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
NOVEMBER 27, 2022FEBRUARY 26, 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
GIS25A
New York Stock Exchange
0.450% Notes due 2026
 
GIS26
 
New York Stock Exchange
1.500% Notes due 2027
 
GIS27
 
New York Stock Exchange
________________
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
 
Securities
Exchange Act of 1934
 
during the preceding 12
 
months (or for such shorter
 
period that the registrant
 
was required to file such
 
reports),
and (2) has been subject to such filing requirements for the past 90 days.
 
Yes
☑
 
No
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
has
 
submitted
 
electronically
 
every
 
Interactive
 
Data
 
File
 
required
 
to
 
be
 
submitted
pursuant to Rule
 
405 of Regulation
 
S-T during
 
the preceding 12
 
months (or for
 
such shorter period
 
that the registrant
 
was required
 
to
submit such files).
Yes
 
☑
 
No
☐
Indicate by check mark
 
whether the registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
smaller reporting
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer,”
 
“smaller
 
reporting
company,” and “emerging“emergin
g
 
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
 
December March
13,
 
2022:2023:
589,610,717587,354,488
 
(excluding
165,002,611167,258,840
 
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
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Net sales
$
5,220.75,125.9
$
5,024.04,537.7
$
9,938.315,064.2
$
9,563.914,101.6
Cost of sales
3,515.63,461.1
3,392.83,134.0
6,785.510,246.6
6,335.39,469.3
Selling, general, and administrative expenses
894.2946.9
828.8751.4
1,685.62,632.5
1,586.22,337.6
Divestitures gain, net
-(13.7)
-(170.1)
(430.9)(444.6)
-(170.1)
Restructuring, impairment, and other exit costs
costs (recoveries)1.4
11.17.1
2.314.1
12.7
(2.0)5.1
Operating profit
799.8730.2
800.1815.3
1,885.42,615.6
1,644.42,459.7
Benefit plan non-service income
(21.7)(21.6)
(27.7)(27.1)
(43.4)(65.0)
(57.3)(84.4)
Interest, net
91.598.3
92.786.5
179.2277.5
188.6275.1
Earnings before income taxes and after-tax earnings
 
from
 
 
joint ventures
730.0653.5
735.1755.9
1,749.62,403.1
1,513.12,269.0
Income taxes
147.1108.3
159.7123.2
363.2471.5
328.6451.8
After-tax earnings from joint ventures
25.412.7
33.029.9
45.257.9
62.192.0
Net earnings, including earnings attributable to redeemable
 
 
and noncontrolling interests
608.3557.9
608.4662.6
1,431.61,989.5
1,246.61,909.2
Net earnings attributable to redeemable and
 
 
noncontrolling interests
2.44.8
11.22.3
5.710.5
22.424.7
Net earnings attributable to General Mills
$
605.9553.1
$
597.2660.3
$
1,425.91,979.0
$
1,224.21,884.5
Earnings per share – basic
$
1.010.94
$
0.981.09
$
2.383.32
$
2.013.10
Earnings per share – diluted
$
1.010.92
$
0.971.08
$
2.363.28
$
1.993.07
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Net earnings, including earnings attributable to
 
 
redeemable and noncontrolling interests
$
608.3557.9
$
608.4662.6
$
1,431.61,989.5
$
1,246.61,909.2
Other comprehensive loss,income (loss), net of tax:
Foreign currency translation
(115.0)12.5
(38.5)(122.5)
(111.2)(98.7)
(62.4)(184.9)
Other fair value changes:
Hedge derivatives
20.8(5.7)
18.7(30.8)
(17.5)(23.2)
20.4(10.4)
Reclassification to earnings:
Foreign currency translation
-
-342.2
(7.4)
-342.2
Hedge derivatives
1.018.9
(6.4)30.2
(0.4)18.5
4.234.4
Amortization of losses and prior service costs
14.213.9
22.822.3
28.342.2
31.253.5
Other comprehensive loss,income (loss), net of tax
(79.0)39.6
(3.4)241.4
(108.2)(68.6)
(6.6)234.8
Total comprehensive
 
