
$
4,431.5
$
3,960.9
$
3,574.2
Cereal
3,209.5
2,998.1
2,868.9
Convenient meals
2,961.6
2,988.5
3,030.2
Pet
2,476.0
2,260.1
1,732.4
Dough
2,390.5
1,986.3
1,866.1
Baking mixes and ingredients
2,037.3
1,843.6
1,695.5
Yogurt
1,472.9
1,714.9
2,074.8
Super-premium ice cream
703.7
782.2
819.7
Other
411.2
458.2
465.2
Total
$
20,094.2
$
18,992.8
$
18,127.0
The following tables provide financial information by geographic area:

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Net sales:

 

 

 

 

 

 

 

 

United States

$

13,496.9

 

$

13,364.5

 

$

12,462.8

Non-United States

 

4,630.1

 

 

4,262.1

 

 

4,402.4

Total

$

18,127.0

 

$

17,626.6

 

$

16,865.2

In Millions

 

May 30, 2021

 

 

May 31, 2020

Cash and cash equivalents:

 

 

 

 

 

United States

$

817.9

 

$

1,112.0

Non-United States

 

687.3

 

 

565.8

Total

$

1,505.2

 

$

1,677.8

In Millions

 

May 30, 2021

 

 

May 31, 2020

Land, buildings, and equipment:

 

 

 

 

 

United States

$

2,714.7

 

$

2,761.6

Non-United States

 

892.1

 

 

819.0

Total

$

3,606.8

 

$

3,580.6

88

Fiscal Year
In Millions
2023
2022
2021
Net sales:
United States
$
16,322.2
$
14,691.2
$
13,496.9
Non-United States
3,772.0
4,301.6
4,630.1
Total
$
20,094.2
$
18,992.8
$
18,127.0
In Millions
May 28, 2023
May 29, 2022
Cash and cash equivalents:
United States
$
204.2
$
46.0
Non-United States
381.3
523.4
Total
$
585.5
$
569.4
In Millions
May 28, 2023
May 29, 2022
Land, buildings, and equipment:
United States
$
2,920.5
$
2,675.2
Non-United States
715.7
718.6
Total
$
3,636.2
$
3,393.8
NOTE 18. SUPPLEMENTAL
INFORMATION

The components of certain Consolidated Balance SheetSheets accounts are
as follows:

In Millions

 

May 30, 2021

 

 

May 31, 2020

Receivables:

 

 

 

 

 

Customers

$

1,674.5

 

$

1,648.3

Less allowance for doubtful accounts

 

(36.0)

 

 

(33.2)

Total

$

1,638.5

 

$

1,615.1

In Millions

 

May 30, 2021

 

 

May 31, 2020

Inventories:

 

 

 

 

 

Finished goods

$

1,506.9

 

$

1,142.6

Raw materials and packaging

 

411.9

 

 

392.2

Grain

 

111.2

 

 

93.6

Excess of FIFO over LIFO cost (a)

 

(209.5)

 

 

(202.1)

Total

$

1,820.5

 

$

1,426.3

(a)Inventories

In Millions
May 28, 2023
May 29, 2022
Receivables:
Customers
$
1,710.1
$
1,720.4
Less allowance for doubtful accounts
(26.9)
(28.3)
Total
$
1,683.2
$
1,692.1
84
In Millions
May 28, 2023
May 29, 2022
Inventories:
Finished goods
$
2,066.9
$
1,634.7
Raw materials and packaging
572.2
532.0
Grain
133.8
164.0
Excess of $1,139.7 FIFO over LIFO cost (a)
(600.9)
(463.4)
Total
$
2,172.0
$
1,867.3
(a)
Inventories
of
$
1,477.5
million
as
of
May 30, 2021,
28,
2023,
and $892.6
$
1,127.1
million
as
of
May 31, 2020,
29,
2022,
were
valued
at
LIFO.
The
difference between replacement
cost and the stated LIFO
inventory value is not materially
different from the reserve
for the LIFO
valuation method.

In Millions

 

May 30, 2021

 

 

May 31, 2020

Prepaid expenses and other current assets:

 

 

 

 

 

Marketable investments

$

360.0

 

$

0

Prepaid expenses

 

221.7

 

 

194.5

Other receivables

 

139.1

 

 

85.2

Derivative receivables

 

37.5

 

 

70.6

Grain contracts

 

12.0

 

 

5.0

Miscellaneous

 

20.0

 

 

46.8

Total

$

790.3

 

$

402.1

In Millions

 

May 30, 2021

 

 

May 31, 2020

Land, buildings, and equipment:

 

 

 

 

 

Equipment

$

6,732.7

 

$

6,428.0

Buildings

 

2,542.7

 

 

2,412.6

Capitalized software

 

718.5

 

 

668.5

Construction in progress

 

395.7

 

 

373.5

Land

 

67.4

 

 

66.1

Equipment under finance lease

 

7.8

 

 

5.8

Buildings under finance lease

 

0.3

 

 

0.3

Total land, buildings, and equipment

 

10,465.1

 

 

9,954.8

Less accumulated depreciation

 

(6,858.3)

 

 

(6,374.2)

Total

$

3,606.8

 

$

3,580.6

In Millions

 

May 30, 2021

 

 

May 31, 2020

Other assets:

 

 

 

 

 

Investments in and advances to joint ventures

$

566.4

 

$

566.7

Right of use operating lease assets

 

378.6

 

 

365.2

Pension assets

 

30.0

 

 

21.2

Life insurance

 

18.6

 

 

19.5

Miscellaneous

 

274.0

 

 

113.2

Total

$

1,267.6

 

$

1,085.8

89

In Millions

In Millions

 

May 30, 2021

 

 

May 31, 2020

Other current liabilities:

 

 

 

 

 

Accrued trade and consumer promotions

$

580.9

 

$

550.4

Accrued payroll

 

434.4

 

 

430.4

Restructuring and other exit costs reserve

 

148.8

 

 

17.8

Current portion of operating lease liabilities

 

111.2

 

 

102.0

Accrued interest, including interest rate swaps

 

80.0

 

 

92.8

Derivative payable, primarily commodity-related

 

39.2

 

 

39.2

Accrued taxes

 

37.4

 

 

80.3

Dividends payable

 

24.1

 

 

20.7

Grain contracts

 

0.9

 

 

1.2

Miscellaneous

 

330.3

 

