UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
 
☑
 
QUARTERLY
 
REPORT
 
PURSUANT
 
TO
 
SECTION
 
13
 
OR
 
15(d)
 
OF
 
THE
 
SECURITIES
 
EXCHANGE
 
ACT
 
OF
 
1934
FOR THE QUARTERLY
 
PERIOD ENDED
AUGUST 28, 202227, 2023
☐
 
TRANSITION
 
REPORT
 
PURSUANT
 
TO
 
SECTION
 
13
 
OR
 
15(d)
 
OF
 
THE
 
SECURITIES
 
EXCHANGE
 
ACT
 
OF
 
1934
FOR THE TRANSITION PERIOD FROM
 
TO
 
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
 
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
 
including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $.10 par value
 
GIS
 
New York Stock Exchange
1.000% Notes due 2023
GIS23A
New York Stock Exchange
0.125% Notes due 2025
GIS25AGIS 25A
New York Stock Exchange
0.450% Notes due 2026
 
GIS26GIS 26
 
New York Stock Exchange
1.500% Notes due 2027
 
GIS27GIS 27
 
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
________________
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
 
Securities
Exchange Act of 1934
 
during the preceding 12
 
months (or for such shorter
 
period that the registrant
 
was required to file such
 
reports),
and (2) has been subject to such filing requirements for the past 90 days.
 
Yes
☑
 
No
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
has
 
submitted
 
electronically
 
every
 
Interactive
 
Data
 
File
 
required
 
to
 
be
 
submitted
pursuant to Rule 405
 
405 of Regulation S-T (§
 
S-T232.405 of this chapter) during
 
the preceding 12 months (or
 
months (or for
such shorter period that
 
that the
registrant
was required
to
submit such files).
Yes
 
☑
 
No
☐
Indicate by check mark
 
whether the registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
smaller reporting
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer,”
 
“smaller
 
reporting
company,” and “emerging
 
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
 
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
 
If
 
an
 
emerging
 
growth
 
company,
 
indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
has
 
elected
 
not
 
to
 
use
 
the
 
extended
 
transition
 
period
 
for
complying with any new or revised financial accounting standards provided
 
pursuant to Section 13(a) of the Exchange Act.
 
☐
Indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the Exchange Act).
Yes
☐
 
No
☑
Number of
 
shares of
 
Common Stock
 
outstanding
 
as of
 
September 14,13,
 
2022:2023:
593,535,650581,279,229
 
(excluding
161,077,678173,334,099
 
shares held
 
in the
treasury).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
PART
 
I.
 
FINANCIAL INFORMATION
Item 1.
 
Financial Statements
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net sales
$
4,717.64,904.7
$
4,539.94,717.6
Cost of sales
3,269.93,134.2
2,942.53,269.9
Selling, general, and administrative expenses
791.4839.3
757.4791.4
Divestitures gain, net
(430.9)-
-(430.9)
Restructuring, impairment, and other exit costs (recoveries)
1.2
1.6
(4.3)
Operating profit
1,085.6930.0
844.31,085.6
Benefit plan non-service income
(21.7)(17.0)
(29.6)(21.7)
Interest, net
87.7117.0
95.987.7
Earnings before income taxes and after-tax earnings
 
from
 
 
joint ventures
1,019.6830.0
778.01,019.6
Income taxes
216.1173.2
168.9216.1
After-tax earnings from joint ventures
19.823.5
29.119.8
Net earnings, including earnings attributable to redeemable
and noncontrolling interests
823.3680.3
638.2823.3
Net earnings attributable to redeemable and
noncontrolling interests
3.36.8
11.23.3
Net earnings attributable to General Mills
$
820.0673.5
$
627.0820.0
Earnings per share – basic
$
1.371.15
$
1.031.37
Earnings per share – diluted
$
1.351.14
$
1.021.35
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$
823.3680.3
$
638.2823.3
Other comprehensive (loss) income, (loss), net of tax:
Foreign currency translation
3.8(18.1)
(23.9)3.8
Other fair value changes:
Hedge derivatives
(38.3)(2.3)
1.7(38.3)
Reclassification to earnings:
Foreign currency translation
(7.4)-
-(7.4)
Hedge derivatives
(1.4)0.2
10.6(1.4)
Amortization of losses and prior service costs
14.19.1
8.414.1
Other comprehensive loss, net of tax
(29.2)(11.1)
(3.2)(29.2)
Total comprehensive
 
income
 
794.1669.2
635.0794.1
Comprehensive income (loss) attributable to
redeemable and noncontrolling interests
2.06.9
(23.5)2.0
Comprehensive income attributable to General Mills
$
792.1662.3
$
658.5792.1
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Aug. 28, 202227, 2023
May 29, 202228, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
594.4490.9
$
569.4585.5
Receivables
1,730.41,791.1
1,692.11,683.2
Inventories
2,089.92,228.8
1,867.32,172.0
Prepaid expenses and other current assets
719.3596.2
802.1
Assets held for sale
-
158.9735.7
Total current
 
assets
5,134.05,107.0
5,089.85,176.4
Land, buildings, and equipment
3,358.63,585.2
3,393.83,636.2
Goodwill
14,454.614,522.0
14,378.514,511.2
Other intangible assets
6,979.46,965.7
6,999.96,967.6
Other assets
1,180.61,139.8
1,228.11,160.3
Total assets
$
31,107.231,319.7
$
31,090.131,451.7
LIABILITIES
AND EQUITY
Current liabilities:
Accounts payable
$
3,786.33,705.8
$
3,982.34,194.2
Current portion of long-term debt
2,095.41,174.6
1,674.21,709.1
Notes payable
991.9584.3
811.431.7
Other current liabilities
1,721.91,603.1
1,552.01,600.7
Total current
 
liabilities
8,595.57,067.8
8,019.97,535.7
Long-term debt
8,474.610,523.5
9,134.89,965.1
Deferred income taxes
2,262.42,085.0
2,218.32,110.9
Other liabilities
949.11,128.0
929.11,140.0
Total liabilities
20,281.620,804.3
20,302.120,751.7
Stockholders' equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,146.11,185.7
1,182.91,222.4
Retained earnings
19,027.620,163.6
18,532.619,838.6
Common stock in treasury,
 
at cost, shares of
160.3173.4
 
and
155.7168.0
(7,676.0)(8,874.3)
(7,278.1)(8,410.0)
Accumulated other comprehensive loss
(1,998.4)(2,288.1)
(1,970.5)(2,276.9)
Total stockholders' equity
10,574.810,262.4
10,542.410,449.6
Noncontrolling interests
250.8253.0
245.6250.4
Total equity
10,825.610,515.4
10,788.010,700.0
Total liabilities and equity
$
31,107.231,319.7
$
31,090.131,451.7
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Consolidated Statements of Total
 
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,788.010,700.0
$
9,773.210,788.0
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,182.91,222.4
1,365.51,182.9
Stock compensation plans
9.37.3
9.19.3
Unearned compensation related to stock unit awards
(79.0)(79.4)
(68.3)(79.0)
Earned compensation
32.935.4
33.1
Decrease in redemption value of
redeemable interest
-
5.632.9
Ending balance
1,146.11,185.7
1,345.01,146.1
Retained earnings:
Beginning balance
18,532.619,838.6
17,069.818,532.6
Net earnings attributable to General Mills
820.0673.5
627.0820.0
Cash dividends declared ($
0.540.59
 
and $
0.510.54
 
per share)
(325.0)(348.5)
(312.3)(325.0)
Ending balance
19,027.620,163.6
17,384.519,027.6
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Shares purchased, including $
4.2
million of excise tax
(6.4)
(504.7)
(6.9)
(500.8)
(2.5)
(150.1)
Stock compensation plans
1.0
40.4
2.3
102.9
1.1
46.3
Ending balance
(173.4)
(8,874.3)
(160.3)
(7,676.0)
(148.3)
(6,715.0)
Accumulated other comprehensive loss:
Beginning balance
(1,970.5)(2,276.9)
(2,429.2)(1,970.5)
Comprehensive (loss) incomeloss
(11.2)
(27.9)
31.5
Ending balance
(1,998.4)(2,288.1)
(2,397.7)(1,998.4)
Noncontrolling interests:
Beginning balance
245.6250.4
302.8245.6
Comprehensive income (loss)
6.9
2.0
(8.2)
Distributions to noncontrolling interest holders
(1.9)(4.3)
(1.1)(1.9)
Divestiture
5.1-
-5.1
Ending balance
250.8253.0
293.5250.8
Total equity,
 
ending balance
$
10,825.610,515.4
$
9,985.8
Redeemable interest:
Beginning balance
$
-
$
604.9
Comprehensive loss
-
(15.3)
Decrease in redemption value of
redeemable interest
-
(5.6)
Ending balance
$
-
$
584.010,825.6
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling
interests
$
823.3680.3
$
638.2823.3
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
134.3137.2
145.8134.3
After-tax earnings from joint ventures
(19.8)(23.5)
(29.1)(19.8)
Distributions of earnings from joint ventures
15.515.8
22.615.5
Stock-based compensation
33.535.3
26.833.5
Deferred income taxes
9.2(14.5)
19.69.2
Pension and other postretirement benefit plan contributions
(5.3)(7.4)
(5.4)(5.3)
Pension and other postretirement benefit plan costs
(6.7)(5.3)
(7.2)(6.7)
Divestitures gain, net
(430.9)-
-(430.9)
Restructuring, impairment, and other exit costs
(15.7)2.4
(19.5)(15.7)
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(209.7)(457.4)
(389.5)(209.7)
Other, net
61.115.2
(32.5)61.1
Net cash provided by operating activities
388.8378.1
369.8388.8
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(90.9)(141.7)
(104.0)(90.9)
Acquisition, net of cash acquired
(252.1)-
(1,198.6)(252.1)
Proceeds from divestitures, net of cash divested
610.7
-
Investments in affiliates, net
-
5.7
Proceeds from disposal of land, buildings, and equipment
-
0.3610.7
Other, net
(1.9)6.2
(1.3)(1.9)
Net cash (used) provided (used) by investing activities
265.8(135.5)
(1,297.9)265.8
Cash Flows - Financing Activities
Change in notes payable
188.0551.8
698.7
Issuance of long-term debt
-
582.2
Payment of long-term debt
-
(612.1)188.0
Proceeds from common stock issued on exercised options
65.54.5
7.965.5
Purchases of common stock for treasury
(500.8)(500.5)
(150.1)(500.8)
Dividends paid
(325.0)(348.5)
(312.3)(325.0)
Distributions to noncontrolling and redeemable interest holders
(1.9)(4.3)
(1.1)(1.9)
Other, net
(34.9)(37.2)
(18.2)(34.9)
Net cash (used) providedused by financing activities
(609.1)(334.2)
195.0(609.1)
Effect of exchange rate changes on cash and cash equivalents
(3.0)
(20.5)
(18.1)
(Decrease) Increase (decrease) in cash and cash equivalents
25.0(94.6)
(751.2)25.0
Cash and cash equivalents - beginning of year
569.4585.5
1,505.2569.4
Cash and cash equivalents - end of period
$
594.4490.9
$
754.0594.4
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(91.1)(104.4)
$
(145.3)(91.1)
Inventories
(243.3)(54.3)
(116.1)(243.3)
Prepaid expenses and other current assets
79.5140.9
39.079.5
Accounts payable
(130.4)(443.8)
(214.9)(130.4)
Other current liabilities
175.64.2
47.8175.6
Changes in current assets and liabilities
$
(209.7)(457.4)
$
(389.5)(209.7)
See accompanying notes to consolidated financial statements.
 
 
 
 
9
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
 
FINANCIAL STATEMENTS
(Unaudited)
(1) Background
The accompanying
 
Consolidated Financial
 
Statements of
 
General Mills,
 
Inc. (we,
 
us, our,
 
General Mills,
 
or the Company)
 
have been
prepared in
 
accordance with
 
accounting principles
 
generally accepted
 
in the
 
United States
 
(GAAP) for
 
interim financial
 
information
and with
 
the rules
 
and regulations
 
for reporting
 
on Form
 
10-Q. Accordingly,
 
they do
 
not include
 
certain information
 
and disclosures
required
 
for
 
comprehensive
 
financial
 
statements.
 
In
 
the
 
opinion
 
of
 
management,
 
all
 
adjustments
 
considered
 
necessary
 
for
 
a
 
fair
presentation have
 
been included
 
and are
 
of a
 
normal recurring
 
nature, including
 
the elimination
 
of all
 
intercompany transactions
 
and
any
 
noncontrolling
 
and
redeemable
interests’
 
share
 
of
 
those
 
transactions.
 
Operating
 
results
 
for
 
the
 
fiscal
 
quarter
 
ended
 
August
 
28,27,
2022,2023,
 
are
not
necessarily indicative of the results that may be expected for the fiscal year ending
 
ending May 28, 2023.26, 2024.
 
These
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
Consolidated
 
Financial
 
Statements
 
and
 
footnotes
 
included
 
in
 
our
 
Annual
Report on Form
 
10-K for the fiscal
 
year ended May
 
29, 2022.28, 2023. The
 
accounting policies used
 
in preparing these
 
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
 
Statements in that Form 10-K.10-K with the exception of
new requirements adopted in the first quarter of fiscal 2024.
In the first quarter
of fiscal 2024, we
adopted optional accounting guidance
to ease the burden
in accounting for reference
rate reform.
The new
standard provides
temporary expedients
and exceptions
to existing
accounting requirements
for contract
modifications
and
hedge accounting
related to transitioning
from discontinued
reference rates.
This resulted in
modifying contracts,
where necessary,
to
apply a new reference rate,
primarily SOFR. The adoption of
this accounting guidance did not
have a material impact on our
results of
operations or financial position.
In the
first quarter
of fiscal
2024, we adopted
new requirements
for enhanced
disclosures related
to supplier
financing programs.
The
new standard requires
disclosure of the
key terms of
the program and
a rollforward of
the related obligation
during the annual
period,
including
the
amount
of
obligations
confirmed
and
obligations
subsequently
paid.
We
have
historically
presented
the
key
terms
of
these programs
and the associated
obligation outstanding
(please see Note
6). The
rollforward requirement
is effective
in fiscal 2025.
The adoption did not have a material impact on our financial statements and related
disclosures.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisition and DivestituresDivestiture
During
 
the first
 
quarter
 
of fiscal
 
2023,
 
we
 
acquired
 
TNT Crust,
 
a
 
manufacturer
 
of high-quality
 
frozen pizza
 
crusts
 
for
 
regional
 
and
national pizza
 
chains, foodservice
 
distributors, and
 
retail outlets,
 
for a
 
purchase price
 
of $
253.0
 
million. We
 
financed the
 
transaction
with U.S. commercial paper.
 