income
 
529.3597.5
605.0904.0
1,323.41,920.9
1,240.02,144.0
Comprehensive income (loss) attributable to
 
 
redeemable and noncontrolling interests
3.04.9
(25.8)2.3
5.09.9
(49.3)(47.0)
Comprehensive income attributable to General Mills
$
526.3592.6
$
630.8901.7
$
1,318.41,911.0
$
1,289.32,191.0
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Nov. 27, 2022Feb. 26, 2023
May 29, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
644.1618.7
$
569.4
Receivables
1,834.01,770.2
1,692.1
Inventories
2,121.32,083.3
1,867.3
Prepaid expenses and other current assets
731.2643.8
802.1
Assets held for sale
-
158.9
Total current
 
assets
5,330.65,116.0
5,089.8
Land, buildings, and equipment
3,358.03,353.6
3,393.8
Goodwill
14,476.014,487.8
14,378.5
Other intangible assets
6,974.86,968.0
6,999.9
Other assets
1,180.41,274.4
1,228.1
Total assets
$
31,319.831,199.8
$
31,090.1
LIABILITIES
 
AND EQUITY
Current liabilities:
Accounts payable
$
4,022.63,868.2
$
3,982.3
Current portion of long-term debt
1,964.32,487.2
1,674.2
Notes payable
1,153.4959.8
811.4
Other current liabilities
2,067.92,103.1
1,552.0
Total current
 
liabilities
9,208.29,418.3
8,019.9
Long-term debt
8,622.58,140.2
9,134.8
Deferred income taxes
2,186.92,151.6
2,218.3
Other liabilities
930.11,006.0
929.1
Total liabilities
20,947.720,716.1
20,302.1
Stockholders' equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,155.31,191.1
1,182.9
Retained earnings
18,991.919,226.5
18,532.6
Common stock in treasury,
 
at cost, shares of
164.4166.2
 
and
155.7
(8,023.5)(8,220.1)
(7,278.1)
Accumulated other comprehensive loss
(2,078.0)(2,038.5)
(1,970.5)
Total stockholders' equity
10,121.210,234.5
10,542.4
Noncontrolling interests
250.9249.2
245.6
Total equity
10,372.110,483.7
10,788.0
Total liabilities and equity
$
31,319.831,199.8
$
31,090.1
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
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,825.610,372.1
$
9,985.99,804.7
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,146.11,155.3
1,345.01,365.1
Stock compensation plans
(7.4)21.9
(5.1)11.5
Unearned compensation related to stock unit awards
(6.8)(14.8)
(3.9)(19.1)
Earned compensation
23.428.7
20.631.7
Decrease in redemption valueReversal of cumulative redeemable interest
 
redeemablevalue adjustments
-
(207.4)
Acquisition of noncontrolling interest
-
8.5(19.5)
Ending balance
1,155.31,191.1
1,365.11,162.3
Retained earnings:
Beginning balance
19,027.618,991.9
17,384.517,363.2
Net earnings attributable to General Mills
605.9553.1
597.2660.3
Cash dividends declared ($
1.080.54
 
and $
1.020.51
 
per share)
(641.6)(318.5)
(618.5)(310.4)
Ending balance
18,991.919,226.5
17,363.217,713.1
Common stock in treasury:
Beginning balance
(160.3)(164.4)
(7,676.0)(8,023.5)
(148.3)(151.4)
(6,715.0)(6,915.2)
Shares purchased
(5.2)(2.9)
(400.5)(251.0)
(3.7)(2.6)
(224.9)(175.5)
Stock compensation plans
1.1
53.054.4
0.61.6
24.775.4
Ending balance
(164.4)(166.2)
(8,023.5)(8,220.1)
(151.4)(152.4)
(6,915.2)(7,015.3)
Accumulated other comprehensive loss:
Beginning balance
(1,998.4)(2,078.0)
(2,397.7)(2,364.1)
Comprehensive (loss)Other comprehensive income
(79.6)39.5
33.6241.4
Ending balance
(2,078.0)(2,038.5)
(2,364.1)(2,122.7)
Noncontrolling interests:
Beginning balance
250.8250.9
293.5280.2
Comprehensive income (loss)
3.04.9
(11.9)2.3
Distributions to noncontrolling interest holders
(2.9)(6.6)
(1.4)(108.3)
Reclassification from redeemable interest
-
561.6
Reversal of cumulative redeemable interest
value adjustments
-
207.4
Divestiture
-
(680.4)
Ending balance
250.9249.2
280.2262.8
Total equity,
 