 

298.5

Total

$

1,787.2

 

$

1,633.3

In Millions

 

May 30, 2021

 

 

May 31, 2020

Other noncurrent liabilities:

 

 

 

 

 

Accrued compensation and benefits, including obligations for underfunded other

postretirement benefit and postemployment benefit plans

$

707.7

 

$

958.7

Noncurrent portion of operating lease liabilities

 

283.2

 

 

277.0

Accrued taxes

 

215.6

 

 

238.6

Miscellaneous

 

86.2

 

 

70.7

Total

$

1,292.7

 

$

1,545.0

May 28, 2023

May 29, 2022
Prepaid expenses and other current assets:
Marketable investments
$
117.2
$
249.8
Other receivables
285.7
182.8
Prepaid expenses
244.4
213.5
Derivative receivables
45.1
86.1
Grain contracts
2.3
28.7
Miscellaneous
41.0
41.2
Total
$
735.7
$
802.1
In Millions
May 28, 2023
May 29, 2022
Assets held for sale:
Goodwill
$
-
$
130.0
Inventories
-
22.9
Equipment
-
6.0
Total
$
-
$
158.9
In Millions
May 28, 2023
May 29, 2022
Land, buildings, and equipment:
Equipment
$
6,672.2
$
6,491.7
Buildings
2,569.3
2,444.8
Construction in progress
746.7
492.8
Capitalized software
514.8
717.8
Land
56.5
55.1
Equipment under finance lease
9.8
7.8
Buildings under finance lease
0.3
0.3
Total land, buildings,
and equipment
10,569.6
10,210.3
Less accumulated depreciation
(6,933.4)
(6,816.5)
Total
$
3,636.2
$
3,393.8
In Millions
May 28, 2023
May 29, 2022
Other assets:
Investments in and advances to joint ventures
$
462.0
$
513.8
Right of use operating lease assets
340.0
336.8
Pension assets
51.8
52.6
Life insurance
15.8
17.5
Miscellaneous
290.7
307.4
Total
$
1,160.3
$
1,228.1
85
In Millions
May 28, 2023
May 29, 2022
Other current liabilities:
Accrued trade and consumer promotions
$
454.3
$
474.4
Accrued payroll
426.6
435.6
Current portion of operating lease liabilities
101.9
106.7
Accrued interest, including interest rate swaps
83.1
70.1
Accrued taxes
80.9
31.4
Restructuring and other exit costs reserve
47.7
36.8
Derivative payable, primarily commodity-related
34.0
19.9
Dividends payable
23.1
25.3
Grain contracts
11.8
3.0
Miscellaneous
337.3
348.8
Total
$
1,600.7
$
1,552.0
In Millions
May 28, 2023
May 29, 2022
Other non-current liabilities:
Accrued compensation and benefits, including obligations for underfunded
other
postretirement benefit and postemployment benefit plans
$
509.6
$
360.8
Non-current portion of operating lease liabilities
257.0
248.3
Accrued taxes
245.1
233.0
Miscellaneous
128.3
87.0
Total
$
1,140.0
$
929.1
Certain Consolidated Statements of Earnings amounts are as follows:

 

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Depreciation and amortization

$

601.3

 

$

594.7

 

$

620.1

Research and development expense

 

239.3

 

 

224.4

 

 

221.9

Advertising and media expense (including production and

communication costs)

 

736.3

 

 

691.8

 

 

601.6

Fiscal Year
In Millions
2023
2022
2021
Depreciation and amortization
$
546.6
$
570.3
$
601.3
Research and development expense
257.6
243.1
239.3
Advertising and media expense (including production and
communication costs)
810.0
690.1
736.3
The components of interest, net are as follows:

 

 

Fiscal Year

Expense (Income), in Millions

 

2021

 

 

2020

 

 

2019

Interest expense

$

430.9

 

$

475.1

 

$

530.2

Capitalized interest

 

(3.2)

 

 

(2.6)

 

 

(2.8)

Interest income

 

(7.4)

 

 

(6.0)

 

 

(5.6)

Interest, net

$

420.3

 

$

466.5

 

$

521.8

Fiscal Year
Expense (Income), in Millions
2023
2022
2021
Interest expense
$
400.5
$
387.2
$
430.9
Capitalized interest
(4.4)
(3.8)
(3.2)
Interest income
(14.0)
(3.8)
(7.4)
Interest, net
$
382.1
$
379.6
$
420.3
Certain Consolidated Statements of Cash Flows amounts are as follows:

 

Fiscal Year

In Millions

 

2021

 

 

2020

 

 

2019

Cash interest payments

$

412.5

 

$

418.5

 

$

500.1

Cash paid for income taxes

 

636.1

 

 

403.3

 

 

440.8

90

Fiscal Year
In Millions
2023
2022
2021
Cash interest payments
$
337.1
$
357.8
$
412.5
Cash paid for income taxes
682.6
545.3
636.1
86
NOTE 19. QUARTERLY
DATA
(UNAUDITED)

Summarized quarterly data for fiscal 20212023 and fiscal 20202022 follows:

 

 

First Quarter

 

 

Second Quarter

 

 

Third Quarter

 

 

Fourth Quarter

 

 

Fiscal Year

 

 

Fiscal Year

 

 

Fiscal Year

 

 

Fiscal Year

In Millions, Except Per

Share Amounts

 

2021

 

2020

 

 

2021

 

2020

 

 

2021

 

2020

 

 

2021

 

2020

Net sales

$

4,364.0

$

4,002.5

 

$

4,719.4

$

4,420.8

 

$

4,520.0

$

4,180.3

 

$

4,523.6

$

5,023.0

Gross margin

 

1,590.4

 

1,389.5

 

 

1,721.1

 

1,569.1

 

 

1,553.9

 

1,403.2

 

 

1,582.9

 

1,768.1

Net earnings attributable to

General Mills

 

638.9

 

520.6

 

 

688.4

 

580.8

 

 

595.7

 

454.1

 

 

416.8

 

625.7

EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.04

$

0.86

 

$

1.12

$

0.96

 

$

0.97

$

0.75

 

$

0.68

$

1.03

Diluted

$

1.03

$

0.85

 

$

1.11

$

0.95

 

$

0.96

$

0.74

 