We consolidated
 
the TNT Crust business into
 
our Consolidated Balance Sheets
 
Sheets and recorded goodwill
 
of
$
154.3156.7
 
million. The
 
goodwill is
 
included in
 
the North
 
America Foodservice
 
segment and
 
is not
 
deductible for
 
tax purposes.
 
The pro
forma
effects
of
this
acquisition
were
not
material.
 
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
TNT Crust business are reported
in
our North America Foodservice segment on a one-month lag.
During the
 
first quarter
 
of fiscal
 
2023,
 
we completed
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly
 
Salad side
 
dishes business
 
to
Eagle Family Foods Group for $
606.8
 
million and recorded a pre-tax gain of $
442.2
 
million.
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 segment and is deductible for tax purposes. The
pro forma effects of this acquisition were not material.
(3) Restructuring, Impairment, and Other Exit Costs
During the
 
first quarter
 
of fiscal 2023,2024,
 
we did not
 
undertake any
 
new restructuring
 
actions. We
 
recorded $
2.39.8
 
million of restructuring
charges
in
the first
quarter
of fiscal
2024
and
$
2.3
million
of
restructuring
charges
in the
 
first
quarter
of
fiscal
 
2023 and afor
 
$previously
4.1
million net recovery
of restructuring charges
in the first quarter
of fiscal 2022 for
previously announced restructuring actions. We
 
expect these actions to be completed by the end of
fiscal 2024
.2025.
We
 
paid net
$
18.07.4
 
million of
cash in
 
the first quarter of
 
of fiscal 2023 2024
related to
 
restructuring actions previously
 
previously announced.
We
 
paid net
$
15.418.0
 
million of cash in the same period of fiscal 2022.
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:
In Millions
Total
Reserve balance as of May 29, 2022
$
36.8
Fiscal 2023 charges, including foreign currency translation
(0.4)
Utilized in fiscal 2023
(17.1)
Reserve balance as of Aug. 28, 2022
$
19.3
The reserve balance primarily consists of expected severance payments
associated with restructuring actions.
2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
Restructuring and impairment charges and project-related
costs are recorded in our Consolidated Statement of Earnings as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Cost of sales
$
8.6
$
0.7
Restructuring, impairment, and other exit costs
1.2
1.6
Total restructuring
charges
$
9.8
$
2.3
Project-related costs classified in cost of sales
$
0.8
$
-
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:
In Millions
Total
Reserve balance as of May 28, 2023
$
47.7
Fiscal 2024 charges, including foreign currency translation
1.2
Utilized in fiscal 2024
(6.4)
Reserve balance as of Aug. 27, 2023
$
42.5
The reserve balance primarily consists of expected severance payments
associated with restructuring actions.
The charges
 
recognized in
 
the roll forward
 
of our reserves
 
for restructuring
 
and other exit
 
exit costs do not
 
not include items
 
items charged
 
directly
to expense
 
(e.g., asset
 
impairment charges,
 
accelerated depreciation,
 
the gain
 
or loss
 
on the
 
sale of
 
restructured assets,
 
and the
 
write-
off
 
of
 
spare parts)
 
and other
 
periodic
 
exit costs
 
are
 
recognized
 
as incurred,
 
as those
 
items are
 
not reflected
 
in our
 
restructuring
 
and
other exit cost reserves on our Consolidated Balance Sheets.
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
 
 
In Millions
Aug. 28, 202227, 2023
May 29, 202228, 2023
Goodwill
$
14,454.614,522.0
$
14,378.514,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,706.46,715.0
6,725.86,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
402.1386.9
400.3386.3
Less accumulated amortization
(129.1)(136.2)
(126.2)(131.1)
Intangible assets subject to amortization, net
273.0250.7
274.1255.2
Other intangible assets
6,979.46,965.7
6,999.96,967.6
Total
$
21,434.021,487.7
$
21,378.421,478.8
Based on
 
the carrying
 
value of
 
finite-lived intangible
 
assets as
 
of August
 
28, 2022,27, 2023,
 
annual amortization
 
expense for
 
each of
 
the next
five fiscal years is estimated to be approximately $
20
 
million.
11
The changes in the carrying amount of goodwill during the first quarter of fiscal 20232024
 
were as follows:
In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Joint
Ventures
Total
Balance as of May 29, 202228, 2023
$
6,552.96,542.4
$
6,062.8
$
648.8805.6
$
721.6708.4
$
392.4392.0
$
14,378.5
Acquisition
-
-
154.3
-
-
154.3
Divestiture
-
-
-
(0.4)
-
(0.4)14,511.2
Other activity, primarily
 
 
foreign currency translation
(3.0)0.1
-
-(0.1)
(46.6)8.2
(28.2)2.6
(77.8)10.8
Balance as of Aug. 28, 202227, 2023
$
6,549.96,542.5
$
6,062.8
$
803.1805.5
$
674.6716.6
$
364.2394.6
$
14,454.614,522.0
The changes in the carrying amount of other intangible assets during the first quarter
 
of fiscal 20232024 were as follows:
In Millions
Total
Balance as of May 29, 202228, 2023
$
6,999.96,967.6
Acquisition
3.8
Other activity, primarily
Amortization, net of foreign currency translation
(24.3)(1.9)
Balance as of Aug. 28, 202227, 2023
$
6,979.46,965.7
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2022,2023,
 
and
 
we
 
determined
 
there
 
was
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
carrying values,
except for
the
Uncle Toby’s
 
brand intangible asset.
The excess fair value as of the fiscal 2022 test date of the
Uncle Toby’s
 
brand intangible asset is as follows:
asset. In Millions
Carrying Valueaddition,
 
ofwhile having
Intangible Asset
Excess Fair Valuesignificant coverage
 
as of
Fiscal 2022 Test
Date
Uncle Toby's
$
55.0
7
%
In
addition,
while
having
significant
coverage
as
of
our
fiscal
2022 2023
 
assessment
date,
the
Progresso
,
Green
Giant
,
 
and
EPIC
 
brand
intangible assets had
risk of decreasing coverage.
We
 
will continue to
monitor these businesses for potential impairment.
11
(5) Inventories
The components of inventories were as follows:
In Millions
Aug. 28, 202227, 2023
May 29, 202228, 2023
Finished goods
$
2,093.0
$
2,066.9
Raw materials and packaging
$553.5
579.6
$
532.0
Finished goods
1,887.0
1,634.7572.2
Grain
122.5130.1
164.0133.8
Excess of FIFO over LIFO cost
(499.2)(547.8)
(463.4)(600.9)
Total
$
2,089.92,228.8
$
1,867.32,172.0
(6) Risk Management Activities
 
Many commodities we
 
use in the
 
production and distribution
 
of our products
 
are exposed to
 
market price risks.
 
We
 
utilize derivatives
to manage price risk for our principal
 
ingredients and energy costs, including
 
grains (oats, wheat, and corn), oils
 
(principally soybean),
dairy products, natural
 
gas, and diesel fuel.
 
Our primary objective
 
when entering into
 
these derivative contracts
 
is to achieve
 
certainty
with
 
regard
 
to
 
the
 
future
 
price
 
of
 
commodities
 
purchased
 
for
 
use
 
in
 
our
 
supply
 
chain.
 
We
 
manage
 
our
 
exposures
 
through
 
a
combination of purchase orders, long-term
 
contracts with suppliers, exchange-traded
 
futures and options, and over-the-counter
 
options
and swaps.
 
We
 
offset
 
our exposures
 
based on
 
current and
 
projected market
 
conditions and
 
generally seek
 
to acquire
 
the inputs
 
at as
close as possible to or below our planned cost.
We
 
use derivatives
 
to manage
 
our exposure
 
to changes
 
in commodity
 
prices. We
 
do not
 
perform the
 
assessments required
 
to achieve
hedge
 
accounting
 
for
 
commodity
 
derivative
 
positions.
 
Accordingly,
 
the
 
changes
 
in
 
the
 
values
 
of
 
these
 
derivatives
 
are
 
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
 
not meet the
 
criteria for
 
cash flow hedge
 
accounting, we believe
 
that these instruments
 
are effective
 
in achieving our
objective of providing certainty
 
in the future price of commodities purchased
 
for use in our supply chain.
 
Accordingly, for
 
purposes of
measuring
 
segment
 
operating
 
performance,
 
these
 
gains
 
and
 
losses
 
are
 
reported
 
in
 
unallocated
 
corporate
 
items
 
outside
 
of
 
segment
operating results
 
until such time
 
time that
the exposure
 
we are manag
 
managinging affects
 
earnings. At
 
that time, we
 
we reclassify the
 
the gain or
 
or loss
from
unallocated
 
corporate
 
items
 
to
 
segment
 
operating
 
profit,
 
allowing
 
our
 
operating
 
segments
 
to
 
realize
 
the
 
economic
 
effects
 
of
 
the
derivative without experiencing any resulting mark-to-market volatility,
 
which remains in unallocated corporate items.
 
12
Unallocated corporate items for the quarters ended August 28, 2022,27, 2023, and
 
August 29, 2021,28, 2022, included:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Aug. 29, 2021
Net gain (loss) gain on mark-to-market valuation of certain
 
 
commodity positions
$
(72.3)28.4
$
30.4(72.3)
Net gainloss (gain) on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
(43.0)3.2
(34.7)(43.0)
Net mark-to-market revaluation of certain grain inventories
(59.4)13.3
28.4(59.4)
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
(174.7)44.9
$
24.1(174.7)
As of August 28, 2022,27, 2023,
 
the net notional value of commodity
 
derivatives was $
432.6278.2
 
million, of which $
152.4113.2
 
million related to energy
inputs and
 
$
280.2165.0
 
million related
 
to agricultural
 
inputs. These
 
contracts relate
 
to inputs
 
that generally
 
will be
 
utilized within
 
the next
12
 
months.
We
also have
net investments
in foreign
subsidiaries that
are denominated
in euros.
As of
August 27,
2023, we
hedged a
portion
of
these investments with €
2,954.1
million of euro-denominated bonds.
The
 
fair
 
values
 
of
 
the
 
derivative
 
positions
 
used
 
in
 
our
 
risk
 
management
 
activities
 
and
 
other
 
assets
 
recorded
 
at
 
fair
 
value
 
were
 
not
material as of
 
of August
28, 2022 27, 2023,
 
and were Level
 
Level 1
or Level
 
2 assets and
 
and liabilities
in the
 
fair value
 
hierarchy.
 
We
 
did not
significantly
change our valuation techniques from prior periods.
 
We
 
offer
 
certain
 
suppliers
 
access
 
to
 
third
partythird-party
 
services
 
that
 
allow
 
them
 
to
 
view
 
our
 
scheduled
 
payments
 
online.
 
The
 
third-party
services also
 
allow suppliers
 
to finance
 
advances on
 
our scheduled
 
payments at
 
the sole
 
discretion of
 
the supplier
 
and the third
 
party.
We
 
have no
 
economic interest
 
in these
 
financing arrangements
 
and no
 
direct relationship
 
with the
 
suppliers, the
 
third parties,
 
or any
financial
institutions
 
concerning
these
 
services.services, including
not providing
any form
of guarantee
and not
pledging assets
as security
to
the third
parties or
financial institutions.
 
All
of
 
our
accounts
 
payable
remain
 
as
obligations
 
to
our
 
suppliers
as
 
stated
in
 
our supplier
supplier
agreements.
As
of
August
28,
2022,
$
1,413.3
million
of
our
total
accounts
payable
were
payable
to
suppliers
who
utilize
these third-party services. As
 
of August 29, 2021,
27, 2023,
$
1,312.81,362.8
 
million of
our total accounts
 
accounts payable
were payable
to suppliers
 
who utilize
these third-
party services.
As of
May 28,
2023, $
1,430.1
million of
our total
accounts payable
were payable
to suppliers
who utilize
these third-partythird-
party services.
12
(7) Debt
The components of notes payable were as follows:
 
 
In Millions
Aug. 28, 202227, 2023
May 29, 202228, 2023
U.S. commercial paper
$
839.8529.2
$
694.8-
Financial institutions
152.155.1
116.631.7
Total
$
991.9584.3
$
811.431.7
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe. We also
have committed and asset-backed credit lines that support our foreign
operations.
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of August 28, 2022:27, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
0.2-
Total committed
 
and uncommitted credit facilities
$
3.3
$
0.2-
The
 
credit
 
facilities
 
contain
 
covenants,
 
including
 
a
 
requirement
 
to
 
maintain
 
a
 
fixed
 
charge
 
coverage
 
ratio
 
of
 
at
 
least
2.5
 
times.
We
were in compliance with all credit facility covenants as of August 28, 2022.27, 2023.
Long-Term
 
Debt
 
The fair values
 
and carrying
 
amounts of long-term
 
debt, including
 
the current portion,
 
were $
10,129.110,811.1
 
million and $
10,570.011,698.1
 
million,
respectively,
 
as
 
of
 
August
 
28,27,
 
2022.2023.
 
The
 
fair
 
value
 
of
 
long-term
 
debt
 
was
 
estimated
 
using
 
market
 
quotations
 
and
 
discounted
 
cash
13
flows based
 
on our
 
current incremental
 
borrowing rates
 
for similar
 
types of
 
instruments. Long
 
-term debt
 
is a
 
Level 2
 
liability in
 
the
fair value hierarchy.
 