ending balance
$
10,372.110,483.7
$
9,804.710,075.7
Redeemable interest:
Beginning balance
$
-
$
584.0561.6
Comprehensive loss
-
(13.9)
Decrease in redemption value of
redeemableReclassification to noncontrolling interest
-
(8.5)(561.6)
Ending balance
$
-
$
561.6-
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
Consolidated Statements of Total
 
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,788.0
$
9,773.2
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,182.9
1,365.5
Stock compensation plans
1.923.8
4.015.5
Unearned compensation related to stock unit awards
(85.8)(100.6)
(72.2)(91.3)
Earned compensation
56.385.0
53.785.4
Decrease in redemption value of
 
redeemable interest
-
14.1
Reversal of cumulative redeemable interest
value adjustments
-
(207.4)
Acquisition of noncontrolling interest
-
(19.5)
Ending balance
1,155.31,191.1
1,365.11,162.3
Retained earnings:
Beginning balance
18,532.6
17,069.8
Net earnings attributable to General Mills
1,425.91,979.0
1,224.21,884.5
Cash dividends declared ($
1.622.16
 
and $
1.532.04
 
per share)
(966.6)(1,285.1)
(930.8)(1,241.2)
Ending balance
18,991.919,226.5
17,363.217,713.1
Common stock in treasury:
Beginning balance
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Shares purchased
(12.1)(15.0)
(901.3)(1,152.3)
(6.2)(8.8)
(375.0)(550.5)
Stock compensation plans
3.44.5
155.9210.3
1.73.3
71.0146.4
Ending balance
(164.4)(166.2)
(8,023.5)(8,220.1)
(151.4)(152.4)
(6,915.2)(7,015.3)
Accumulated other comprehensive loss:
Beginning balance
(1,970.5)
(2,429.2)
Other comprehensive (loss) income
(107.5)(68.0)
65.1306.5
Ending balance
(2,078.0)(2,038.5)
(2,364.1)(2,122.7)
Noncontrolling interests:
Beginning balance
245.6
302.8
Comprehensive income (loss)
5.09.9
(20.1)(17.8)
Distributions to noncontrolling interest holders
(4.8)(11.4)
(2.5)(110.8)
Reclassification from redeemable interest
-
561.6
Reversal of cumulative redeemable interest
value adjustments
-
207.4
Divestiture
5.1
-(680.4)
Ending balance
250.9249.2
280.2262.8
Total equity,
 
ending balance
$
10,372.110,483.7
$
9,804.710,075.7
Redeemable interest:
Beginning balance
$
-
$
604.9
Comprehensive loss
-
(29.2)
Decrease in redemption value of
 
redeemable interest
-
(14.1)
Reclassification to noncontrolling interest
-
(561.6)
Ending balance
$
-
$
561.6-
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling
 