$

0.68

$

1.02

First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions, Except Per
Share Amounts
2023
2022
2023
2022
2023
2022
2023
2022
Net sales
$
4,717.6
$
4,539.9
$
5,220.7
$
5,024.0
$
5,125.9
$
4,537.7
$
5,030.0
$
4,891.2
Gross margin
1,447.7
1,597.4
1,705.1
1,631.2
1,664.8
1,403.7
1,728.2
1,769.9
Net earnings attributable to
General Mills
820.0
627.0
605.9
597.2
553.1
660.3
614.9
822.8
EPS:
Basic
$
1.37
$
1.03
$
1.01
$
0.98
$
0.94
$
1.09
$
1.04
$
1.36
Diluted
$
1.35
$
1.02
$
1.01
$
0.97
$
0.92
$
1.08
$
1.03
$
1.36
In the fourth
quarter fiscal 2023,
we approved restructuring
actions to enhance
the efficiency
of our global
supply chain structure
and
recorded $
36.2
million of
charges. We
also approved
restructuring actions
in our International
segment to
optimize our
Häagen-Dazs
shops network
and recorded
$
6.4
million of
charges.
In addition,
we recorded
a net
recovery of
$
11.8
million related
to a
voluntary
recall of certain international
H
ä
agen-Dazs
ice cream products as a result of an insurance recovery.
In the fourth
quarter of fiscal 2021, 2022,
we approved restructuring actions designed to better align our organizational structure and resources with strategic initiatives and recorded $157.3 million of charges. We recorded a lossan additional
gain on the
sale of our Laticínios Carolina businessinterests in Brazil
Yoplait
SAS, Yoplait
Marques SNC,
and Liberté
Marques Sàrl
of $53.5 $
14.9
million in and
an additional
gain on
the fourth quarter sale
of fiscal 2021. In the fourth quarterour
European dough
businesses of fiscal 2021, we
$
9.2
million. We
also recorded $9.5
$
16.0
million of
transaction costs
primarily
related to
the sale
of our non-binding memorandum
interests in
Yoplait
SAS, Yoplait
Marques SNC,
and
Liberté
Marques
Sàrl,
the sale
of understanding
our
European
dough
businesses,
the
definitive
agreements
to
sell our 51 percent controlling interest in our European Yoplait business
Helper
main meals
and our planned acquisition of Tyson Foods’ pet treats business. We also recorded an $8.8 million gain related to indirect taxes in Brazil and an $11.2 million loss related to deferred taxes on amendments to reorganize certain U.S. retiree health and welfare benefit plans.

During the fourth quarter of fiscal 2020, we changed the reporting period of our Pet segment from an April fiscal year end to a May fiscal year end to match our fiscal calendar. Accordingly, our fiscal 2020 fourth quarter results include 4 months of Pet segment results compared to 3 months in the fourth quarter of fiscal 2019. The fourth quarter of fiscal 2020 also included an additional week of results across all other segments. In the fourth quarter of fiscal 2020, we recorded $19.3 million of expense due to a product recall related to our international Green Giant business and $11.5 million of restructuring charges.

91

Suddenly
Salad

side
dishes
business,
and
the
definitive
agreement
to
acquire
TNT
Crust.
We
also
recorded
a
$

34.0

million
loss
associated
with
the
valuation
of
a
corporate
investment.
In
addition,
we
recorded
a
$
34.0
million
reduction
to
our
restructuring
reserve.
87
Glossary

AOCI.
Accumulated other comprehensive income (loss).

Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-year
comparability.

Adjusted EBITDA. The calculation of earnings before income taxes and after-tax earnings from joint ventures, net interest, and depreciation and amortization adjusted for certain items affecting year-to-year comparability.

Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-year
comparability.

Adjusted
operating
profit
margin.
Operating
profit
adjusted
for
certain
items
affecting
year-to-year
comparability,
divided by
net
sales.

Constant currency.
Financial results
translated
to United
States dollars
using constant
foreign currency
exchange rates
based on
the
rates
in
effect
for
the
comparable
prior-year
period
.
To
present
this
information,
current
period
results
for
entities
reporting
in
currencies other
than United
States dollars
are translated
into United
States dollars
at the
average exchange
rates in effect for the comparable prior-year period. To present this information, current period results for entities reporting in currencies other than United States dollars are translated into United States dollars at the average exchange rates in
effect during
the
corresponding
period
of
the
prior
fiscal
year,
rather
than
the
actual
average
exchange
rates
in
effect
during
the
current
fiscal
year
.
Therefore,
the
foreign
currency
impact
is
equal
to
current
year
results
in
local
currencies
multiplied
by
the
change
in
the
average
foreign currency exchange rate between the current fiscal period and the
corresponding period of the prior fiscal year.

Core working capital.
Accounts receivable plus inventories less accounts payable, all as of the last day of our
fiscal year.

COVID-19. Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus. In March 2020, the World Health Organization declared COVID-19 a global pandemic.

Derivatives.
Financial instruments such
as futures, swaps,
options, and forward
contracts that we
use to manage
our risk arising
from
changes in commodity prices, interest rates, foreign exchange rates, and equity
prices.

Earnings
before
interest,
taxes,
depreciation
and
amortization (EBITDA
(EBITDA
)
.
The
calculation
of earnings
before
income taxes
and
after-tax earnings from joint ventures, net interest, depreciation
and amortization.

Euribor.
European Interbank Offered Rate.

Fair value
hierarchy.
For purposes
of fair
value measurement,
we categorize
assets and
liabilities into
one of
three levels
based on
the assumptions
(inputs) used
in valuing
the asset or liability.
liability.
Level 1 provides
the most reliable
measure of
fair value, while
Level 3
generally requires significant management judgment.judgment. The three levels
are defined as follows:

Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2:
Observable inputs
other than quoted
prices included in
Level 1, such
as quoted prices
for similar assets
or liabilities
in active markets or quoted prices for identical assets or liabilities in inactive markets.

markets

.
Level 3:
Unobservable inputs reflecting management’s
assumptions about the inputs used in pricing the asset or liability.

Free cash flow.
Net cash provided by operating activities less purchases of land, buildings, and equipment.

equipment

.
Free
cash
flow
conversion
rate.
Free
cash
flow
divided
by
our
net
earnings,
including
earnings
attributable
to
redeemable
and
noncontrolling interests adjusted for certain items affecting year-to-year
comparability.

GDP. Gross domestic product.