In the first
 
quarter of fiscal
2024, we issued
€
500.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to
repay €
500.0
million of floating-rate notes due
July 27, 2023
.
In the fourth quarter
 
of fiscal 2023, we
issued €
250.0
million of floating-rate notes
due
November 10, 2023
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
May 16, 2023
.
In the
fourth quarter
 
of fiscal
 
2022,2023, we
 
issued €
750.0
million of
3.907
percent fixed-rate
notes due
April 13, 2029
. We
used the
net
proceeds to repay €
500.0
million of
1.0
percent fixed-rate notes due
April 27, 2023
, and €
250.0
million of floating-rate notes due
May
16, 2023
.
In the fourth
quarter of fiscal
2023, we
issued $
1,000.0
million of
4.95
percent fixed-rate
notes due
March 29, 2033
. We
used the net
proceeds to repay our outstanding commercial paper and for general
corporate purposes.
In the second
quarter of fiscal
2023, we repaidissued
 
$
850.0500.0
 
million
of
3.75.241
 
percent
fixed
rate fixed-rate notes
 
due
October 17, 2023November 18, 2025
, using. We
 
proceedsused the
from the issuancenet proceeds to repay a portion of our outstanding commercial paper.paper and for general
corporate purposes.
In the fourth
second quarter
of fiscal 2022,
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
. We used the net
proceeds for general corporate purposes.
In the
second quarter
of fiscal 2022, we issued €
500.0
 
million of
0.125
2023,
 
percent fixed-rate notes due
November 15, 2025
. We used the
net proceeds to repay a portion of our €
500.0
we repaid
 
million of
0.0
percent fixed-rate notes due
November 16, 2021
, and for general corporate
purposes.
In the second quarter of fiscal 2022, we issued €
250.0
million of floating-rate notes due
May 16, 2023
. 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 2022, we issued $
500.0
 
million of
2.252.6
 
percent fixed-rate
notes due
October 14, 203112, 2022
. We used the net , using
proceeds
together with proceeds from the issuance of commercial paper,
to repay $
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.paper.
Certain
 
of
 
our
 
long-term
 
debt
 
agreements
 
contain
 
restrictive
 
covenants.
As of August 28, 2022,27, 2023, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most recent
mark-to-market valuation
(currently $
251.5
million). The
floating preferred return
rate on GMC’s
Class A Interests is
the
sum
of
the
three-month Term SOFR
plus
186
basis
points.
The
preferred
return
rate
is
adjusted
every
three years
through
a
negotiated agreement with the Class A Interest holder or through
a remarketing auction.
Our noncontrolling interests contain restrictive covenants. As of August 27, 2023, we were in compliance with all of these covenants.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
(8) Redeemable and Noncontrolling Interests
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the
most
recent
mark-to-market
valuation
(currently
$
251.5
million).
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.
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
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.
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.
A subsidiary of
Yoplait
SAS had an exclusive
milk supply agreement
for its European operations
with Sodiaal through
November 28,
2021. Net purchases totaled $
50.1
million for the quarter ended August 29, 2021.
Our noncontrolling interests contain restrictive covenants. As of August 28, 2022, we were in compliance with all of these covenants.
14
(9) Stockholders’ Equity
 
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
General Mills
Noncontrolling
Interests
 
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net
Net earnings, including earnings
attributable to redeemable and
noncontrolling interests
 
$
673.5
$
6.8
$
820.0
$
3.3
$
627.0
$
3.0
$
8.2
Other comprehensive (loss) income:
Foreign currency translation
$
(22.0)
$
3.8
(18.2)
0.1
$
(48.0)
$
53.1
5.1
(1.3)
$
(11.9)
$
22.7
10.8
(11.2)
(23.5)
Other fair value changes:
Hedge derivatives
(2.7)
0.4
(2.3)
-
(49.8)
11.5
(38.3)
-
2.8
(1.0)
1.8
-
(0.1)
Reclassification to earnings:
Foreign currency translation (a)
-
-
-
-
(7.4)
-
(7.4)
-
-
-
-
-
-
Hedge derivatives (b)(a)
(1.3)
1.5
0.2
-
(1.9)
0.5
(1.4)
-
12.0
(1.5)
10.5
-
0.1
Amortization of losses and
 
prior service costs (c)(b)
11.5
(2.4)
9.1
-
18.2
(4.1)
14.1
-
10.8
(2.4)
8.4
-
-
Other comprehensive (loss) income
$
(14.5)
$
3.3
(11.2)
0.1
$
(88.9)
$
61.0
(27.9)
(1.3)
$
13.7Total comprehensive income
$
17.8662.3
31.5$
(11.2)6.9
(23.5)
Total comprehensive income (loss)$
$
792.1
$
2.0
$
$
658.5
$
(8.2)
$
(15.3)
(a)
Gain reclassified from AOCI into earnings is reported in the divestitures gain, net.
(b)
 
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(c)(b)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,
 
were as follows:
 
In Millions
Aug. 28, 202227, 2023
May 29, 202228, 2023
Foreign currency translation adjustments
$
(593.0)(726.8)
$
(590.7)(708.6)
Unrealized (loss) gain from hedge derivatives
(16.4)3.8
23.35.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,495.2)(1,655.7)
(1,513.4)(1,670.6)
Prior service credits
106.290.6
110.396.4
Accumulated other comprehensive loss
$
(1,998.4)(2,288.1)
$
(1,970.5)(2,276.9)
(10) Stock Plans
We
 
have various
 
stock-based compensation
 
programs under
 
which awards,
 
including stock
 
options, restricted
 
stock, restricted
 
stock
units, and performance
 
awards, may be granted
 
to employees and non-employee
 
directors. These programs
 
and related accounting
 
are
described in Note
12 to the
Consolidated Financial
Statements included
in our Annual
Report on Form
10-K for the
fiscal year ended
May 28, 2023.
Compensation expense related to stock-based payments recognized
in the Consolidated Statements of Earnings was as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Compensation expense related to stock-based payments
$
35.3
$
33.5
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings
were as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
Windfall tax benefits from stock-based payments
$
8.4
$
12.8
As
of
August
27,
2023,
unrecognized
compensation
expense
related
to
non-vested
stock
options,
restricted
stock
units,
and
performance share units was $
172.2
million. This expense will be recognized over
25
months, on average.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1415
described in Note
12 to the
Consolidated Financial
Statements included
in our Annual
Report on Form
10-K for the
fiscal year ended
May 29, 2022.
Compensation expense related to stock-based payments recognized
in the Consolidated Statements of Earnings was as follows:
Quarter Ended
In Millions
Aug. 28, 2022
Aug. 29, 2021
Compensation expense related to stock-based payments
$
33.5
$
33.6
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
In Millions
Aug. 28, 2022
Aug. 29, 2021
Windfall tax benefits from stock-based payments
$
12.8
$
4.7
As
of
August
28,
2022,
unrecognized
compensation
expense
related
to
non-vested
stock
options,
restricted
stock
units,
and
performance share units was $
166.8
million. This expense will be recognized over
26
months, on average.
Net cash proceeds from the exercise of stock options
 
less shares used for withholding taxes and the intrinsic
 
value of options exercised
were as follows:
 
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net cash proceeds
$
65.54.5
$
7.965.5
Intrinsic value of options exercised
$
32.02.1
$
5.132.0
We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-
pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and
dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,
excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We
also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially
those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting
the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 29, 2022.28, 2023.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Estimated fair values of stock options granted
 
$
14.1617.47
$
8.7714.16
Assumptions:
Risk-free interest rate
3.34.0
%
1.53.3
%
Expected term
8.5
years
8.5
years
Expected volatility
20.921.4
%
20.220.9
%
Dividend yield
3.12.8
%
3.43.1
%
The total grant date fair value of restricted stock unit awards that vested during
 
the period was as follows:
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Total grant date fair
 
value
$
82.0104.8
$
69.582.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
16
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
 
Quarter Ended
In Millions, Except per Share Data
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net earnings attributable to General Mills
$
820.0673.5
$
627.0820.0
Average number
 
number of common shares - basic EPS
600.2586.3
610.4600.2
Incremental share effect from: (a)
Stock options
3.32.8
2.13.3
Restricted stock units and performance share units
2.3
2.5
2.3
Average number
 
number of common shares - diluted EPS
606.0591.4
614.8606.0
Earnings per share – basic
$
1.371.15
$
1.031.37
Earnings per share – diluted
$
1.351.14
$
1.021.35
(a)
 
Incremental
 
shares
 
from
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
 
performance
 
share
 
units
 
are
 
computed
 
by
 
the
 
treasury
 
stock
method.
 
Stock
 
options,
 
restricted
 
stock
 
units,
 
and
 
performance
 
share units
 
excluded
 
from
 
our
 
computation
 
of
 
diluted
 
EPS
 
because
 
they
were not dilutive were as follows
:
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
0.81.6
4.60.8
(12) Share Repurchases
Share repurchases were as follows:
 
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Shares of common stock
6.96.4
2.56.9
Aggregate purchase price
$
500.8504.7
$
150.1500.8
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net cash interest payments
$
55.283.9
$
69.955.2
Net income tax payments
$
9.013.7
$
33.19.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
17
(14) Retirement and Postemployment Benefits
Components of net periodic benefit expense (income) are as follows:
 
Defined Benefit
Pension Plans
Other Postretirement
 
Benefit Plans
Postemployment
Benefit Plans
Quarter Ended
Quarter Ended
Quarter Ended
In Millions
Aug. 28,27,
2022
Aug. 29,
20212023
Aug. 28,
2022
Aug. 29,27,
20212023
Aug. 28,
2022
Aug. 29,27,
20212023
Aug. 28,
2022
Service cost
$
14.2
$
17.6
$
23.71.2
$
1.4
$
1.91.8
$
2.1
$
1.8
Interest cost
74.2
64.6
46.35.3
4.5
3.21.0
0.8
0.4
Expected return on plan assets
(102.9)
(105.0)
(102.8)(8.7)
(7.8)
(6.7)
-
-
Amortization of losses (gains)
21.5
28.3
34.9(5.1)
(4.9)
(2.7)-
0.1
0.8
Amortization of prior service costs (credits)
0.4
0.20.4
(5.4)
(5.8)
(5.2)
0.1
0.1
Other adjustments
-
-
-
-
3.02.6
1.9
Curtailment gain
-
(14.8)
-
(5.5)
-
-3.0
Net expense (income)
$
7.4
$
5.9
$
(12.5)(12.7)
$
(12.6)
$
(15.0)5.5
$
6.1
$
5.0
(15) Income Taxes
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
the
 
Inflation
 
Reduction
 
Act
 
(IRA)
 
was
 
signed
 
into
 
law.
 
The
 
IRA
 
introduces
 
a
 
Corporate
Alternative Minimum Tax
 
beginning in our fiscal 2024
 
and an excise tax on the
 
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.
We
will
continue
to
monitor
and
assess
the
impact
the
IRA
may
have
on
our
business
and
financial
results.
During fiscal
2022, the
Brazilian tax
authority,
Secretaria da
Receita Federal
do Brasil
(RFB), concluded
audits of
on our 2012
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. We
believe we have meritorious defenses and intend to continue to contest the disallowance
for all years.liquidity.
(16) Contingencies
During
 
fiscal
 
2020,
 
we
 
received
 
notice
 
from
 
the
 
tax
 
authorities of
 
the
 
State of
 
São
 
Paulo,
 
Brazil
 
regarding
 
our
 
compliance
 
with
 
its
state sales tax requirements.
 
As a result, we
 
have been assessed additional
 
state sales taxes, interest,
 
and penalties. We
 
believe that we
have meritorious defenses against this claim and will vigorously defend
 
our position. As of August 28, 2022,27, 2023, we are unable to estimate
any possible loss and have not recorded a loss contingency for this matter.
(17) Business Segment and Geographic Information
We
 
operate
 
in
 
the
 
packaged
 
foods
 
industry.
 
In
fiscal
2022,
we
completed
a
new
organization
structure
to
streamline
our
global
operations.
This
global
reorganization
required
us
to
reevaluate
ourOur
 
operating
 
segments.segments
 
Underare
 
ouras
 
newfollows:
 
organizationNorth
 
structure,America
 
ourRetail,
International,
chief operating decision maker assesses performance
Pet,
 
and makes decisions about resources to be allocated to
our operating segments as
follows: North America Retail; International; Pet; and North America
Foodservice.
We
have restated
our net
sales by segment
and segment
operating profit
to reflect our
previously reported
operating segment
change.
These
segment
changes
had
no
effect
on
previously
reported
consolidated
net
sales,
operating
profit,
net
earnings
attributable
to
General Mills, or earnings per share.
 
Our North America Retail
 
operating segment reflects business
 
with a wide variety of
 
grocery stores, mass merchandisers, membership
stores,
 
natural
 
food
 
chains,
 
drug,
 
dollar
 
and
 
discount
 
chains,
 
convenience
 
stores,
 
and
 
e-commerce
 
grocery
 
providers.
 
Our
 
product
categories
 
in
 
this
 
business
 
segment
 
include
 
ready-to-eat
 
cereals,
 
refrigerated
 
yogurt,
 
soup,
 
meal
 
kits,
 
refrigerated
 
and
 
frozen
 
dough
products,
 
dessert
 
and
 
baking
 
mixes,
 
frozen
 
pizza
 
and
 
pizza
 
snacks,
 
snack
 
bars,
 
fruit
 
snacks,
 
savory
 
snacks,
 
and
 
a
 
wide
 
variety
 
of
organic products
including ready-to-eat
cereal, frozen
 
and shelf-stable vegetables,
meal kits, fruit
snacks, and snack
bars, and
refrigerated
yogurt. bars.
Our
 
International
 
operating
 
segment
 
consists
 
of
 
retail
 
and
 
foodservice
 
businesses
 
outside
 
of
 
the
 
United
 
States
 
and
 
Canada.
 
Our
product categories include super-premium
 
ice cream and frozen desserts, meal kits, salty snacks,
 
snack bars, dessert and baking mixes,
and
 
shelf
 
stable
 
vegetables.
 