interests
$
1,431.61,989.5
$
1,246.61,909.2
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
273.9411.0
286.9430.6
After-tax earnings from joint ventures
(45.2)(57.9)
(62.1)(92.0)
Distributions of earnings from joint ventures
26.536.6
35.849.0
Stock-based compensation
57.686.7
47.980.3
Deferred income taxes
(48.1)(71.2)
56.481.3
Pension and other postretirement benefit plan contributions
(12.7)(20.2)
(12.5)(20.7)
Pension and other postretirement benefit plan costs
(13.5)(20.2)
(14.4)(10.6)
Divestitures gain, net
(430.9)(444.6)
-(170.1)
Restructuring, impairment, and other exit costs
(13.7)(14.6)
(44.2)(62.5)
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(64.4)21.3
(88.7)91.5
Other, net
39.6110.6
46.1(57.9)
Net cash provided by operating activities
1,200.72,027.0
1,497.82,228.1
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(226.7)(351.3)
(224.3)(350.6)
Acquisition, net of cash acquired
(251.5)
(1,198.6)(1,201.3)
Proceeds from divestitures, net of cash divested
610.7633.1
-46.1
Investments in affiliates, net
(1.4)(30.8)
4.830.1
Proceeds from disposal of land, buildings, and equipment
0.50.8
1.51.6
Other, net
(6.5)(6.4)
20.612.3
Net cash provided (used)used by investing activities
125.1(6.1)
(1,396.0)(1,461.8)
Cash Flows - Financing Activities
Change in notes payable
353.4159.2
854.2471.5
Issuance of long-term debt
500.0501.8
1,935.01,935.2
Payment of long-term debt
(600.0)
(2,221.7)(2,278.2)
Proceeds from common stock issued on exercised options
118.5168.0
26.196.2
Purchases of common stock for treasury
(901.3)(1,152.3)
(375.0)(550.5)
Dividends paid
(647.9)(967.4)
(623.2)(934.1)
Distributions to noncontrolling and redeemable interest holders
(4.8)(11.4)
(2.5)(110.8)
Other, net
(48.4)(53.5)
(20.1)(26.8)
Net cash used by financing activities
(1,230.5)(1,955.6)
(427.2)(1,397.5)
Effect of exchange rate changes on cash and cash equivalents
(20.6)(16.0)
(35.1)(29.6)
Increase (decrease) in cash and cash equivalents
74.749.3
(360.5)(660.8)
Cash and cash equivalents - beginning of year
569.4
1,505.2
Cash and cash equivalents - end of period (includes $
123.7
million of cash classified as
held for sale as of November 28, 2021)
$
644.1618.7
$
1,144.7844.4
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(200.8)(132.4)
$
(237.3)(214.5)
Inventories
(278.5)(237.0)
9.2102.5
Prepaid expenses and other current assets
62.9151.5
(1.2)41.5
Accounts payable
112.5(41.6)
(28.4)(14.0)
Other current liabilities
239.5280.8
169.0176.0
Changes in current assets and liabilities
$
(64.4)21.3
$
(88.7)91.5
See accompanying notes to consolidated financial statements.
 
 
 
10
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
 
November 27,February 26,
2022,2023,
 
are not necessarily indicative of the results that may be expected for the fiscal year
 
ending May 28, 2023.
 
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. 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.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisitions and DivestitureDivestitures
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 consoliconsol
 
datedidated the TNT Crust business
 
into our Consolidated Balance
 
Sheets and recorded goodwill
 
of
$
154.3
 
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
 
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.
We
recorded
a
net
pre-tax
gain
of
$
148.8
million on the sale of these businesses during the third quarter of fiscal 2022.
During the third quarter of fiscal 2022, we sold a European dough business
and recorded a net pre-tax gain on sale of $
21.3
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
 
the 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
 
effects of this acquisition were not material.
(3) Restructuring, Impairment, and Other Exit Costs
In the six-monthnine-month period
ended November 27, 2022,
February 26, 2023, we did not undertake
 
any new restructuring
actions. We
 
recorded $
11.62.1
 
million of
restructuring
charges
in
the
second
third quarter
of
fiscal
2023
and
$
13.9
million
of
restructuring
charges
in
the
six-month
period
ended
November 27,
2022, related
to restructuring
actions previously
announced.
We
recorded $
2.716.0
 
million of
restructuring charges
in the nine-month period ended
second
quarter of
fiscal 2022
and
a $
1.4
million net
recovery of
restructuring
charges
in the
six-month
period
ended November
28,
2021,February 26, 2023, related to restructuring actions previously announced. We
 