Generally
accepted accounting
principles (GAAP).
Guidelines, procedures,
and practices
that we
are required
to use
in recording
and reporting accounting information in our financial statements.

Goodwill.
The difference
between the purchase
price of acquired
companies plus the fair
value of any
redeemable and noncontrolling
interests and the related fair values of net assets acquired.

Gross margin.
Net sales less cost of sales.

92

Hedge accounting.

Accounting for qualifying
hedges that allows changes in
a hedging instrument’s
fair value to offset
corresponding
changes in
the hedged
item in
the same
reporting period
.
Hedge accounting
is permitted
for certain
hedging instruments
and hedged
items
only
if
the
hedging
relationship
is
highly
effective,
and
only
prospectively
from
the
date
a
hedging
relationship
is
formally
documented.

Holistic Margin Management
(HMM).
Company-wide initiative to
use productivity savings, mix
management,
and price realization
to offset input cost inflation, protect margins
,
and generate funds to reinvest in sales-generating activities.

88
Interest
bearing
instruments.
Notes
payable,
long-term
debt,
including
current
portion,
cash
and
cash
equivalents,
and
certain
interest bearing investments classified within prepaid expenses and other current
assets and other assets.

LIBOR.
London Interbank Offered Rate.

Mark-to-market.
The act of determining a value for
financial instruments, commodity contracts, and
related assets or liabilities based
on the current market price for that item.

Net debt.
Long-term debt, current portion of long-term debt, and notes payable,
less cash and cash equivalents.

Net debt-to-adjusted EBITDA ratio.
Net debt divided by Adjusted EBITDA.

Net
mark-to-market
valuation of
certain
commodity
positions.
Realized
and
unrealized
gains
and
losses on
derivative
contracts
that will be allocated to segment operating profit when the exposure
we are hedging affects earnings.

Net price realization.
The impact of list and promoted price changes, net of trade and other price
promotion costs.

Net realizable
value.
The estimated
selling price
in the
ordinary course
of business,
less reasonably
predictable costs
of completion,
disposal, and transportation.

Noncontrolling interests.
Interests of consolidated subsidiaries held by third parties.

Notional principal amount.
The principal
amount on which fixed-rate or floating-rate interest payments are calculated.

calculated

.
OCI.
Other comprehensive income (loss).

Operating
cash
flow
conversion
rate.
Net
cash
provided
by
operating
activities,
divided
by
net
earnings,
including
earnings
attributable to redeemable and noncontrolling interests.

Operating cash flow to net debt ratio.
Net debt divided by cash provided by operating activities.

Organic net
sales growth.
Net sales growth
adjusted for
foreign currency
translation, as
well as
acquisitions, divestitures,
and a
53
rd
week impact, when applicable.

Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
charges.

Redeemable
interest.
Interest
of
consolidated
subsidiaries
held
by
a
third
party
that
can
be
redeemed
outside
of
our
control
and
therefore cannot be classified as a noncontrolling interest in equity.

Reporting unit.
An operating segment or a business one level below an operating
segment.

SOFR.
Secured Overnight Financing Rate.
Strategic
Revenue
Management
(SRM).
A
company-wide
capability
focused
on
generating
sustainable
benefits
from
net
price
realization
and
mix
by
identifying
and
executing
against
specific
opportunities
to
apply
tools
including
pricing,
sizing,
mix
management, and promotion optimization across each of our businesses.

Supply chain
input costs.
Costs incurred
to produce
and deliver
product,
including costs
for
ingredients
and
conversion, inventory
management, logistics, and warehousing.

Total
debt.
Notes payable and long-term debt, including current portion.

Translation
adjustments.
The impact
of the conversion
of our foreign
affiliates’ financial
statements to United
States dollars
for the
purpose of consolidating our financial statements.

93

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.

Working capital.

Current assets and current liabilities, all as of the last day of our fiscal year.

ITEM 9 - Changes in and Disagreements With

Accountants on Accounting and Financial Disclosure

None.

89
ITEM 9A - Controls and Procedures

We,
under the
supervision and
with the
participation of
our management,
including our
Chief Executive
Officer and
Chief Financial
Officer,
have
evaluated
the
effectiveness
of
the design
and
operation
of
our
disclosure
controls
and
procedures (as
(as
defined
in
Rule
13a-15(e) under the 1934 Act). Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded
that,
as of May 30, 2021,28,
2023, our disclosure
controls and procedures
were effective
to ensure that information
required to be disclosed
by us in
reports
that
we
file
or
submit
under
the
1934
Act
is
(1)
recorded,
processed,
summarized,
and
reported
within
the
time
periods
specified
in applicable
rules and
forms, and
(2)
accumulated and
communicated
to our
management,
including our
Chief
Executive
Officer and Chief Financial Officer,
in a manner that allows timely decisions regarding required disclosure.

There were
no changes
in our
internal control
over financial
reporting (as
defined in
Rule 13a-15(f)
under the
1934 Act)
during our
fiscal quarter ended May 30, 2021,
28, 2023, that have materially
affected, or are reasonably
likely to materially affect,
our internal control
over
financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING

The
management
of
General
Mills,
Inc.
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting,
as
such
term
is
defined
in
Rule
13a-15(f)
under
the
1934
Act.
The
Company’s
internal
control
system
was
designed
to
provide
reasonable
assurance
to
our
management
and
the
Board
of
Directors
regarding
the
preparation
and
fair
presentation
of
published
financial
statements.
Under
the
supervision
and
with
the
participation
of
management,
including
our
Chief
Executive
Officer and Chief Financial Officer,
we conducted an assessment of the effectiveness
of our internal control over financial reporting
as
of May 30, 2021.28, 2023. In
making this assessment, management
used the criteria set forth
by the Committee of Sponsoring
Organizations of
the Treadway Commission (COSO) in
Internal Control – Integrated Framework (2013)
.

Based
on
our
assessment
using
the
criteria
set
forth
by
COSO
in
Internal
Control
–
Integrated
Framework
(2013)
,
management
concluded that our internal control over financial reporting was effective
as of May 30, 2021.

28, 2023.

KPMG
LLP,
our
independent
registered
public
accounting
firm,
has
issued
a
report
on the
effectiveness
of
the Company’s
internal
control over financial reporting.