We
 
also
 
sell
 
super-premium
 
ice
 
cream
 
and
 
frozen
 
desserts
 
directly
 
to
 
consumers
 
through
 
owned
 
retail
17
shops. Our
 
International segment
 
also includes
 
products manufactured
 
in the United
 
States for
 
export, mainly
 
to Caribbean
 
and Latin
American markets, as well as
 
products we manufacture
 
for sale to our international
 
joint ventures. Revenues from
 
export activities are
reported in the region or country where the end customer is located.
Our Pet operating segment includes
 
pet food products sold primarily in the
 
United States and Canada in national
 
pet superstore chains,
e-commerce retailers,
 
grocery stores,
 
regional pet
 
store chains,
 
mass merchandisers,
 
and veterinary
 
clinics and
 
hospitals. Our
 
product
categories include dog and cat food (dry
 
foods, wet foods, and treats) made with
 
whole meats, fruits, vegetables and other
 
high-quality
natural
 
ingredients.
 
Our
 
tailored
 
pet
 
product
 
offerings
 
address
 
specific
 
dietary,
 
lifestyle,
 
and
 
life-stage
 
needs
 
and
 
span
 
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
 
functions,
 
and textures and cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
we sell are branded
 
branded to the consumer
 
consumer
18
and nearly
 
all are
 
branded to
 
our customers.
 
We
 
sell to
 
distributors and
 
operators in
 
many customer
 
channels including
 
foodservice,
vending, and supermarket bakeries.
Operating profit
 
for these
 
segments excludes
 
unallocated corporate
 
items, gain
 
or loss
 
on divestitures,
 
and restructuring,
 
impairment,
and
 
other
 
exit
 
costs.
 
Unallocated
 
corporate
 
items
 
include
 
corporate
 
overhead
 
expenses,
 
variances
 
to
 
planned
 
North
 
American
employee
 
benefits
 
and
 
incentives,
 
certain
 
charitable
 
contributions,
 
restructuring
 
initiative
 
project-related
 
costs,
 
gains
 
and
 
losses
 
on
corporate investments,
 
and other
 
items that
 
are not
 
part of
 
our measurement
 
of segment
 
operating performance.
 
These include
 
gains
and
 
losses
 
arising
 
from
 
the
 
revaluation
 
of
 
certain
 
grain
 
inventories
 
and
 
gains
 
and
 
losses
 
from
 
mark-to-market
 
valuation
 
of
 
certain
commodity positions
 
until passed back
 
to our operating
 
segments. These items
 
affecting operating
 
profit are centrally
 
managed at
 
the
corporate
 
level
 
and
 
are
 
excluded
 
from
 
the
 
measure
 
of
 
segment
 
profitability
 
reviewed
 
by
 
executive
 
management.
 
Under
 
our
 
supply
chain organization, our manufacturing,
 
warehouse, and distribution activities are substantially integrated
 
across our operations in order
to maximize
 
efficiency
 
and productivity.
 
As a
 
result, fixed
 
assets and
 
depreciation and
 
amortization expenses
 
are neither
 
maintained
nor available by operating segment.
Our operating segment results were as follows:
 
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Net sales:
North America Retail
$
2,988.83,073.0
$
2,710.62,988.8
International
652.5715.8
930.6652.5
Pet
579.9
488.0579.9
North America Foodservice
496.4536.0
410.7496.4
Total
$
4,717.64,904.7
$
4,539.94,717.6
Operating profit:
North America Retail
$
777.8798.2
$
648.6777.8
International
34.850.0
60.634.8
Pet
123.1111.2
115.2123.1
North America Foodservice
53.659.1
71.853.6
Total segment operating
 
profit
$
989.31,018.5
$
896.2989.3
Unallocated corporate items
333.087.3
56.2333.0
Divestitures gain, net
(430.9)-
-(430.9)
Restructuring, impairment, and other exit costs (recoveries)
1.2
1.6
(4.3)
Operating profit
$
1,085.6930.0
$
844.31,085.6
Net sales for our North America Retail operating units were as follows:
Quarter Ended
In Millions
Aug. 27, 2023
Aug. 28, 2022
U.S. Snacks
$
954.5
$
887.2
U.S. Meals & Baking Solutions
941.9
949.2
U.S. Morning Foods
927.8
904.0
Canada
248.8
248.4
Total
$
3,073.0
$
2,988.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
Net sales for our North America Retail operating units were as follows:
Quarter Ended
In Millions
Aug. 28, 2022
Aug. 29, 2021
U.S. Meals & Baking Solutions
$
949.2
$
861.5
U.S. Morning Foods
904.0
829.7
U.S. Snacks
887.2
780.1
Canada
248.4
239.3
Total
$
2,988.8
$
2,710.6
19
Net sales by class of similar products were as follows:
 
Quarter Ended
In Millions
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Snacks
$
1,068.41,136.7
$
954.51,068.4
Cereal
814.7817.9
731.0814.7
Convenient meals
679.2665.5
695.5679.2
Pet
579.9
580.8
488.0Dough
534.9
464.8
Baking mixes and ingredients
473.5466.5
396.3
Dough
464.8
405.2473.5
Yogurt
346.0368.4
505.9346.0
Super-premium ice cream
183.5224.0
244.8183.5
Other
106.7110.9
118.7106.7
Total
$
4,717.64,904.7
$
4,539.94,717.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
20
Item 2.
 
Management’s Discussion and Analysis
 
of Financial Condition and Results of Operations.
INTRODUCTION
This
 
Management’s
 
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
 
Operations
 
(MD&A)
 
should
 
be
 
read
 
in
conjunction
 
with
 
the
 
MD&A
 
included
 
in
 
our
 
Annual
 
Report
 
on
 
Form
 
10-K
 
for
 
the
 
fiscal
 
year
 
ended
 
May
 
29,28,
 
20222023
 
for
 
important
background
 
regarding,
 
among other
 
things, our
 
key business
 
drivers.
 
Significant
 
trademarks and
 
service marks
 
used in
 
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
 
“Glossary” section below.
We
expect the largest
 
the largest factors impacting our performance
 
performance in fiscal 2023 2024
will be the economic
 
the economic health of consumers, the
 
inflationary costmoderating rate
environment, and the frequency andof input
 
severity of disruptions in the supply
chain. We
anticipate double-digit input cost inflation
 
in fiscal
2023,
 
and
 
arethe increasing
 
addressingstability of
 
inflationthe supply
 
headwindschain environment
 
with
Holistic
Margin
Management
(HMM)
cost
savings
and
net
price
realization
generated
through
our
Strategic
Revenue
Management
(SRM)
capability..
 
We
 
are
planning
for
volume
elasticitiesexpect
 
to drive
 
increaseorganic
 
butnet sales
remain below historical levels and supply chain disruptions to slowly moderategrowth
 
in
fiscal 20232024
through strong
marketing, innovation,
in-store support,
and net
price realization
generated through
our Strategic
Revenue
Management (SRM)
capability,
most of
which will
be carried
over from
SRM actions
taken in
fiscal 2023.
We
anticipate input
cost
inflation of
approximately 5
percent in
fiscal 2024
and expect
to generate
higher levels
of Holistic
Margin Management
(HMM) cost
savings compared to fiscal 2022 levels.2023.
CONSOLIDATED
 
RESULTS
 
OF OPERATIONS
First Quarter Results
In the first
quarter of fiscal
 
2023,2024, net sales
and organic net
sales increased 4
 
percent and organic net salescompared to
 
increased 10 percent compared
to the same period
last year.
 
Operating
profit increased 29decreased
14 percent
to $1,086$930
 
million, primarily
driven by favorable
net price realization and mix and
 
a net
gain
 
gain on
 
divestitures
 
partiallyin fiscal
 
offset
by
2023, higher
 
input
costs,
an
unfavorable
change
to
the
mark-to-market
valuation
of
certain
commodity
positions
 
and
 
grainan
inventories,
volume
declines,
an
increase
in
certain
selling,
 
general
and
administrative
 
(SG&A) expenses, including
increased media and
advertising expenses, partially
offset
expenses,by favorable net price
realization and mix
 
and a favorable change
 
lowerto the mark-to-market valuation
 
netof certain commodity positions
 
corporateand
grain
 
investment
activity.inventories.
 
Operating
 
profit
 
margin
 
of
 
2319.0
 
percent
 
increaseddecreased
 
440400
 
basis
 
points.
 
Adjusted
operating
operating
profit
 
of $881
$899
 
million
increased 2 percent on
 
8 percenta constant-currency basis, primarily
 
on a
constant-currency basis,
primarily driven
by favorable
net price
 
realization
and mix,
partially offset
 
by higher
input costs, an
increase in SG&A
expenses, including
increased media and
advertising expenses, and
a decrease in
contributions from
volume
 
declines and
an increase in
certain SG&A expenses.growth.
 
Adjusted
operating
 
profit
margin increased
 
70 margin
decreased
40
basis
points
 
to 18.7
18.3
percent.
 
Diluted
earnings
 
per
share
of
 
$1.35 increased 321.14
decreased 16 percent in the first
 
first quarter of
fiscal
2023.
2024. Adjusted diluted
 
earnings per share of $1.09 decreased 1
 
share ofpercent on a constant-
currency basis compared
 
$1.11to the first quarter
 
increased 13 percentof fiscal 2023.
 
on a
constant-currency basis
compared to
the first
quarter of
fiscal 2022. See the “Non-GAAP
Measures” section below
for a description
 
of our use
of measures not defined by GAAP.
A summary of our consolidated financial results for the first quarter of
 
fiscal 20232024 follows:
 
Quarter Ended Aug. 28, 202227, 2023
In millions,
except per share
Quarter Ended
Aug. 28, 202227, 2023 vs.
Aug. 29, 202128, 2022
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
 
$
4,717.64,904.7
4
%
Operating profit
1,085.6930.0
29(14)
%
23.019.0
%
Net earnings attributable to General Mills
820.0673.5
31(18)
%
Diluted earnings per share
$
1.351.14
32(16)
%
Organic net sales growth rate (a)
104
%
Adjusted operating profit (a)
881.2899.0
82
%
18.718.3
%
82
%
Adjusted diluted earnings per share (a)
$
1.111.09
12(2)
%
13(1)
%
(a)
 
See the "Non-GAAP Measures" section below for our use of measures not defined by
GAAP.
Consolidated
net sales
 
were as follows:
 
Quarter Ended
Aug. 27, 2023
Aug. 27, 2023 vs.
Aug. 28, 2022
Aug. 28, 2022 vs.
Aug. 29, 2021
Aug. 29, 2021
Net sales (in millions)
$
4,717.64,904.7
4%
$
4,539.94,717.6
Contributions from volume growth (a)
(12)(2)
pts
Net price realization and mix
176
pts
Foreign currency exchange
(1)
ptFlat
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Net sales
in the
first quarter
of fiscal
2023
increased 4
percent compared
to the
same period
in fiscal
2022,
driven by
favorable
net
price
realization
and
mix,
partially
offset
by
a
decrease
in
contributions
from
volume
growth
and
unfavorable
foreign
currency
exchange.
 
 
 
 
 
 
 
 
 
 
 
 
20
21
Net sales
in the
first quarter
of fiscal
2024
increased 4
percent compared
to the
same period
in fiscal
2023,
driven by
favorable
net
price realization and mix, partially offset by a decrease in
contributions from volume growth.
Components of organic net sales growth are shown in the following
 
table:
 
 
Quarter Ended Aug. 28, 202227, 2023 vs.
Quarter Ended Aug. 29, 202128, 2022
Contributions from organic volume growth (a)
(5)(2)
pts
Organic net price realization and mix
157
pts
Organic net sales growth
104
pts
Foreign currency exchange
(1)
ptFlat
Acquisitions and divestitures
(5)
ptsFlat
Net sales growth
4
pts
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Organic
net
sales
increased
10
4 percent
 
in
the
first
quarter
of
fiscal
2023
2024 compared
 
to
the
same
period
in
fiscal
2022,
as
2023, driven by favorable
organic net price realization and mix, was partially offset
 
by a decrease in contributions from organic volume growth.growth
.
Cost of
 
sales
increased $328decreased $136 million
 
to $3,270$3,134
 
million in
 
the first
 
quarter of
 
fiscal 20232024
 
compared to
 
the same
 
period in
 
fiscal 2022.2023.
The increase
was primarily
driven bydecrease included
 
a $451$54 million decrease attributable
 
to lower volume and
a $150 million increase attributable
 
to product rate and
mix. We
 
rate and
mix partially
offset
byrecorded a
 
$34345 million
decrease attributable to lower volume. We
 
recordednet decrease
in cost
of sales
related to
the mark-to-market
valuation of
certain commodity
positions
and grain inventories in the first quarter of fiscal 2024
compared to a $175 million net increase in cost ofthe first quarter
 
sales related to the mark-to-market valuation
of certainfiscal 2023.
 
commodity positions
and grain
inventories in
the first
quarter of
fiscal 2023
compared to
a $24
million net
decrease in
In the
first quarter of
 
of fiscal 2022. In the
 
first quarter of2023,
 
fiscal 2023, we recorded
 
a $21
million
 
charge
related
 
to a voluntary
 
voluntary recall
on certain
international
Häagen-Dazs
 
ice
cream products.
We
also recorded $9
million of restructuring
charges and $1
million of restructuring
initiative project-related
costs in
cost of sales in the first
quarter of fiscal 2024 compared
to $1 million of restructuring
charges in the first
quarter of fiscal 2023 (please
refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A expenses
increased $34$48 million
 
to $791$839 million in
 
the first quarter
 
of fiscal 2023,2024,
 
compared to the
 
same period in
 
fiscal 2022,2023,
primarily driven by valuation adjustments
 
and the loss on sale ofby increased
 
certain corporate investments in fiscalmedia and
 
2023 and a recovery relatedadvertising expenses.
 
to
a Brazil indirectSG&A expenses
 
tax item in
fiscal 2022. SG&A
expenses as a
 
percent of net
 
net sales
in the
 
first quarter of
 
of fiscal 2023 increased
10 basis
2024 increased 30 basis points compared to the first quarter of fiscal 2022.2023.
Divestitures
 
gain,
net
 
totaled $431
 
million in
 
the first
 
quarter of
 
fiscal 2023,
 
primarily related
 
to the
 
sale of
 
our Helper
 
main meals
and
 
Suddenly
 
Salad
 
side
 
dishes
 
business
 
(please
 
refer
 
to
 
Note
 
2
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Part
 
I,
 
Item
 
1
 
of
 
this
report).
 