We recorded $
9.3
million of restructuring charges in the
third quarter of fiscal 2022 and $
7.9
million of restructuring charges in the nine-month period ended
February 27, 2022, related to
restructuring actions previously announced.
We
expect these actions to be completed by the end of
fiscal 2024
.
In
the
second
quarter
of
fiscal
2023,
we
increased
the
estimate
of
restructuring
charges
that
we
expect
to
incur
related
to
our
previously announced
actions in the
International segment
to drive efficiencies
in manufacturing
and logistics operations.
As a result,
we recorded
aWe paid net $
4.5
million increase
to our
restructuring reserve
primarily related
to estimated
severance charges.
We
expect to
incur
approximately
$
25
million
of
restructuring
charges
and
project-related
costs
related
to
these
actions,
of
which
approximately
$
16
million will be
cash. These charges
are expected
to consist of
approximately $
1230.6
 
million of severancecash in the nine-month period ended February 26, 2023, related to restructuring
 
andactions previously
announced. We
paid net $
1070.4
 
million of other
costs,
primarily
asset write-offs.
We
also
expect
to
incur
approximately
$
3
million
cash in the same period of project-related
costs.
We
expect
these actions
to be
completed by the end of
fiscal 2024
.
In
the
second
quarter
of
fiscal
2023,
we
increased
the
estimate
of
restructuring
charges
that
we
expect
to
incur
related
to
our
previously
announced
global
organizational
structure
and
resource
realignment
actions.
As
a
result,
we
recorded
a
$
4.1
million
increase to our
restructuring reserve primarily
related to estimated
severance charges.
We
expect to incur
approximately $
140
million2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
of
 
restructuring
 
charges
 
related
 
to
 
these
 
actions,
 
of
 
which
 
approximately
 
$
115
 
million
 
will
 
be
 
cash.
 
These
 
charges
 
are
 
expected
 
to
consist
 
of
 
approximately
 
$
105
 
million
 
of
 
severance
 
and
 
approximately
 
$
35
 
million
 
of
other
costs.
We
expect
these
actions
to
be
completed by the end of
fiscal 2023
.
We
paid
net
$
27.6
million
of
cash
in
the
six-month
period
ended
November
27,
2022,
related
to
restructuring
actions
previously
announced. We
paid net $
42.8
million of cash in the same period of fiscal 2022.
11
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
7.58.6
Utilized in fiscal 2023
(24.1)(26.5)
Reserve balance as of Nov. 27, 2022Feb. 26, 2023
$
20.218.9
The reserve balance primarily consists of expected severance payments
 
associated with restructuring actions.
 
The charges
 
recognized in
 
the roll forward
 
of our reserves
 
for restructuring
 
and other exit
 
costs do not
 
include items
 
charged directly
to expense
 
(e.g., asset
 
impairment charges,
 
accelerated depreciation,
 
the gain
 
or loss
 
on the
 
sale of
 
restructured assets,
 
and the
 
write-
off
 
of
 
spare parts)
 
and other
 
periodic
 
exit costs
 
are
 
recognized
 
as incurred,
 
as those
 
items are
 
not reflected
 
in our
 
restructuring
 
and
other exit cost reserves on our Consolidated Balance Sheets.
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
 
 
In Millions
Nov. 27, 2022Feb. 26, 2023
May 29, 2022
Goodwill
$
14,476.014,487.8
$
14,378.5
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,706.66,708.2
6,725.8
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
401.9385.5
400.3
Less accumulated amortization
(133.7)(125.7)
(126.2)
Intangible assets subject to amortization, net
268.2259.8
274.1
Other intangible assets
6,974.86,968.0
6,999.9
Total
$
21,450.821,455.8
$
21,378.4
Based on the
 
on
the carrying
value
of
 
finite-lived intangible assets
 
intangibleas of February
 
assets as
of
November
27,
2022,
26, 2023, annual
amortization
 
expense
for
each of
 
the next
next five fiscal years is estimated to be approximately $
20
 
million.
12
The changes in the carrying amount of goodwill during the six-monthnine-month period
 
ended November 27, 2022,February 26, 2023, were as follows:
In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Joint Ventures
Total
Balance as of May 29, 2022
$
6,552.9
$
6,062.8
$
648.8
$
721.6
$
392.4
$
14,378.5
Acquisition
-
-
154.3
-
-
154.3
DivestitureDivestitures
-(2.0)
-
-
(0.4)
-
(0.4)(2.4)
Other activity, primarily
 