/s/ J. L. Harmening
/s/ K. A. Bruce

J. L. Harmening
K. A. Bruce

Chief Executive Officer
Chief Financial Officer

June 30, 2021

28, 2023

Our independent registered public accounting firm’s
attestation report on our internal control over financial reporting
is included in the “Report
“Report of Independent Registered Public Accounting Firm” in Item
8 of this report.

ITEM 9B - Other Information

None.

ITEM 9C - Disclosure Regarding Foreign Jurisdictions that
Prevent Inspections
Not applicable.
PART
III

ITEM 10 - Directors, Executive Officers and Corporate

Governance

The
information
contained
in
the
sections
entitled
“Proposal
Number
1
-
Election
of
Directors”
and
“Shareholder
Director
Nominations”
contained
in
our
definitive
Proxy
Statement
for
our
2023
Annual
Meeting
of
Shareholders
is
incorporated
herein
by
reference.
Information regarding our executive officers is set forth in
Item 1 of this report.
The
information
regarding
our
Audit
Committee,
including
the
members
of
the
Audit
Committee
and
audit
committee
financial
experts, set forth
in the sections section
entitled “Proposal Number 1 - Election of Directors”“Board
Committees and “Shareholder Director Nominations”
Their Functions”
contained in our
definitive Proxy
Statement for
our 2021
2023 Annual Meeting of Shareholders is incorporated herein by reference.

94

Information regarding our executive officers is set forth in Item 1 of this report.

The information regarding our Audit Committee, including the members of the Audit Committee and audit committee financial experts, set forth in the section entitled “Board Committees and Their Functions” contained in our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders is incorporated herein by reference.

90
We
have adopted a
Code of Conduct
applicable to all employees,
including our principal
executive officer,
principal financial officer,
and
principal
accounting
officer.
A
copy
of
the
Code
of Conduct
is
available
on
our
website
at
https://www.generalmills.com.www.general
mills.com.
We
intend
to
post
on
our
website
any
amendments
to
our
Code
of
Conduct
and
any
waivers
from
our
Code
of
Conduct
for
principal
officers.

ITEM 11 - Executive Compensation

The
information
contained
in
the
sections
entitled “Executive
“Executive
Compensation,” “Director
“Director
Compensation,”
and “Overseeing
“Overseeing
Risk
Management” in our definitive Proxy Statement for our 20212023 Annual
Meeting of Shareholders is incorporated herein by reference.

ITEM 12 - Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

The
information
contained
in
the
section
entitled “Ownership
“Ownership
of
General
Mills
Common
Stock
by
Directors,
Officers
and
Certain
Beneficial
Owners”
in
our
definitive
Proxy
Statement
for
our 2021
2023
Annual
Meeting
of
Shareholders
is
incorporated
herein
by
reference.

Equity Compensation Plan Information

The following table provides certain information as of May 30, 2021, 28, 2023,
with respect to our equity compensation plans:

Plan Category

Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1)

Weighted-Average Exercise Price of Outstanding Options, Warrants and

Rights (2) (a)

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (1)) (3)

Equity compensation plans

approved by

security holders

24,887,956

(b)

$

53.29

23,482,523

(d)

Equity compensation plans

not approved by

security holders

109,604

(c)

 

-

-

 

Total

24,997,560

 

$

53.29

23,482,523

 

Plan Category
Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (1)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and
Rights (2) (a)
Number of Securities Remaining
Available for
Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column (1)) (3)
Equity compensation plans
approved by
security holders
18,806,084
(b)
$
57.43
35,104,287
(d)
Equity compensation plans
not approved by
security holders
97,154
(c)
-
-
Total
18,903,238
$
57.43
35,104,287
(a)
Only includes the weighted-average exercise price of outstanding options,
whose weighted-average term is 5.265.59 years.

(b)
Includes 17,397,504 11,571,445
stock options, 3,992,705 3,359,589
restricted stock units, 1,177,652
1,690,278 performance share
units (assuming pay out
for
target performance), and 2,320,0952,184,772 restricted stock units that have
vested and been deferred.

(c)
Includes 109,60497,154 restricted
stock units that have
vested and been deferred.
These awards were made
in lieu of salary
increases
and certain other compensation
and benefits. We
granted these awards under
our 1998 Employee Stock
Plan, which provided
for the
issuance of stock
options, restricted
stock, and restricted
stock units
to attract
and retain
employees and
to align their interests
interest with those of shareholders.
We discontinued
the 1998 Employee Stock Plan in
September 2003, and no future awards
may be granted under that plan.

(d)
Includes
stock
options,
restricted
stock,
restricted
stock
units,
shares
of
unrestricted
stock,
stock
appreciation
rights,
and
performance awards that we may
award under our 20172022 Stock
Compensation Plan, which had 23,482,523 has 35,104,287
shares available for
grant at May 30, 2021.

28, 2023.

ITEM 13 - Certain Relationships and Related Transactions,

and Director Independence

The
information
set forth
in the
section
entitled “Board
Independence
and Related
Person
Transactions”
contained
in our
definitive
Proxy Statement for our 20212023 Annual Meeting of Shareholders is incorporated
herein by reference.
ITEM 14 - Principal Accountant Fees and Services
The
information
contained
in
the
section
entitled
“Independent
Registered
Public
Accounting
Firm
Fees”
in
our
definitive
Proxy
Statement for our 2023 Annual Meeting of Shareholders is incorporated herein
by reference.

ITEM 14 - Principal Accounting Fees and Services

The information contained in the section entitled “Independent Registered Public Accounting Firm Fees” in our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders is incorporated herein by reference.

95

91

PART

IV

ITEM 15 – Exhibits and Financial Statement Schedules

1.
Financial Statements:

The following financial statements are included in Item 8 of this report:

Consolidated Statements of Earnings for the fiscal years ended May 30, 2021,28, 2023, May 31, 2020,29,
2022, and May 26, 2019.

Consolidated Statements of Comprehensive Income for the fiscal years ended May 30, 2021, 2021.

Consolidated
Statements
of
Comprehensive
Income
for
the
fiscal
years
ended
May 31, 2020,
28,
2023,
May
29,
2022,
and
May 26, 2019.

30,
2021.
Consolidated Balance Sheets as of May 30, 202128, 2023 and May 31, 2020.

29, 2022.

Consolidated Statements of Cash Flows for the fiscal years ended May 30, 2021, 28, 2023,
May 31, 2020,29, 2022, and May 26, 2019.

30, 2021.