Restructuring,
impairment,
 
and
other
exit
 
costs
(recoveries)
totaled
$2
$1 million
 
of
expenses
in
the
first
 
quarter
of
fiscal
 
2023,2024,
compared to a
net recovery of $4$2
 
million in the
same period last year
(please (please refer to
Note 3 to the Consolidated Financial
 
Consolidated Financial Statements
in Part I, Item 1 of this report).
Benefit plan
 
non-service income
totaled $22$17 million
 
in the
 
first quarter
 
of fiscal
 
2023, compare
d2024, compared
 
to $30$22 million
 
in the
 
same period
last year, primarily reflecting an increase
 
in interest costs, partially offset by lower amortization of losses.
 
Interest,
 
net
for
 
the
first
 
quarter
of
 
fiscal 2023
2024
 
totaled $88
$117 million,
 
down $8up
$29 million
 
from
the
 
first
quarter
 
of fiscal
 
2022,2023,
 
primarily
driven by lowerhigher interest rates and higher average long-term debt levels.
The
effective tax rate
 
for the first quarter of fiscal
 
20232024 was 21.220.9 percent compared
 
to 21.721.2 percent for the first
 
quarter of fiscal 2022.2023.
The
 
0.50.3
 
percentage
 
point
 
decrease
 
was
 
primarily
 
due
 
to
 
certain
 
unfavorable
tax
components
related
to
the
divestitures
in
the
first
quarter of
fiscal 2023,
partially offset
by certain
nonrecurring discrete
tax benefits
in the
first quarter
of fiscal
2023 and
unfavorable
earnings mix
by jurisdiction
in the
first quarter
of fiscal
2024. Our
effective
tax rate
excluding certain
items affecting
comparability
was
21.1
percent
in
the
first
quarter
of
fiscal
2024,
compared
to
19.7
percent
in
the
same
period
last
year
(see
the
“Non-GAAP
Measures”
section
below
for
a
description
of
our
use
of
measures
not
defined
by
GAAP).
The
1.4
percentage
point
increase
was
primarily
due
to
certain
nonrecurring
 
discrete
 
tax
 
benefits
 
partiallyin
 
offset
by
certain
unfavorable tax components
related to the
 
divestituresfirst
 
in the first quarter
 
of fiscal 2023. Our
 
effective tax
rate excluding certain
items
affecting comparability
was 19.7 percent
in the first
quarter of fiscal
 
2023 compared
 
to 21.7 percentand
 
in the sameunfavorable
 
period last yearearnings
 
(see
the “Non-GAAPmix
 
Measures” section
below for
a description
of our
use of
measures not
defined by
GAAP). The
2.0 percentage
point
decrease was primarily due to certain nonrecurring discrete tax benefits
jurisdiction in the first quarter of fiscal 2023.2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
22
After-tax earnings
 
earnings from
 
joint ventures
 
for the
 
first quarter
 
of fiscal
 
20232024
decreasedincreased to
 
$2024 million compared
 
to $29$20 million
 
in the
same period
in fiscal 2022,2023,
 
primarily driven by higher net
sales as a result of favorable
net price realization and mix
at Cereal Partners
Worldwide
(CPW) and
favorable
discrete tax
items at
CPW,
partially
offset
 
by higher
 
input
costs at
 
Cereal Partners Worldwide
(CPW) and Häagen
-Dazs Japan, Inc.
(HDJ), partially
offset
by positive
net price
realizationCPW and
 
mix atHäagen-Dazs
 
CPW.Japan,
Inc. (HDJ). On
 
On a constant-currency basis,
 
constant-currency
basis, after-tax
earnings from
 
joint
ventures decreasedincreased 26
 
27 percent (see the
 
the “Non-GAAP“Non-GAAP Measures”
Measures” section
below for
a description of
our use of
measures not defined
by
GAAP).
 
The components of our joint ventures’ net sales growth are shown in the following
 
table:
 
Quarter Ended Aug. 28, 202227, 2023 vs.
Quarter Ended Aug. 29, 202128, 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(5)(11)
pts
(8)(5)
pts
Net price realization and mix
819
pts
Flat9
pts
Net sales growth in constant currency
38
pts
(8)4
pts
17
ptpts
Foreign currency exchange
(11)1
pt
(5)
pts
(17)
pts
(12)
ptsFlat
Net sales growth
(7)9
pts
(25)(1)
ptspt
(11)7
pts
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Average
 
diluted
 
shares
 
outstanding
decreased
 
by
 
915
 
million
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
20232024
 
from
 
the
 
same
 
period
 
a
 
year
 
ago
primarily due to share repurchases.repurchases, partially offset by option
exercises.
 
SEGMENT OPERATING
 
RESULTS
Our businesses are
 
organized into four
 
four operating segments: North
 
North America Retail; International;Retail,
International,
 
Pet, and North
 
America Foodservice.
Please
 
refer
 
to
 
Note
 
17
 
of
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Part
 
I,
 
Item
 
1
 
of
 
this
 
report
 
for
 
a
 
description
 
of
 
our
 
operating
segments.
North America Retail Segment Results
North America Retail net sales were as follows:
 
Quarter Ended
Aug. 28,27,
20222023
Aug. 27, 2023 vs
Aug. 28, 2022 vs
Aug. 29, 202128,
Aug. 29,
20212022
Net sales (in millions)
$
2,988.83,073.0
103
%
$
2,710.62,988.8
Contributions from volume growth (a)
(6)(5)
pts
Net price realization and mix
168
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
North
 
America
 
Retail
 
net
 
sales
increased
 
103
 
percent
 
in
 
the
first
 
quarter
 
of
 
fiscal
 
2023 2024,
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2022,2023,
driven by favorable net price realization and mix, partially offset
 
by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
23
The components of North America Retail organic net
 
sales growth are shown in the following table:
 
Quarter Ended
Aug. 28, 202227, 2023
Contributions from organic volume growth (a)
(5)(4)
pts
Organic net price realization and mix
178
pts
Organic net sales growth
124
pts
Foreign currency exchange
Flat
Divestiture (b)
(1)
pt
Net sales growth
103
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestiture of our Helper main meals and Suddenly Salad side dishes businesses in
fiscal 2023. Please see Note 2 to the Consolidated Financial
 
Consolidated Financial Statements in Part I, Item 1 of this report.
North America
 
America Retail
organic
 
net sales
 
increased 124
 
percent in
 
the first
 
quarter of
 
fiscal 20232024,
 
compared to
 
the same
 
period in
 
fiscal
2022,2023,
 
driven by
 
favorable organic
 
net price
 
realization and
 
mix,
 
partially offset
 
by a
 
decrease in
 
contributions from
 
organic
 
volume
growth.
North America Retail net sales percentage change by operating unit are shown
 
in the following table:
 
Quarter Ended
Aug. 28, 202227, 2023
U.S. Snacks
148
%
U.S. Morning Foods
3
%
Canada (a)
Flat
U.S. Meals & Baking Solutions
10
%
U.S. Morning Foods
9
%
Canada (a)
4(1)
%
Total
103
%
(a)
 
On a constant-currency basis,
Canada net sales increased 7 4
percent in the first quarter of
fiscal 2023, 2024,
compared to the same period
in fiscal 2022.
2023. See the "Non-GAAP Measures" section below for our use of this measure not
defined by GAAP.
Segment operating profit
 
increased 20 percent
to $778 million in
the first quarter
of fiscal 2023
compared to $649 million
in the same
period in fiscal
2022, primarily driven
by favorable net
price realization
and mix, partially
offset by higher
input costs and
a decrease
in contributions from volume growth. Segment
operating profit increased 20 percent on a constant-currency
basis in the first quarter of
fiscal 2023 compared
to the same period
in fiscal 2022 (see
the “Non-GAAP Measures”
section below for
our use of this
measure not
defined by GAAP).
International Segment Results
International net sales were as follows:
Quarter Ended
Aug. 28,
2022
Aug. 28, 2022 vs
Aug. 29, 2021
Aug. 29,
2021
Net sales (in millions)
$
652.5
(30)
%
$
930.6
Contributions from volume growth (a)
(39)
pts
Net price realization and mix
14
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.
International net
sales decreased 303
 
percent in theto
 
first quarter of
fiscal 2023
compared to the
same period
in fiscal 2022,
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.
23
The components of International organic net sales growth
are shown in the following table:
Quarter Ended
Aug. 28, 2022
Contributions from organic volume growth (a)
(7)
pts
Organic net price realization and mix
5
pts
Organic net sales growth
(2)
pts
Foreign currency exchange
(5)
pts
Divestitures (b)
(23)
pts
Net sales growth
(30)
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.
International organic net sales decreased
2 percent in the first quarter of fiscal 2023
compared to the same period in fiscal 2022, driven
by a decrease
in contributions from
organic volume
growth, including
the impact of
the ice cream
recall, partially
offset by
favorable
organic net price realization and mix.
Segment operating profit
decreased 43 percent
to $35$798 million in the
 
first quarter of
 
fiscal 2023 from $612024,
 
compared to $778 million
in the same
period in
 
period in
fiscal
2022, 2023,
 
primarily
driven
by
a
decrease
in
contributions
from
volume
growth,
including
the
impact
of
volume
declines
from
divestitures and
the ice
cream recall,
and higher
input costs,
partially offset
 
by favorable net
 
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 mix and
a decreaseadvertising expenses. Segment
in
SG&A
expenses.
Segment
operating
 
profit
 
decreasedincreased
 
343
 
percent
 
on
 
a
 
constant-currency
 
basis
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
20232024
compared
compared
to
the
 
same period in
 
fiscal 2022 (seeperiod
 
in
fiscal 2023 (see the “Non-GAAP Measures”
section below for
our use of this measure
 
this measure not
defined by
GAAP).
PetInternational Segment Results
PetInternational net sales were as follows:
 
Quarter Ended
Aug. 28,27,
20222023
Aug. 27, 2023 vs
Aug. 28, 2022 vs
Aug. 29, 202128,
Aug. 29,
20212022
Net sales (in millions)
$
579.9715.8
1910
%
$
488.0652.5
Contributions from volume growth (a)
(1)(5)
ptpts
Net price realization and mix
2013
pts
Foreign currency exchange
Flat1
pt
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Pet
International net
sales
increased
19
10 percent
during
in the
first
quarter
of
fiscal
2023 2024,
 
compared to the same period in fiscal 2023 which
included the impact of the voluntary recall on certain international
Häagen-Dazs
 
to
the
same
period
in
fiscal
2022,
ice cream products, driven
by
favorable net price
realization and mix and favorable foreign currency exchange, partially offset
 
offset by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
24The components of International organic net sales growth
are shown in the following table:
Quarter Ended
Aug. 27, 2023
Contributions from organic volume growth (a)
(5)
pts
Organic net price realization and mix
13
pts
Organic net sales growth
9
pts
Foreign currency exchange
1
pt
Net sales growth
10
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
International organic net
sales increased 9 percent
in the first quarter of
fiscal 2024,
compared to the same period
in fiscal 2023 which
included the
impact of
the voluntary
recall on
certain international
Häagen-Dazs
ice cream
products,
driven by
favorable organic
net
price realization and mix, partially offset by a decrease in
contributions from organic volume growth.
Segment operating
profit increased
44 percent
to $50 million
in the
first quarter
of fiscal
2024,
compared to
$35 million in
the same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix
and
the
voluntary
recall
on
certain
international
Häagen-Dazs
ice cream
products in
fiscal 2023,
partially offset
by higher
input costs.
Segment operating
profit increased
52 percent
on
a
constant-currency
basis
in
the
first
quarter
of
fiscal
2024
compared
to
the
same
period
in
fiscal
2023
(see
the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Pet Segment Results
Pet net sales were as follows:
Quarter Ended
Aug. 27,
2023
Aug. 27, 2023 vs
Aug. 28, 2022
Aug. 28,
2022
Net sales (in millions)
$
579.9
Flat
$
579.9
Contributions from volume growth (a)
(5)
pts
Net price realization and mix
5
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Pet net
sales in
the first
quarter of
fiscal 2024
matched the same
period in
fiscal 2023,
as favorable
net price realization
and mix
was
offset by a decrease in contributions from volume growth.
The components of Pet organic net sales growth are shown in the following
 
table:
 
Quarter Ended
Aug. 28, 202227, 2023
Contributions from organic volume growth (a)
(3)(5)
pts
Organic net price realization and mix
175
pts
Organic net sales growth
14
ptsFlat
Foreign currency exchange
Flat
Acquisition (b)
5
pts
Net sales growth
19
ptsFlat
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 2 to the Consolidated Financial Statements in Part I, Item 1 of
this report.
Pet
 
organic
 
net
 
sales
increased
14 percent
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
20232024
 
comparedmatched
 
to the
 
same
 
period
 
in
 
fiscal
 
2022,2023,
 
drivenas
 
byfavorable
organic
net
price
favorable organic net price realization and mix partiallywas offset
by a decrease in contributions from
organic volume growth.
Segment operating
profit increased
7decreased 10 percent
 
to $123$111 million
in the
 
first quarter of fiscal 2024,
 
of fiscal
2023 compared
to $115
$123 million in
the same
period
in
fiscal 2022,
2023,
 
primarily
driven
by
higher
input
costs,
a
decrease
in
contributions
from
volume
growth,
and
an
increase
in
SG&A
expenses,
partially
offset
by
favorable
 
net
price
realization
and
 
mix, partially offset
by higher input costs
and an increase
in
SG&A
expenses.mix.
 