 
foreign currency translation
(6.4)(8.5)
-
-
(37.5)(27.2)
(12.5)(6.9)
(56.4)(42.6)
Balance as of Nov. 27, 2022Feb. 26, 2023
$
6,546.56,542.4
$
6,062.8
$
803.1
$
683.7694.0
$
379.9385.5
$
14,476.014,487.8
The changes in the carrying amount of other intangible assets during the six-monthnine-month
 
period ended November 27, 2022,February 26, 2023, were as follows:
In Millions
Total
Balance as of May 29, 2022
$
6,999.9
Acquisition
3.8
Divestiture
(3.6)
Other activity, primarily
 
foreign currency translation
(28.9)(32.1)
Balance as of Nov. 27, 2022Feb. 26, 2023
$
6,974.86,968.0
12
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
 
brand intangible assets
 
had risk of decreasing
 
coverage. We
 
will continue to
monitor these businesses for potential impairment.
(5) Inventories
The components of inventories were as follows:
In Millions
Nov. 27, 2022Feb. 26, 2023
May 29, 2022
Raw materials and packaging
$
565.8560.2
$
532.0
Finished goods
1,923.61,929.7
1,634.7
Grain
156.1148.6
164.0
Excess of FIFO over LIFO cost
(524.2)(555.2)
(463.4)
Total
$
2,121.32,083.3
$
1,867.3
(6) Risk Management Activities
 
Many commodities we
 
use in the
 
production and distribution
 
of our products
 
are exposed to
 
market price risks.
 
We
 
utilize derivatives
to manage price risk for our principal
 
ingredients and energy costs, including
 
grains (oats, wheat, and corn), oils
 
(principally soybean),
dairy products, natural
 
gas, and diesel fuel.
 
Our primary objective
 
when entering into
 
these derivative contracts
 
is to achieve
 
certainty
with
 
regard
 
to
 
the
 
future
 
price
 
of
 
commodities
 
purchased
 
for
 
use
 
in
 
our
 
supply
 
chain.
 
We
 
manage
 
our
 
exposures
 
through
 
a
combination of purchase orders, long-term
 
contracts with suppliers, exchange-traded
 
futures and options, and over-the-counter
 
options
and swaps.
 
We
 
offset
 
our exposures
 
based on
 
current and
 
projected market
 
conditions and
 
generally seek
 
to acquire
 
the inputs
 
at as
close as possible to or below our planned cost.
We
 
use derivatives
 
to manage
 
our exposure
 
to changes
 
in commodity
 
prices. We
 
do not
 
perform the
 
assessments required
 
to achieve
hedge
 
accounting
 
for
 
commodity
 
derivative
 
positions.
 
Accordingly,
 
the
 
changes
 
in
 
the
 
values
 
of
 
these
 
derivatives
 
are
 
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
 
not meet the
 
criteria for
 
cash flow hedge
 
accounting, we believe
 
that these instruments
 
are effective
 
in achieving our
objective of providing certainty
 
in the future price of commodities purchased
 
for use in our supply chain.
 
Accordingly, for
 
purposes of
measuring
 
segment
 
operating
 
performance,
 
these
 
gains
 
and
 
losses
 
are
 
reported
 
in
 
unallocated
 
corporate
 
items
 
outside
 
of
 
segment
operating results
 
until such
 
time that
 
the exposure
 
we are
 
managing affects
 
earnings. At
 
that time
 
we reclassify
 
the gain
 
or loss
 
from
unallocated
 
corporate
 
items
 
to
 
segment
 
operating
 
profit,
 
allowing
 
our
 
operating
 
segments
 
to
 
realize
 
the
 
economic
 
effects
 
of
 
the
derivative without experiencing any resulting mark-to-market volatility,
 
which remains in unallocated corporate items.
 