Consolidated
Statements of
Total
Equity
and Redeemable
Interest for
the fiscal
years ended
May 28,
2023, May
29, 2022,
and May 30, 2021, May 31, 2020, and May 26, 2019.

2021.

Notes to Consolidated Financial Statements.

Report of Management Responsibilities.

Report of Independent Registered Public Accounting Firm.

PCAOB ID:

185
.
2.
Financial Statement Schedule:

For the fiscal years ended May 28, 2023, May 29, 2022, and May 30, 2021,2021:
II – Valuation
and Qualifying Accounts
92
3.
Exhibits
:
Exhibit No.
Description
Amended
and
Restated
Certificate
of
Incorporation
of
the
Company
(incorporated
herein
by
reference to Exhibit 3.1 to the Company’s
Current Report on Form 8-K filed October 1, 2021).
By-laws
of
the
Company
(incorporated
herein
by
reference
to
Exhibit
3.1
to
the
Company’s
Current Report on Form 8-K filed January 28, 2022).
Indenture,
dated
as
of
February
1,
1996,
between
the
Company
and
U.S.
Bank
National
Association
(f/k/a
First
Trust
of
Illinois,
National
Association)
(incorporated
herein
by
reference to
Exhibit 4.1
to the
Company’s
Registration Statement
on Form
S-3 filed
February
6, 1996 (File no. 333-00745)).
First Supplemental
Indenture, dated as
of May 18,
2009, between the
Company and U.S.
Bank
National
Association
(incorporated
herein
by
reference
to
Exhibit
4.2
to
Registrant’s
Annual
Report on Form 10-K for the fiscal year ended May 31, 2020, 2009).
Description of the Company’s registered
securities.
2001
Compensation
Plan
for
Non-Employee
Directors
(incorporated
herein
by
reference
to
Exhibit
10.2
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
August 29, 2010).
2006 Compensation Plan for Non-Employee Directors (incorporated
herein by reference to
Exhibit 10.5 to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended
August 29, 2010).
2011
Stock
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.6
to
the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 31, 2015).
2011 Compensation Plan for Non-Employee
Directors (incorporated herein by reference to
Exhibit 10.2 to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended
November 27, 2011).
2016
Compensation
Plan
for
Non-Employee
Directors
(incorporated
herein
by
reference
to
Exhibit
10.1
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
November 27, 2016).
Executive
Incentive
Plan
(incorporated
herein
by reference
to
Exhibit
10.1
to
the
Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended November
28, 2010).
Separation Pay
and Benefits
Program for
Officers (incorporated
herein by
reference to
Exhibit
10.1
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
23, 2020).
Supplemental Savings Plan (incorporated
herein by reference to Exhibit
10.4 to the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended February
28, 2021).
Supplemental
Retirement
Plan
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.1
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
28, 2021).
2005
Supplemental
Retirement
Plan
(incorporated
herein
by
reference
to
Exhibit
10.3
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 2021).
Deferred
Compensation
Plan
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.14 to
the Company’s
Quarterly Report
on Form
10-Q for
the fiscal
quarter ended
February
22, 2009).
2005
Deferred
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.5
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 2021).
Executive
Survivor
Income
Plan
(incorporated
herein
by
reference
to
Exhibit
10.6
to
the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 29, 2005).
93
Supplemental
Benefits
Trust
Agreement,
amended
and
restated
as
of
September
26,
1988,
between the Company and
Norwest Bank Minnesota, N.A. (incorporated
herein by reference to
Exhibit
10.3
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
November 27, 2011).
Supplemental Benefits Trust
Agreement, dated September 26,
1988, between the Company and
Norwest
Bank
Minnesota,
N.A.
(incorporated
herein
by
reference
to
Exhibit
10.4
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended November 27, 2011).
Form
of
Performance
Share
Unit
Award
Agreement
(incorporated
herein
by
reference
to
Exhibit
10.18
to
the Company’s
Annual
Report
on
Form
10-K
for
the fiscal
year
ended May
27, 2018).
Form
of
Stock
Option
Agreement
(incorporated
herein
by
reference
to
Exhibit
10.19
to
the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 27, 2018).
Form of Restricted Stock
Unit Agreement (incorporated
herein by reference to Exhibit
10.20 to
the Company’s Annual Report on
Form 10-K for the fiscal year ended May 27, 2018).
Deferred Compensation
Plan for Non-Employee
Directors (incorporated
herein by reference
to
Exhibit
10.1
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
November 26, 2019:

II – Valuation 2017).

2017
Stock
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.2
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended November 26, 2017).
Supplemental
Retirement
Plan
I
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.2
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
28, 2021).
Supplemental
Retirement
Plan
I
(incorporated
herein
by
reference
to
Exhibit
10.6
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended
February 28, 2021).
2022
Stock
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.1
to
the
Company's Current Report on Form 8-K filed September 30, 2022).
Agreements,
dated
November
29,
1989,
by
and
between
the
Company
and
Nestle
S.A.
(incorporated
herein by
reference
to Exhibit
10.15 to
the Company’s
Annual Report
on Form
10-K for the fiscal year ended May 28, 2000).
Protocol
of
Cereal
Partners
Worldwide,
dated
November
21,
1989,
and
Addendum
No.
1
to
Protocol, dated
February 9,
1990, between
the Company
and Qualifying Accounts

Nestle
S.A. (incorporated
herein

96

by
reference

to
Exhibit
10.16
to
the
Company’s
Annual
Report
on
Form
10-K
for
the
fiscal

3.Exhibits:

Exhibit No.

Description

3.1

Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009)year ended May 27, 2001).

3.2

By-laws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed March 8, 2016).

4.1

Indenture, dated as of February 1, 1996, between the Company and U.S. Bank National Association (f/k/a First Trust of Illinois, National Association) (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed February 6, 1996 (File no. 333-00745)).

4.2

First Supplemental Indenture, dated as of May 18, 2009, between the Company and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.2 to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009).

4.3

Description of the Company’s registered securities.

10.1*

2001 Compensation Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 29, 2010).

10.2*

2006 Compensation Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 29, 2010).

10.3*

10.4*

10.5*

2009 Stock Compensation Plan (incorporated herein by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 29, 2010).

2011 Stock Compensation Plan (incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015).

2011 Compensation Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 27, 2011).

10.6*

2016 Compensation Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 27, 2016).

10.7*

Executive Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2010).