Segment
 
operating
 
profit
 
increaseddecreased
 
710
 
percent
 
on
 
a
 
constant-currency
 
basis
 
25
constant-currency basis in
 
the
first
quarter
 
of fiscal 2024
 
fiscal
2023
compared to the
 
same period in
 
fiscal 20222023 (see
 
the “Non-GAAP Measures”
section below for
our use of
this measure not
defined by
GAAP).
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
 
Quarter Ended
Aug. 28,27,
20222023
Aug. 27, 2023 vs
Aug. 28, 2022 vs
Aug. 29, 202128,
Aug. 29,
20212022
Net sales (in millions)
$
496.4536.0
218
%
$
410.7496.4
Contributions from volume growth (a)
(1)7
ptpts
Net price realization and mix
221
ptspt
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
21
8 percent
in
the
first
 
quarter
of
fiscal
2024, compared to the same period in fiscal 2023,
compared
to
the
same
period
in
fiscal
2022, driven
by favorable net
price realization
and mix, including
market index pricing
on bakery flour,
partially offset
by a decrease
an increase in contributions from volume growth.growth and favorable
net price realization and mix.
The components of North America Foodservice organic
 
net sales growth are shown in the following table:
 
Quarter Ended
Aug. 28, 202227, 2023
Contributions from organic volume growth (a)
(3)4
pts
Organic net price realization and mix
21
ptsFlat
Organic net sales growth
184
pts
Foreign currency exchange
Flat
Acquisition (b)
34
pts
Net sales growth
218
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of TNT Crust in fiscal 2023. Please see Note 2 to the Consolidated Financial Statements
in Part I, Item 1 of this report.
North
 
America Foodservice
 
25
North America
Foodservice organic
 
net sales
 
increased 184
 
percent in
 
the first
 
quarter of
 
fiscal 20232024,
 
compared to
 
the same
 
period in
fiscal 2022,2023, driven
by favorable organic
net price realization
and mix,
including market
index pricing on
bakery flour,
partially offset
by a decreasean increase in contributions from organic
volume growth.
Segment operating
 
profit decreasedincreased
 
2510 percent
 
to $54$59
 
million in
 
the first
 
quarter of
 
fiscal 20232024,
 
compared to
 
$7254 million in
 
the same
period
in
fiscal
 
2022, 2023,
primarily
driven
by
 
higher input costs andfavorable
 
an increase in SG&Anet
 
expenses, partially offsetprice
 
by favorable net price
realization
 
and
 
mix.mix,
partially
offset
by
higher
input
costs.
 
Segment
operating
 
profit increased
 
decreased
25
10 percent
 
on
a
 
constant-currency
 
basis in
the first
quarter of
fiscal 2024
compared to
the same
period in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
UNALLOCATED
CORPORATE
ITEMS
Unallocated corporate
expenses totaled $87
million in the
first quarter of
fiscal 2024, compared
to $333 million
in the same
period in
fiscal
2023.
In
the
first
quarter
of
fiscal
2024,
we
recorded
a
$45 million
net
decrease
in
expense
related
to
the
mark-to-market
valuation of certain commodity positions
and grain inventories, compared to
a $175 million net increase in expense
in the same period
last year.
We
recorded $3 million
of net losses
related to valuation
adjustments on certain
corporate investments
in the first quarter
of
fiscal
2024,
compared
to
$26 million
of
net
losses
related
to
valuation
adjustments
and
the
loss
on
sale
of
certain
corporate
investments
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023
compared to the
same period in
fiscal 2022 (see
the “Non-GAAP Measures”
section below for
our use of
this measure not
defined by
GAAP).
UNALLOCATED
CORPORATE
ITEMS
Unallocated corporate
expense totaled
$333 million in
the first
quarter of
fiscal 2023,
compared to
$56 million in
the same
period in
fiscal
2022.2023.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
recorded
 
a
 
$175 22
million
 
net
increase
in
expensecharge
 
related
 
to
 
thea
voluntary
 
mark-to-marketrecall
valuation ofon
 
certain commodity
 
positions andinternational
Häagen-Dazs
 
grain inventoriesice
 
compared tocream
 
a $24 million
net decrease
in expense
in the same
period
last year.products.
 
We
 
recorded $26
$9
million
 
of net losses
 
related to valuationrestructuring
 
adjustments charges
and
 
the loss on$1
million
 
sale of certain
 
corporate investmentsrestructuring
initiative
project-related
costs
in
cost
of
sales
in
 
the
 
first quarter
 
of
fiscal
 
2023,2024,
 
compared
 
to
 
$1
million
 
of
restructuring
 
net
losses related
to
valuation
adjustmentscharges
 
in cost
 
of sales
in the
 
firstsame period
 
quarterlast year.
In addition,
we recorded
$2 million
 
of integration
 
fiscalcosts primarily
2022. Inrelated to our acquisition of TNT Crust in the first quarter of fiscal 2023,2023.
 
we recorded a $22 million charge related to a
voluntary recall on certain international
Häagen-
Dazs
 
ice cream products.
 
In addition, we
 
recorded $2 million
 
of integration costs
 
primarily related
 
to our acquisition
 
of TNT Crust
 
in
the
 
first
 
quarter
 
of
 
fiscal
 
2023
 
compared
 
to
 
$12 million
of
integration
costs
related
to
our
acquisition
of
Tyson
Foods’
pet
treats
business
in
the
first
quarter of
fiscal
2022.
Also,
in the
first quarte
r
of fiscal
2022,
we recorded
a $21
million
recovery
related
to
a
Brazil
indirect
tax
item,
a
$13 million
insurance
recovery and
$11 million
of
transaction
costs related
to
the
sale of
our
interests
in
Yoplait
SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl.26
LIQUIDITY
 
AND CAPITAL
 
RESOURCES
During the first quarter of
 
fiscal 2023,
2024, cash provided by operations
was $378 million compared to $389
 
million compared to $370 million in
the same period last
year.
 
The $19$11 million
 
increasedecrease was mainly
 
mainly driven by
 
by a
$185 $248 million
 
increasechange in
 
net earnings,current assets and
liabilities and
 
a $180$46
 
million change
in current
assets
and
liabilities,
and
a
$94
million
change
in
 
other
 
non-cash
 
items
 
in
 
net
 
earnings,
 
including
 
changes
 
in
 
the
 
valuation
 
of
 
certain
corporate
corporate
investments.
 
These
were
 
partially
offset
 
by a
 
$288 million
increase
in
net
earnings,
excluding
the
$431 million
 
net
divestitures
 
gain. Thegain
 
$180 millionin fiscal
 
2023.
The $248
million
change in
current assets
and liabilities is primarily driven by an $85a $313 million
 
million change in the timing of accounts payable andpayable.
Cash
 
a $54 million change in the timing of
accounts receivable.used
 
Cash provided by
 
investing activities during the
 
first quarter of fiscalactivities
 
2023 was $266 million
compared to cash used
of $1,298 million
for the same
period in fiscal
2022. During the
first quarter of the
2023, we completed
the sale of the
Helper main meals and Suddenly
Salad side dishes
business for $607
million cash. In
the first quarter
of fiscal 2023,
we acquired TNT
Crust for $252
million cash, net
of cash
acquired. In
the first
quarter of
fiscal 2022,
we acquired
the Tyson
Foods’ pet
treats business for
an aggregate
purchase price
of
$1.2 billion.
In
addition,
we
spent
$91
million
on
purchases
of
land,
buildings,
and
equipment
induring
 
the
 
first
 
quarter
 
of
 
fiscal
 
20232024
was
$136
million
compared
to
cash
provided
by
investing
activities
of
$266 million
for
the
same
period
in
fiscal
2023.
During
the
first
quarter
of
the
2023,
we
completed
the
sale
of
the
Helper main meals and Suddenly Salad side dishes
business for $607 million cash. In the
first quarter of fiscal 2023, we acquired
TNT
Crust for $252
million cash, net of cash acquired. In addition, we spent $142 million
on purchases of land, buildings, and equipment in
the first quarter of fiscal 2024 compared to $104$91 million in the same period
last year.
Cash used
 
by financing
 
activities during
 
the first
 
quarter of
 
fiscal 20232024
 
was $334 million
compared
to $609 million
 
compared toof cash
 
$195 million of
cash providedused by
by
financing
activities
 
in
the
 
same
period
 
in fiscal 202
 
fiscal
2022.
3. We
 
paid
$325 $348 million
 
of
dividends
 
in
the
 
first
quarter
 
of
fiscal
 
2023,2024, compared
compared to $325 million
 
$312 million in the
 
the same period
 
period last
year.
 
We
 
paid $501$500
 
million for
 
purchases of
 
common stock
 
for treasury
 
in the first
 
firstquarter of
quarter
of
fiscal
2024, consistent with the same period in fiscal 2023
 
compared
to
$150
million
in
the
same
period
in
fiscal
2022..
 
In
addition,
we
had
$188
$552 million
of
net
debt
issuances in the first
quarter of
fiscal 2023,2024 compared to $669$188 million of net debt issuances in the first quarter
 
of fiscal 2022.2023.
 
As of August
 
28, 2022,27, 2023, we had
 
$533425 million of cash
 
and cash equivalents
 
in foreign jurisdictions. In
 
anticipation of repatriating
 
funds
from
 
foreign
 
jurisdictions,
 
we
 
record
 
local
 
country
 
withholding
 
taxes
 
on
 
our
 
international
 
earnings,
 
as
 
applicable.
 
Furthermore,
 
we
may repatriate our
 
cash and cash equivalents
 
held by our
 
foreign subsidiaries without
 
such funds being
 
subject to further
 
U.S. income
tax liability. Earnings prior
 
to fiscal 2018 from our foreign subsidiaries remain permanently reinvested
 
in those jurisdictions.
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of August 28, 2022:27, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
0.2-
Total committed
 
and uncommitted credit facilities
$
3.3
$
0.2
26-
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
 
mark-to-market
-to-market valuation
 
(currently
 
$252 million).
On
June 1,
2021,
the 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
 
on GMC’s
Class A Interests
is
the sum of three
-month Term
SOFR plus 186
basis points. The preferred
return rate is adjusted
 
every three years
years through a negotiated
agreement with the Class A Interest holder
or through a remarketing auction.
 
We
 
have an option
 
to purchase the
 
Class A Interests for
 
consideration equal to
 
the then current
 
capital account value,
 
plus any unpaid
preferred return
 
and the
 
prescribed make-whole
 
amount. If
 
we purchase
 
these interests,
 
any change
 
in the
 
third-party holder’s
 
capital
account
 
from
 
its
 
original
 
value
 
will
 
be
 
charged
 
directly
 
to
 
retained
 
earnings
 
and
 
will
 
increase
 
or
 
decrease
 
the
 
net
 
earnings
 
used
 
to
calculate EPS in that period.
 
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe. We
also have uncommitted and asset-backed credit lines that support our
foreign operations.
Certain
 
of
 
our
 
long-term
 
debt
 
agreements,
 
our
 
credit
 
facilities,
 
and
 
our
 
noncontrolling
 
interests
 
contain
 
restrictive
 
covenants.
 
As
 
of
August 28, 2022,27, 2023, we were in compliance with all of these covenants.
 
We
 
have $2,095
$1,175
million
 
of
long-term
debt
 
maturing
in
the
 
next
12
months
 
that
is
classified
 
as
current,
including
 
$500 million of400
 
2.60
percent fixedmillion
 
-rate of
floating-rate
notes
 
due
October
 
12, 2022,17,
 
$100 2023,
€250
million
 
of 6.41
 
floating-rate
notes
due
November
10,
2023,
and
$500
million
of
3.65
percent fixed-rate
 
notes due
 
OctoberFebruary 15,
 
2022, €250
million of
0.00 percent
fixed-rate notes due
November 11,
2022, €500 million
of 1.00
percent fixed-rate
notes due
April 27, 2023,
€250 million
of 0.00
percent fixed-rate
notes due
May 16,
2023
and €500
million of
0.00 percent
fixed-rate notes
due July
27, 2023.
2024. We
 
believe that
that cash flows
from operations,
together with
available short-
 
and long-termlong-
term debt financing, will be adequate to meet
our liquidity and
capital needs
for at least the next 12 months.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
 
to the Consolidated Financial Statements included
 
in our Annual Report on
Form
 
10-K for
 
the fiscal
 
year ended
 
May 29,28,
 
2022.2023. The
 
accounting policies
 
used in
 
preparing our
 
interim fiscal
 
20232024
Consolidated
Financial
Statements
are
the
same
as
those
described
in
our
Form
10-K
with
the
exception
of
the
new
accounting
requirements
27
adopted in the first quarter of fiscal 2024. Please see Note 1
to the Consolidated Financial Statements are the same as those described in our Form 10-K.Part I, Item 1
of this report for
additional information.
Our
 
critical
 
accounting
 
estimates
 
are
 
those
 
that
 
have
 
meaningful
 
impact
 
on
 
the
 
reporting
 
of
 
our
 
financial
 
condition
 
and
 
results
 
of
operations.
 
These
 
estimates
 
include
 
our
 
accounting
 
for
 
revenue
 
recognition,
 
valuation
 
of
 
long-lived
 
assets,
 
intangible
 
assets,
 
stock-
based compensation,
 
income taxes,
 
and defined
 
benefit pension,
 
other postretirement
 
benefit, and
 
postemployment benefit
 
plans. The
assumptions and methodologies used
 
in the determination of
 
those estimates as of August
 
28, 2022,27, 2023, are the
 
same as those described in
our Annual Report on Form 10-K for the fiscal year ended May 29, 2022.28, 2023.
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2022,2023,
 
and
 
we
 
determined
 
there
 
was
 
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
carrying values,
except for
the
Uncle Toby’s
 
brand intangible asset.
The excess fair value as of the fiscal 2022
 
test date of the
Uncle Toby’s
asset. In addition,
 
brand intangible asset is as follows:
In Millions
Carrying Valuewhile having
 
of
Intangible Asset
Excess Fair Valuesignificant coverage
 
as of
Fiscal 2022 Test
Date
Uncle Toby's
$
55.0
7
%
In
addition,
while
having
significant
coverage
as
of
our
fiscal
2022 2023
 
assessment
date,
the
Progresso
,
Green
Giant
,
 
and
EPIC
brand
intangible assets had
risk of decreasing coverage.
We
 
will continue to
monitor these businesses for potential impairment.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
In March 2020, 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 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
a discontinued reference rate
and are analyzing the
impact of this
guidance on our results of operations and financial position.
27
NON-GAAP MEASURES
We
 
have
 
included
 
in
 
this
 
report
 
measures
 
of
 
financial
 
performance
 
that
 
are not
 
defined
 
by
 
GAAP.
 