Unallocated corporate items for the quarters and nine-month periods ended
February 26, 2023, and February 27, 2022, included:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 26, 2023
Feb. 27, 2022
Feb. 26, 2023
Feb. 27, 2022
Net (loss) gain on mark-to-market valuation of certain
commodity positions
$
(30.2)
$
72.3
$
(123.4)
$
119.3
Net gain on commodity positions reclassified from
unallocated corporate items to segment operating profit
(21.5)
(48.1)
(85.0)
(118.7)
Net mark-to-market revaluation of certain grain inventories
(14.9)
(44.2)
(58.0)
15.6
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
(66.6)
$
(20.0)
$
(266.4)
$
16.2
As
of
February
26,
2023,
the
net
notional
value
of
commodity
derivatives
was
$
448.0
million,
of
which
$
153.0
million
related
to
energy inputs and $
295.0
million related to agricultural inputs. These contracts relate to inputs that generally
will be utilized within the
next
12
months.
As of February 26, 2023, the notional value of foreign exchange derivatives was $
1,111.8
million.
We
also have net
investments in
foreign subsidiaries
that are denominated
in euros. As
of February
26, 2023, we
hedged a portion
of
these investments with €
2,942.8
million of euro-denominated bonds.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
Unallocated corporate items for the quarters and six-month periods ended
November 27, 2022, and November 28, 2021, included:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Net (loss) gain on mark-to-market valuation of certain
commodity positions
$
(20.9)
$
16.6
$
(93.2)
$
47.0
Net gain on commodity positions reclassified from
unallocated corporate items to segment operating profit
(20.5)
(35.9)
(63.5)
(70.6)
Net mark-to-market revaluation of certain grain inventories
16.3
31.4
(43.1)
59.8
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
(25.1)
$
12.1
$
(199.8)
$
36.2
As of
November
27,
2022,
the net
notional
value
of
commodity
derivatives
was $
429.4
million,
of
which
$
158.1
million
related
to
energy inputs and $
271.3
million related to agricultural inputs. These contracts relate to inputs that generally
will be utilized within the
next
12
months.
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
November
27,
2022 February 26, 2023,
 
and
were
Level
1
or
Level
2
assets
and
 
liabilities
in
the
fair
value
hierarchy.
 
We
did
 
not significantly
significantly change our valuation techniques from prior periods.
 
During
the third
quarter of
fiscal 2023,
in advance
of a
planned debt
refinancing,
we entered
into a
€
250.0
million notional
amount
forward-starting interest rate swap.
During
the
second
quarter
of
fiscal
2023,
we
entered
into
a
$
500.0
million
notional
amount
interest
rate
swap
to
convert
our
$
500.0
million fixed rate notes due
November 18, 2025
, to a floating rate.
Subsequent
to
the
end
of
the
third
quarter
of
fiscal
2023,
in
advance
of
planned
debt
refinancings,
we
entered
into
€
500.0
million
notional amount of forward-starting interest rate swaps and $
350.0
million notional amount of treasury locks.
We
 
offer
 
certain
 
suppliers
 
access
 
to
 
third
 
party
 
services
 
that
 
allow
 
them
 
to
 
view
 
our
 
scheduled
 
payments
 
online.
 
The
 
third-party
services also
 
allow suppliers
 
to finance
 
advances on
 
our scheduled
 
payments at
 
the sole
 
discretion of
 
the supplier
 
and the third
 
party.
We
 
have no
 
economic interest
 
in these
 
financing arrangements
 
and no
 
direct relationship
 
with the
 
suppliers, the
 
third parties,
 
or any
financial
 
institutions
 
concerning
 
these
 
services.
 
All
 
of
 
our
 
accounts
 
payable
 
remain
 
as
 
obligations
 
to
 
our
 
suppliers
 
as
 
stated
 
in
 
our
supplier
agreements.
 
As of
 
November 27,February 26,
 
2022,2023, $
1,477.41,483.9
 
million of
 
our total
 
total accounts payable
 
payable were
payable
 
to suppliers
 
who utilize
these
third-party
 
services.
As
 
of November
 
28,February
 
2021, 27,
2022,
$
1,378.11,382.8
 
million
 
of
our
 
total
accounts
 
payable
 
were
payable
 
to
suppliers
 
who
utilize these third-party services.
During
the
second
quarter
of
fiscal
2023,
we
entered
into
a
$
500.0
million
notional
amount
interest
rate
swap
to
convert
our
$
500.0
million fixed rate notes due
November 18, 2025
, to a floating rate.
(7) Debt
The components of notes payable were as follows:
 