10.8*

Separation Pay and Benefits Program for Officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 23, 2020).

10.9*

Supplemental Savings Plan (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

10.10*

Supplemental Retirement Plan (Grandfathered) (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

10.11*

2005 Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

10.12*

Deferred Compensation Plan (Grandfathered) (incorporated herein by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 22, 2009).

10.13*

2005 Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

97

10.26

10.14*

Executive Survivor Income Plan (incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 29, 2005).

10.15*

Supplemental Benefits Trust Agreement, amended and restated as of September 26, 1988, between the Company and Norwest Bank Minnesota, N.A. (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 27, 2011).

10.16*

Supplemental Benefits Trust Agreement, dated September 26, 1988, between the Company and Norwest Bank Minnesota, N.A. (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 27, 2011).

10.17*

Form of Performance Share Unit Award Agreement (incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2018).

10.18*

Form of Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2018).

10.19*

Form of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2018).

10.20*

Deferred Compensation Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 26, 2017).

10.21*

2017 Stock Compensation Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 26, 2017).

10.22*

Supplemental Retirement Plan I (Grandfathered) (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

10.23*

Supplemental Retirement Plan I (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2021).

10.24

Agreements, dated November 29, 1989, by and between the Company and Nestle S.A. (incorporated herein by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).

10.25

Protocol of Cereal Partners Worldwide, dated November 21, 1989, and Addendum No. 1 to Protocol, dated February 9, 1990, between the Company and Nestle S.A. (incorporated herein by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2001).

10.26

Addendum No. 2 to the Protocol of Cereal Partners Worldwide, dated March 16, Addendum

No.
2
to
the
Protocol
of
Cereal
Partners
Worldwide,
dated
March
16,
1993, between the Company and Nestle S.A. (incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 30, 2004).

10.27

Addendum No. 3 to the Protocol of Cereal Partners Worldwide, effective as of March 15, 1993, between the Company and Nestle S.A. (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 28, 2000).

10.28+

Addendum No. 4, effective as August 1, 1998, and Addendum No. 5, effective as April 1, 2000, to the Protocol of Cereal Partners Worldwide between the Company and Nestle S.A. (incorporated herein by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009).

10.29

Addendum No. 10 to the Protocol of Cereal Partners Worldwide, effective January 1, 2010, among the Company, Nestle S.A., and CPW S.A. (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2010).

98

between the Company and Nestle S.A. (incorporated herein by

reference to Exhibit 10.18 to the

10.30+

Addendum No. 11 to the Protocol of Cereal Partners Worldwide, effective July 17, 2012, among the Company, Nestle S.A., and CPW S.A. (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 26, 2012).

10.31

Five-Year Credit Agreement, dated as of April 12, 2021, among the Company, the several financial institutions from time to time party to the agreement, and Bank of America, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10 to the Company’s Current Report on Form 8-K filed April 15, 2021).

21.1

Subsidiaries of the Company.

23.1

Consent of Independent Registered Public Accounting Firm.

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following materials from the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2020 formatted in Inline Extensible Business Reporting Language: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Total Equity and Redeemable Interest; (v) the Consolidated Statements of Cash Flows; (vi) the Notes to Consolidated Financial Statements; and (vii) Schedule II – Valuation of Qualifying Accounts.

104

Cover Page, formatted in Inline Extensible Business Reporting Language and contained in Exhibit 101.

Company’s Annual Report

on Form 10-K for the
fiscal year ended May 30, 2004).
Addendum No. 3 to the Protocol of Cereal Partners Worldwide,
effective as of March 15, 1993,
between the
Company and
Nestle S.A. (incorporated
herein by reference
to Exhibit 10.2
to the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 28, 2000).
+
Addendum
No.
4,
effective
as
August
1,
1998,
and
Addendum
No.
5,
effective
as
April
1,
2000,
to
the
Protocol
of
Cereal
Partners
Worldwide
between
the
Company
and
Nestle
S.A.
(incorporated
herein by
reference
to Exhibit
10.26 to
the Company’s
Annual Report
on Form
10-K for the fiscal year ended May 31, 2009).
Addendum
No.
10
to
the
Protocol
of
Cereal
Partners
Worldwide,
effective
January
1,
2010,
among the
Company,
Nestle S.A.,
and CPW
S.A. (incorporated
herein by
reference to
Exhibit
10.1
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
28, 2010).
Five-Year
Credit Agreement, dated
as of April 12,
2021, as amended
April 3, 2023,
among the
Company,
the several financial
institutions from time
to time party
to the agreement,
and Bank
of America, N.A., as Administrative Agent.
94
Subsidiaries of the Company.
Consent of Independent Registered Public Accounting Firm.
Certification of
Chief Executive
Officer pursuant
to Section
302 of
the Sarbanes-Oxley
Act of
2002.
Certification of
Chief Financial
Officer
pursuant to
Section 302
of the
Sarbanes-Oxley
Act of
2002.
Certification of
Chief Executive
Officer pursuant
to Section
906 of
the Sarbanes-Oxley
Act of
2002.
Certification of
Chief Financial
Officer
pursuant to
Section 906
of the
Sarbanes-Oxley
Act of
2002.
101
The following
materials from
the Company’s
Annual Report
on Form
10-K for
the fiscal
year
ended
May
28,
2023,
formatted
in
Inline
Extensible
Business
Reporting
Language:
(i)
the
Consolidated
Balance
Sheets;
(ii)
the
Consolidated
Statements
of
Earnings;
(iii)
the
Consolidated Statements
of Comprehensive
Income; (iv)
the Consolidated
Statements of
Total
Equity and Redeemable Interest; (v)
the Consolidated Statements of Cash
Flows; (vi) the Notes
to
Consolidated
Financial
Statements;
and
(vii)
Schedule
II
–
Valuation
of
Qualifying
Accounts.
104
Cover
Page,
formatted
in
Inline
Extensible
Business
Reporting
Language
and
contained
in
Exhibit 101.
_____________

*
Management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 15 of Form
10-K.

+
Confidential information has been omitted from the exhibit and filed
separately with the SEC pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain
instruments defining the rights of holders of our long-term debt are
not filed and, in lieu thereof, we agree to furnish copies to the SEC upon request.

ITEM 16 - Form 10-K Summary

Not Applicable.