We
 
believe
 
that
 
these
 
measures
provide useful information to investors, and include these measures in other
 
communications to investors.
 
For each
 
of these
 
non-GAAP financial
 
measures, we
 
are providing
 
below a
 
reconciliation of
 
the differences
 
between the
 
non-GAAP
measure and the most
 
directly comparable GAAP measure,
 
an explanation of why
 
we believe the non-GAAP
 
measure provides useful
information to
 
investors, and
 
any additional
 
material purposes
 
for which
 
our management
 
or Board
 
of Directors
 
uses the
 
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
 
in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several
 
measures
 
below
 
are
 
presented
 
on
 
an
 
adjusted
 
basis.
 
The
 
adjustments
 
are
 
either
 
items
 
resulting
 
from
 
infrequently
 
occurring
events or items that, in management’s
 
judgment, significantly affect the year-to-year
 
assessment of operating results.
The following are descriptions of significant items impacting comparability
 
of our results.
Divestitures
 
gain, net
Net divestitures
gain primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
fiscal 2023.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report
.
Transaction costs
Transaction
costs
primarily
related
to
the
sale
of
our
Helper
main
meals
and
Suddenly
Salad
side
dishes
business
in
fiscal
2023.
Transaction
costs related
to the
sale of
our interests
in Yoplait
SAS, Yoplait
Marques SNC,
and Liberté
Marques Sàrl
in fiscal
2022.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report
.
Non-income tax recovery
Recovery related to a Brazil indirect tax item recorded in fiscal 2022.
Acquisition integration costs
Integration costs
primarily resulting
from the acquisition
of TNT Crust
in fiscal 2023.
Integration costs
resulting from
the acquisition
of Tyson
Foods’ pet treats business
in fiscal 2022.
Please see Note
2 to the Consolidated
Financial Statements in
Part I, Item
1 of this
report.
Investment activity,
net
Valuation
adjustments and
the loss on
sale of certain
corporate investments in
fiscal 2023. Valuation
adjustments of certain
corporate
investments in fiscal 2022.
Mark-to-market effects
Net
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
recognized
 
in
 
unallocated
 
corporate
 
items.
 
Please
 
see
 
Note
 
6
 
to
 
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Restructuring charges (recoveries)and project-related costs
Restructuring charges
 
charges and
project-related
costs for
previously announced
 
restructuring actions
recorded in
fiscal 2024.
Restructuring
charges
for
previously
announced
restructuring
actions
recorded
 
in fiscal 2023
 
and fiscal 2022.
2023.
 
Please
see
Note
3
 
to
the
Consolidated
Financial
Statements in Part I, Item 1 of this report.
Investment activity, net
Valuation
adjustments of
certain corporate
investments in
fiscal 2024. Valuation
adjustments and
the loss on
sale of certain
corporate
investments in fiscal 2023.
Acquisition integration costs
Integration
costs
primarily
resulting
from
the
acquisition
of
TNT
Crust
in
fiscal
2024
and
fiscal
2023.
Please
see
Note
2
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Product recall
Voluntary
recall costs recorded inCosts related to the fiscal 2023 related tovoluntary recall of certain international
Häagen-Dazs
 
ice cream products.
CPW restructuring chargesDivestitures gain, net
CPW restructuring charges Net divestitures
gain primarily
related to previously announced
 
restructuring actions.the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
fiscal 2023.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Transaction costs
Transaction costs primarily related
to the sale of our Helper main meals and Suddenly
Salad side dishes business in fiscal 2023.
Please
see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
28
Organic Net Sales Growth Rates
We
 
provide organic
 
net sales
 
growth rates
 
for our
 
consolidated net
 
sales and
 
segment net
 
sales. This
 
measure is
 
used in
 
reporting to
our
 
Board
 
of
 
Directors
 
and
 
executive
 
management
 
and
 
as
 
a
 
component
 
of
 
the
 
measurement
 
of
 
our
 
performance
 
for
 
incentive
compensation purposes.
 
We
 
believe that
 
organic net
 
sales growth
 
rates provide
 
useful information
 
to investors
 
because they
 
provide
transparency
 
to
 
underlying
 
performance
 
in
 
our
 
net
 
sales
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations,
acquisitions, divestitures,
 
and a 53
rd
 
week, when applicable,
 
have on year-to-year comparability.
 
A reconciliation of
 
these measures to
reported net
 
sales growth
 
rates, the
 
relevant GAAP
 
measures, are
 
included in
 
our Consolidated
 
Results of
 
Operations and
 
Results of
Segment Operations discussions in the MD&A above.
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
Margin)
We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit margin
on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Aug. 27, 2023
Aug. 28, 2022
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
930.0
19.0
%
$
1,085.6
23.0
%
Mark-to-market effects
(44.9)
(0.9)
%
174.7
3.7
%
Restructuring charges
9.8
0.2
%
2.3
-
%
Investment activity, net
2.9
0.1
%
26.3
0.6
%
Project-related costs
0.8
-
%
-
-
%
Acquisition integration costs
0.2
-
%
1.5
-
%
Product recall
0.2
-
%
21.5
0.5
%
Divestitures gain, net
-
-
%
(430.9)
(9.1)
%
Transaction costs
-
-
%
0.2
-
%
Adjusted operating profit
$
899.0
18.3
%
$
881.2
18.7
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
Margin)
We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit
margin on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Aug. 28, 2022
Aug. 29 2021
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
1,085.6
23.0
%
$
844.3
18.6
%
Divestitures gain, net
(430.9)
(9.1)
%
-
-
%
Mark-to-market effects
174.7
3.7
%
(24.1)
(0.5)
%
Investment activity, net
26.3
0.6
%
0.7
-
%
Product recall
21.5
0.5
%
-
-
%
Restructuring charges (recoveries)
2.3
-
%
(4.1)
(0.1)
%
Acquisition integration costs
1.5
-
%
12.4
0.3
%
Transaction costs
0.2
-
%
10.6
0.2
%
Non-income tax recovery
-
-
%
(20.6)
(0.5)
%
Adjusted operating profit
$
881.2
18.7
%
$
819.2
18.0
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Operating Profit Growth on a Constant-currency Basis
This measure is used in reporting
 
to our Board of Directors and
 
executive management and as a
 
component of the measurement of
 
our
performance for
 
incentive compensation purposes.
 
We
 
believe that
 
this measure provides
 
useful information
 
to investors because
 
it is
the
 
operating
 
profit
 
measure
 
we
 
use
 
to
 
evaluate
 
operating
 
profit
 
performance
 
on
 
a
 
comparable
 
year-to-year
 
basis.
 
The
 
measure
 
is
evaluated on
 
a constant-currency
 
basis by
 
excluding the
 
effect that
 
foreign currency
 
exchange rate
 
fluctuations have
 
on year-to-year
comparability given the volatility in foreign currency exchange rates.
 
Our adjusted operating profit growth on a constant-currency basis is calculated
 
as follows:
 
Quarter Ended
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Change
Operating profit as reported
$
1,085.6930.0
$
844.31,085.6
29(14)
%
Mark-to-market effects
(44.9)
174.7
Restructuring charges
9.8
2.3
Investment activity, net
2.9
26.3
Project-related costs
0.8
-
Acquisition integration costs
0.2
1.5
Product recall
0.2
21.5
Divestitures gain, net
(430.9)
-
Mark-to-market effects
174.7
(24.1)
Investment activity, net
26.3
0.7
Product recall
21.5
-
Restructuring charges (recoveries)
2.3
(4.1)
Acquisition integration costs
1.5
12.4(430.9)
Transaction costs
0.2
10.6
Non-income tax recovery
-
(20.6)0.2
Adjusted operating profit
$
881.2899.0
$
819.2881.2
82
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
82
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
29
Adjusted Diluted EPS and Related Constant-currency Growth Rates
This measure
 
is used in
 
reporting to
 
our Board of
 
Directors and executive
 
management. We
 
believe that
 
this measure provides
 
useful
information to
 
investors because it
 
is the profitability
 
measure we use
 
to evaluate earnings
 
performance on
 
a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
 
EPS and the related constant-currency growth rates follows:
 
Quarter Ended
Per Share Data
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
Change
Diluted earnings per share, as reported
$
1.351.14
$
1.021.35
32(16)
%
Divestitures gain, net
(0.54)
-
Mark-to-market effects
(0.06)
0.22
(0.03)Restructuring charges
0.01
-
Investment activity, net
0.04-
-0.04
Product recall
 
-
0.03
Divestitures gain, net
-
Restructuring charges (recoveries)
-
(0.01)
Acquisition integration costs
-
0.02
Transaction costs
-
0.01
Non-income tax recovery
-
(0.02)(0.54)
Adjusted diluted earnings per share
$
1.111.09
$
0.991.11
12(2)
%
Foreign currency exchange impact
(1)
pt
Adjusted diluted earnings per share growth, on a constant-currency basis
13(1)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
 
below of the effective
 
income tax rate as
 
reported to the adjusted
 
effective income tax
 
rate for the tax
 
impact of
each item affecting comparability.
30
Constant-currency After-tax Earnings from Joint Ventures
 
Growth Rates
 
We
 
believe that
 
this measure
 
provides useful
 
information to
 
investors because
 
it provides
 
transparency to
 
underlying performance
 
of
our joint
 
ventures by
 
excluding the
 
effect
 
that foreign
 
currency exchange
 
rate fluctuations
 
have on
 
year-to-year
 
comparability given
volatility in foreign currency exchange markets.
 
After-tax earnings from joint ventures growth rates on a constant-currency
 
basis are calculated as follows:
 
Percentage Change in
After-Tax
 
Earnings from Joint
Ventures
 
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in After-Tax
Earnings from Joint Ventures
on Constant-Currency Basis
Quarter Ended Aug. 28, 202227, 2023
(32)19
%
(5)(7)
pts
(27)26
%
Note: Table may
 
not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency
 
Basis
 
We
 
believe
 
that
 
this
 
measure
 
of
 
our
 
Canada
 
operating
 
unit
 
net
 
sales
 
provides
 
useful
 
information
 
to
 
investors
 
because
 
it
 
provides
transparency to
 
the underlying
 
performance for
 
the Canada operating
 
unit within our
 
North America Retail
 
segment by
 
excluding the
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
 
year-to-year
 
comparability
 
given
 
volatility
 
in
 
foreign
 
currency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currency
 
basis are calculated as follows:
 
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Aug. 28, 202227, 2023
4
%Flat
(4)
pts
74
%
Note: Table may
 
not foot due to rounding.
30
Constant-currency Segment Operating Profit Growth Rates
 
We
 
believe that
 
this measure
 
provides useful
 
information to
 
investors because
 
it provides
 
transparency to
 
underlying performance
 
of
our
 
segments
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
 
year-to-year
 
comparability
 
given
volatility in foreign currency exchange markets.
 
Our segments’ operating profit growth rates on a constant-currency
 
basis are calculated as follows:
 
Quarter Ended Aug. 28, 202227, 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
203
%
Flat
203
%
International
(43)44
%
(9)(8)
pts
(34)52
%
Pet
7(10)
%
Flat
7(10)
%
North America Foodservice
(25)10
%
Flat
(25)10
%
Note: Table may
 
not foot due to rounding.
31
Adjusted Effective Income Tax
 
Rates
 
We
 
believe
 
this
 
measure
 
provides
 
useful
 
information
 
to
 
investors
 
because
 
it
 
presents
 
the
 
adjusted
 
effective
 
income
 
tax
 
rate
 
on
 
a
comparable year-to-year basis.
 
Adjusted effective income tax rates are calculated as follows:
 
 
Quarter Ended
 
Aug. 28, 202227, 2023
Aug. 29, 202128, 2022
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
830.0
$
173.2
$
1,019.6
$
216.1
$
778.0
$
168.9
Divestitures gain, net
(430.9)
(101.9)
-
-
Mark-to-market effects
(44.9)
(10.3)
174.7
40.2
(24.1)Restructuring charges
(5.5)9.8
4.7
2.3
0.6
Investment activity, net
2.9
1.0
26.3
0.5
0.7Project-related costs
0.8
0.3
-
-
Acquisition integration costs
0.2
0.1
1.5
0.3
Product recall
 
0.2
0.1
21.5
4.9
Divestitures gain, net
-
-
Restructuring charges (recoveries)(430.9)
2.3
0.6
(4.1)
(0.9)
Acquisition integration costs
1.5
0.3
12.4
2.8(101.9)
Transaction costs
-
-
0.2
-
10.6
4.6
Non-income tax recovery
-
-
(20.6)
(7.0)
As adjusted
$
799.1
$
169.0
$
815.2
$
160.8
$
752.8
$
163.0
Effective tax rate:
As reported
21.2%20.9%
21.7%21.2%
As adjusted
19.7%21.1%
21.7%19.7%
Sum of adjustment to income taxes
$
(55.3)(4.3)
$
(5.9)(55.3)
Average number
 
of common shares - diluted EPS
606.0591.4
614.8606.0
Impact of income tax adjustments on adjusted diluted EPS
$
0.090.01
$
0.010.09
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
3132
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
 
Diluted EPS adjusted for certain items affecting year-to-year
 
comparability.
Adjusted operating profit.
 
Operating profit adjusted for certain items affecting year-to-year
 
comparability.
Adjusted operating profit
 
margin.
Operating profit adjusted
 
for certain items
 
affecting year-over-year
 
comparability,
 
divided by net
sales.
Constant currency.
 
Financial results
 
translated to
 
United States
 
dollars using
 
constant foreign
 
currency exchange
 
rates based
 
on the
rates
 
in
 
effect
 
for
 
the
 
comparable
 
prior-year
 
period.
 
To
 
present
 
this
 
information,
 
current
 
period
 
results
 
for
 
entities
 
reporting
 
in
currencies other
 
than United
 
States dollars
 
are translated
 
into United
 
States dollars
 
at the
 
average exchange
 
rates in
 
effect during
 
the
corresponding
 
period
 
of
 
the
 
prior
 
fiscal
 
year,
 
rather
 
than
 
the
 
actual
 
average
 
exchange
 
rates
 
in
 
effect
 
during
 
the
 
current
 
fiscal
 
year.
Therefore,
 
the
 
foreign
 
currency
 
impact
 
is
 
equal
 
to
 
current
 
year
 
results
 
in
 
local
 
currencies
 
multiplied
 
by
 
the
 
change
 
in
 
the
 
average
foreign currency exchange rate between the current fiscal period and the corresponding
 
period of the prior fiscal year.
 
Core working capital.
 
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments such
 
as futures, swaps,
 
options, and forward
 
contracts that we
 
use to manage
 
our risk arising
 
from
changes in commodity prices, interest rates, foreign exchange rates, and stock
 
prices.
Euribor.
 
Euro Interbank Offered Rate.
Fair value
 
hierarchy.
For purposes
 
of fair
 
value measurement,
 
we categorize
 
assets and
 
liabilities into
 
one of
 
three levels
 
based on
the assumptions
 
(inputs) used
 
in valuing
 
the asset or
 
liability.
 
Level 1 provides
 
the most reliable
 
measure of
 
fair value, while
 
Level 3
generally requires significant management judgment. The three levels are
 
are defined as follows:
 
Level 1:
 
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
 
Observable inputs other than quoted prices included in
 
Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:
 
Unobservable inputs reflecting management’s
 
assumptions about the inputs used in pricing the asset or liability.
Free cash flow.
 
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted
 
Accounting Principles
 
(GAAP).
Guidelines, procedures,
 
and practices
 
that we
 
are required
 
to use in
 
in recording
and reporting accounting information in our financial statements.
Goodwill.
The difference
 
between the purchase
 
price of acquired
 
companies plus the fair
 
value of any noncontrolling
 
noncontrolling and redeemable
interests and the related fair values of net assets acquired.
 
Gross margin.
 
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
 
hedges that allows changes in
 
a hedging instrument’s
 
fair value to offset
 
corresponding
changes in
 
the hedged
 
item in
 
the same
 
reporting period.
 
Hedge accounting
 
is permitted
 
for certain
 
hedging instruments
 
and hedged
items
 
only
 
if
 
the
 
hedging
 
relationship
 
is
 
highly
 
effective,
 
and
 
only
 
prospectively
 
from
 
the
 
date
 
a
 
hedging
 
relationship
 
is
 
formally
documented.
Holistic Margin Management
 
(HMM).
 
Company-wide initiative to
 
use productivity savings, mix
 
management, and price realization
to offset input cost inflation, protect margins,
 
and generate funds to reinvest in sales-generating activities.
Interest
 
bearing
 
instruments.
Notes
 
payable,
 
long-term
 
debt,
 
including
 
current
 
portion,
 
cash
 
and
 
cash
 
equivalents,
 
and
 
certain
interest bearing investments classified within prepaid expenses and other current
 
assets and other assets.
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.
32
33
Net
 
mark-to-market
 
valuation of
 
certain
 
commodity
 
positions.
Realized
 
and
 
unrealized
 
gains
 
and
 
losses on
 
derivative
 
contracts
that will be allocated to segment operating profit when the exposure we are hedging
 
affects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other price
 
promotion costs.
Net realizable
 
value.
The estimated
 
selling price
 
in the
 
ordinary course
 
of business,
 
less reasonably
 
predictable costs
 
of completion,
disposal, and transportation.
 
Noncontrolling interests.
Interests of subsidiaries held by third parties.
 
Notional
 
amount.
The
 
amount
 
of
 
a
 
position
 
or
 
an
 
agreed
 
upon
 
amount
 
in
 
a
 
derivative
 
contract
 
on
 
which
 
the
 
value
 
of
 
financial
instruments are calculated.
OCI.
Other Comprehensive Income.
 
Organic net sales growth
. Net sales growth adjusted
 
for foreign currency translation,
 
acquisitions, divestitures and a
 
53
rd
 
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
 
charges.
Redeemable interest.
Interest of 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.
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.
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.
 
 
 
 
 
 
 
 
 
 
3334
CAUTIONARY STATEMENT
 
RELEVANT
 
TO FORWARD
 
-LOOKING INFORMATION
 
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
 
SECURITIES LITIGATION
 
REFORM ACT OF 1995
This report
 
contains or
 
incorporates by
 
reference
 
forward-looking
 
statements within
 
the meaning
 
of the
 
Private Securities
 
Litigation
Reform Act
 
of 1995
 
that are
 
based on
 
our current
 
expectations and
 
assumptions. We
 
also may
 
make written
 
or oral
 
forward-looking
statements,
 
including
 
statements
 
contained
 
in
 
our
 
filings
 
with
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
and
 
in
 
our
 
reports
 
to
stockholders.
The words or
 
phrases “will likely
 
result,” “are expected
 
to,” “will continue,”
 
“is anticipated,” “estimate,”
 
“plan,” “project,” or
 
similar
expressions identify
 
“forward-looking statements”
 
within the
 
meaning of
 
the Private
 
Securities Litigation
 
Reform Act
 
of 1995.
 
Such
statements are
 
subject to
 
certain risks
 
and uncertainties
 
that could
 
cause actual
 
results to
 
differ
 
materially from
 
historical results
 
and
those currently anticipated or projected. We
 
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
 
from any
current opinions or statements.
Our
future
results
could
 
be
affected
 
by
a
variety
of
 
factors, such as: the impact
 
of the COVID-19 pandemicsuch
 
on our business, suppliers,
consumers,
customers,
and
employees;as:
 
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
 
products,
including
new
productintroductions, advertising activities,
introductions,
advertising
activities,
pricing
actions,
and
promotional
 
activities
of
our
competitors;
 
economic conditions, including
 
conditions,
including
changes
in
inflation
rates,
 
interest rates,
rates,
tax
 
rates,
 
or
 
the
 
availability
 
of
 
capital;
 
product
 
development
 
and
 
innovation;
 
consumer
acceptance
 
of
 
new
 
products
 
and
 
product
improvements;
 
consumer
 
reaction
 
to
 
pricing
 
actions
 
and
 
changes
 
in
 
promotion
 
levels;
acquisitions
 
or
 
dispositions
 
of
 
businesses
 
or
assets;
changes
in
capital
structure;
 
changes
in
the
legal
and
regulatory
 
environment,
including
tax
legislation,
labeling
 
and advertising
advertising
regulations,
and
litigation;
impairments
in
the
carrying
 
value of goodwill, other intangible assets, or other long
 
of
goodwill,
other
intangible-lived assets,
or other
long-lived assets,
or changes
in the
 
useful lives
 
of other
 
intangible assets;
 
changes in
 
accounting standards
and
 
and the impact
 
of critical
 
accounting estimates;
 
estimates; product
quality
 
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
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
 
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
 
failure or
breach of
our information
technology systems;
 
foreign economic conditions,
conditions, including
currency rate
fluctuations; and
political unrest
in foreign markets
and economic uncertainty due to terrorism or war.
You
 
should also
 
consider the risk
 
factors that we
 
identify in Item
 
1A of Part
 
I of our
 
Annual Report on
 
Form 10-K for
 
the fiscal year
ended May 29, 202228, 2023, which could also affect our future results.
We undertake
 
no obligation to publicly revise any forward-looking
 
statements to reflect events or circumstances
 
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated
events.
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk.
 
The
 
estimated
 
maximum
 
potential
 
value-at-risk
 
arising
 
from
 
a
 
one-day
 
loss
 
in
 
fair
 
value
 
for
 
our
 
interest
 
rate,
 
foreign
 
exchange,
commodity, and equity
 
market-risk-sensitive instruments outstanding as of August 28, 2022,27, 2023,
 
was as follows:
 
In Millions
One-day Risk
of Loss
Change During
Quarter Ended
Aug. 28, 202227, 2023
Analysis of Change
Interest rate instruments
$
4559
$
4(6)
RisingLower interest ratesrate volatility
Foreign currency instruments
2436
3(1)
Larger portfolioImmaterial
Commodity instruments
105
(3)
Decrease in commodity prices
Equity instruments
3
-
Immaterial
For additional information, see Item 7A of Part II of our Annual Report on Form 10-K
 
for the fiscal year ended May 29, 2022.28, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3435
Item 4.
 
Controls and Procedures.
 
We,
 
under the
 
supervision and
 
with the
 
participation of
 
our management,
 
including our
 
Chief Executive
 
Officer and
 
Chief Financial
Officer,
 
have
 
evaluated
 
the
 
effectiveness
 
of
 
the design
 
and
 
operation
 
of
 
our
 
disclosure
 
controls
 
and
 
procedures
 
(as
 
defined
 
in
 
Rule
13a-15(e)
 
under
 
the
 
Securities
 
Exchange
 
Act
 
of
 
1934).
 
Based
 
on
 
our
 
evaluation,
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
Officer have
 
concluded that,
 
as of
 
August 28,27,
 
2022,2023, our
 
disclosure controls
 
and procedures
 
were effective
 
to ensure
 
that information
required to
 
be disclosed
 
by us
 
in reports
 
that we file
 
or submit
 
under the
 
Securities Exchange
 
Act of
 
1934 is (1)
 
recorded, processed,
summarized,
 
and
 
reported
 
within
 
the
 
time
 
periods
 
specified
 
in
 
Securities
 
and
 
Exchange
 
Commission
 
rules
 
and
 
forms,
 
and
 
(2)
accumulated and
 
communicated to
 
our management,
 
including our
 
Chief Executive
 
Officer and
 
Chief Financial
 
Officer,
 
in a
 
manner
that allows timely decisions regarding required disclosure.
There were no changes in our internal
 
control over financial reporting (as defined
 
in Rule 13a-15(f) under the Securities Exchange
 
Act
of 1934)
 
during the
 
quarter ended
 
August 28,27,
 
20222023, that
 
materially affected,
 
or are reasonably
 
reasonably likely to
 
to materially affect,
 
affect, our
internal
control
over financial reporting.
PART
 
II.
 
OTHER INFORMATION
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds.
 
The
 
following
 
table
 
sets forth
 
information
 
with
 
respect
 
to
 
shares
 
of
 
our
 
common
 
stock
 
that we
 
purchased
 
during
 
the quarter
 
ended
August 28, 2022:27, 2023:
Period
Total
 
Number
 
of Shares
Purchased (a)
Average
Price Paid
Per Share
Total
 
Number of Shares
Purchased as Part of a Publicly
Announced Program (b)
Maximum Number of Shares
that may yet be Purchased
Under the Program (b)
May 30, 202229, 2023 -
July 3, 20222, 2023
2,876,5503,648,025
$
68.5980.40
2,876,5503,648,025
18,061,62681,214,844
July 4, 20223, 2023 -
July 30, 2023
2,739,485
77.18
2,739,485
78,475,359
July 31, 2022
2,262,422
74.58
2,262,422
97,737,578
August 1, 20222023 -
 
August 28, 202227, 2023
1,744,640-
77.22-
1,744,640-
95,992,93878,475,359
Total
6,883,6126,387,510
$
72.7579.02
6,883,6126,387,510
95,992,93878,475,359
(a)
 
The total number
 
of shares purchased
 
includes shares of
 
common stock withheld
 
for the payment
 
of withholding taxes
 
upon the distribution
 
of
deferred option units.
(b)
 
On June
 
27, 2022,
 
our Board
 
of Directors approved
 
approved a
newan authorization
 
for the
 
repurchase of
 
up to
 
100,000,000 shares of
our common stock
and
terminated the
prior authorization.
Purchases can
be made
in the
open market
or in
privately negotiated
transactions, including
the use
 
of our
common stockcall
and terminated
the prior
authorization. Purchases
can be
made in
the open
market or
in privately
negotiated transactions,
including the
use of
call options
 
and
other
 
derivative
instruments,
 
Rule
10b5-1
 
trading
plans,
 
and
accelerated
 
repurchase
programs.
 
The
Board
 
did
not
 
specify
an
expiration date for the authorization.
Item 5.
Other Information.
None.
 
3536
PART
 
II. OTHER INFORMATION
Item 6.
Exhibits.
 
10.1+10.1
10.2
10.3
 
31.1
 
31.2
 
32.1
 
32.2
 
101
Financial
 
Statements
 
from
 
the Quarterly
 
Report
 
on Form
 
10-Q
 
of the
 
Company
 
for
 
the quarter
 
ended
 
August
 
28,27,
2022,2023,
 
formatted
 
in
 
Inline
 
Extensible
 
Business
 
Reporting
 
Language:
 
(i)
 
Consolidated
 
Statements
 
of
 
Earnings;
 
(ii)
Consolidated
 
Statements
 
of
 
Comprehensive
 
Income,
 
(iii)
 
Consolidated
 
Balance
 
Sheets;
 
(iv)
 
Consolidated
Statements of
Total
 
Equity and RedeemableEquity; (v)
 
Interest; (v) Consolidated Statements
 
Statements of Cash
 
Flows; and (vi)
 
(vi) Notes
to Consolidated
Financial
Consolidated Financial Statements.
 
104
Cover Page, formatted in Inline Extensible Business Reporting Language
 
and contained in Exhibit 101.
+
Portions of this exhibit have been excluded in accordance with SEC regulations
.
 
 
3637
SIGNATURES
Pursuant
 
to
 
the
 
requirements
 
of
 
the
 
Securities
 
Exchange
 
Act
 
of
 
1934,
 
the
 
registrant
 
has
 
duly
 
caused
 
this
 
report
 
to
 
be
 
signed
 
on
 
its
behalf by the undersigned thereunto duly authorized.
 
GENERAL MILLS, INC.
(Registrant)
Date: September 21, 202220, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
 
Officer
(Principal Accounting Officer and Duly Authorized
 
Officer)