99

gis202310kp95i0
95
Signatures

Pursuant to
the requirements of
Section 13 or
15(d) of the
Securities Exchange
Act of 1934,
the registrant has
duly caused this
report
to be signed on its behalf by the undersigned, thereunto duly authorized.

GENERAL MILLS, INC.

Date:
June 30, 2021

28, 2023

By
/s/ Mark A. Pallot

Name:
Mark A. Pallot

Title:
Vice President, Chief Accounting
Officer

Pursuant to
the requirements
of the
Securities Exchange
Act of
1934, this
report has
been signed
below by
the following
persons on
behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Jeffrey L Harmening

Jeffrey L. Harmening

Chairman of the Board, Chief Executive Officer, and Director

(Principal Executive Officer)

June 30, 2021

/s/ Kofi A. Bruce

Kofi A. Bruce

Chief Financial Officer

(Principal Financial Officer)

June 30, 2021

/s/ Mark A. Pallot

Mark A. Pallot

Vice President, Chief Accounting Officer

(Principal Accounting Officer)

June 30, 2021

/s/ R. Kerry Clark

R. Kerry Clark

Director

June 30, 2021

/s/ David M. Cordani

David M. Cordani

Director

June 30, 2021

/s/ Roger W. Ferguson Jr.

Roger W. Ferguson Jr.

Director

June 30, 2021

/s/ Maria G. Henry

Maria G. Henry

Director

June 30, 2021

/s/ Jo Ann Jenkins

Jo Ann Jenkins

Director

June 30, 2021

/s/ Elizabeth C. Lempres

Elizabeth C. Lempres

Director

June 30, 2021

/s/ Diane L. Neal

Diane L. Neal

Director

June 30, 2021

/s/ Steve Odland

Steve Odland

Director

June 30, 2021

/s/ Maria A. Sastre

Maria A. Sastre

Director

June 30, 2021

/s/ Eric D. Sprunk

Eric D. Sprunk

Director

June 30, 2021

/s/ Jorge A. Uribe

Jorge A. Uribe

Director

June 30, 2021

100

Signature

General Mills, Inc. and Subsidiaries

 

 

 

 

 

 

Schedule II - Valuation of Qualifying Accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

In Millions

 

2021

 

2020

 

2019

Allowance for doubtful accounts:

 

 

 

 

 

 

Balance at beginning of year

$

33.2

$

28.8

$

28.4

Additions charged to expense

 

25.7

 

25.9

 

23.9

Bad debt write-offs

 

(29.9)

 

(22.9)

 

(22.7)

Other adjustments and reclassifications

 

7.0

 

1.4

 

(0.8)

Balance at end of year

$

36.0

$

33.2

$

28.8

Valuation allowance for deferred tax assets:

 

 

 

 

 

 

Balance at beginning of year

$

214.2

$

213.7

$

176.0

Additions charged to expense

 

9.1

 

4.2

 

(5.2)

Adjustments due to acquisitions, translation of amounts, and other

 

5.9

 

(3.7)

 

42.9

Balance at end of year

$

229.2

$

214.2

$

213.7

Reserve for restructuring and other exit charges:

 

 

 

 

 

 

Balance at beginning of year

$

17.8

$

36.5

$

66.8

Additions charged to expense, including translation amounts

 

143.9

 

(2.5)

 

11.6

Net amounts utilized for restructuring activities

 

(12.9)

 

(16.2)

 

(41.9)

Balance at end of year

$

148.8

$

17.8

$

36.5

Reserve for LIFO valuation:

 

 

 

 

 

 

Balance at beginning of year

$

202.1

$

213.5

$

213.2

Increase (decrease)

 

7.4

 

(11.4)

 

0.3

Balance at end of year

$

209.5

$

202.1

$

213.5

Title

101

Date
/s/ Jeffrey L Harmening
Jeffrey L. Harmening
Chairman of the Board, Chief Executive Officer,
and Director
(Principal Executive Officer)
June 28, 2023
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer
(Principal Financial Officer)
June 28, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
Officer
(Principal Accounting Officer)
June 28, 2023
/s/ R. Kerry Clark
R. Kerry Clark
Director
June 28, 2023
/s/ David M. Cordani
David M. Cordani
Director
June 28, 2023
/s/ C. Kim Goodwin
Director
June 28, 2023
C. Kim Goodwin
/s/ Maria G. Henry
Maria G. Henry
Director
June 28, 2023
/s/ Jo Ann Jenkins
Jo Ann Jenkins
Director
June 28, 2023
/s/ Elizabeth C. Lempres
Elizabeth C. Lempres
Director
June 28, 2023
/s/ Diane L. Neal
Diane L. Neal
Director
June 28, 2023
/s/ Steve Odland
Steve Odland
Director
June 28, 2023
/s/ Maria A. Sastre
Maria A. Sastre
Director
June 28, 2023
/s/ Eric D. Sprunk
Eric D. Sprunk
Director
June 28, 2023
/s/ Jorge A. Uribe
Jorge A. Uribe
Director
June 28, 2023
96
General Mills, Inc. and Subsidiaries
Schedule II - Valuation
of Qualifying Accounts
Fiscal Year
In Millions
2023
2022
2021
Allowance for doubtful accounts:
Balance at beginning of year
$
28.3
$
36.0
$
33.2
Additions charged to expense
29.6
23.0
25.7
Bad debt write-offs
(28.6)
(26.4)
(29.9)
Other adjustments and reclassifications
(2.4)
(4.3)
7.0
Balance at end of year
$
26.9
$
28.3
$
36.0
Valuation
allowance for deferred tax assets:
Balance at beginning of year
$
185.1
$
229.2
$
214.2
Additions charged (benefits) to expense
77.1
(41.6)
9.1
Adjustments due to acquisitions, translation of amounts, and other
(3.0)
(2.5)
5.9
Balance at end of year
$
259.2
$
185.1
$
229.2
Reserve for restructuring and other exit charges:
Balance at beginning of year
$
36.8
$
148.8
$
17.8
Additions charged to expense, including translation amounts
41.7
3.4
143.9
Reserve adjustment
-
(34.0)
-
Net amounts utilized for restructuring activities
(30.8)
(81.4)
(12.9)
Balance at end of year
$
47.7
$
36.8
$
148.8
Reserve for LIFO valuation:
Balance at beginning of year
$
463.4
$
209.5
$
202.1
Increase
137.5
253.9
7.4
Balance at end of year
$
600.9
$
463.4
$
209.5