 
In Millions
Nov. 27, 2022Feb. 26, 2023
May 29, 2022
U.S. commercial paper
$
1,126.6948.1
$
694.8
Financial institutions
26.811.7
116.6
Total
$
1,153.4959.8
$
811.4
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
 
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of November 27, 2022:February 26, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
 
and uncommitted credit facilities
$
3.3
$
-
The
 
credit
 
facilities
 
contain
 
covenants,
 
including
 
a
 
requirement
 
to
 
maintain
 
a
 
fixed
 
charge
 
coverage
 
ratio
 
of
 
at
 
least
2.5
 
times.
We
were in compliance with all credit facility covenants as of November 27, 2022.February 26, 2023.
Long-Term
 
Debt
 
The fair
 
values and
 
carrying amounts
 
of long-term
 
debt, including
 
the current
 
portion, were
 
$
9,875.39,840.9
 
million and
 
$
10,586.810,627.4
 
million,
respectively,
 
as of
 
November 27,February
 
2022. The26,
 
2023.
The fair
value
 
of long-term
 
debt was
 
was estimated
using
 
market quotations
 
and
discounted
 
cash
14
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
 
second
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
issued
 
$
500.0
 
million
 
of
5.241
 
percent
 
notes
 
due
November 18, 2025
.
 
We
 
used
 
the
 
net
proceeds to repay a portion of our outstanding commercial paper and for general
 
for general corporate purposes.
In the
 
second quarter
 
of fiscal
 
2023, we
 
issued €
250.0
 
million of
 
floating-rate notes
 
due
May 16, 2023
.
 
We
 
used the
 
net proceeds
 
to
repay €
250.0
 
million of
0.0
 
percent fixed-rate notes due
November 11, 2022
.
In
 
the fourth
 
quarter
 
of fiscal
 
2022,
 
we repaid
 
$
850.0
 
million
 
of
3.7
 
percent
 
fixed
 
rate notes
 
due
October 17, 2023
, using
 
proceeds
from the issuance of commercial paper.
14
In the fourth quarter of fiscal 2022, we issued €
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
 
percent fixed-rate notes due
November 15, 2025
. We used the
net proceeds to repay a portion of our €
500.0
 
million of
0.0
 
percent fixed-rate notes due
November 16, 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
2.25
 
percent notes due
October 14, 2031
. We used the net 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
 
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.
Certain of our
 
our long-term
debt agreements
 
contain restrictive
 
covenants.
As of November 27, 2022,February 26, 2023, we were in compliance with all of
these covenants.
(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). The
 
Onfloating preferred return
 
June 1,rate on GMC’s
 
2021,Class A Interests is
the
sum
of
 
the
three-month Term SOFR
 
floatingplus
186
basis
points.
The
 
preferred
 
return
 
rate
 
onis
 
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
agreement
for
the
use
of
Yoplait
 
and
Liberté
brands in the United States and Canada, and cash. Please see Note 2 to the Consolidated
 
Financial Statements.
Up to
 
the date
 
of the
 
divestiture, Sodiaal
 
held the remaining
 
interests in
 
each of
 
the entities.
 
On the
 
acquisition date,
 
we recorded
 
the
fair
value
 
of
Sodiaal’s
49
 
percent
euro-denominated
interest
 
in
Yoplait
 
SAS
as
 
a redeemable
interest on
our Consolidated
Balance Sheets.
Sodiaal had
the
right
to put
all or
a portion
of its
 
redeemable
 
interest
 
onto us
 
our
Consolidated
Balance
Sheets. Sodiaal had
the right to
put all or
a portion of
its redeemable interest
to us at
 
fair value until
 
until the
divestiture
closed
 
in the third
quarter of
 
fiscal 2022.third quarter
 
of fiscal
2022. In connection
 
connection with the
 
the divestiture, cumulative
 
cumulative adjustments made
 
made to the
 
the redeemable
 
interest related
 
to the
 
fair value
value put feature
were
reversed against additional paid-in
 
paid-in capital, where changes
in the redemption amount
 
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 $
99.5
 
million for the six-month period ended November 28, 2021.
Our noncontrolling interests contain restrictive covenants. As of November 27, 2022,February 26, 2023, we were in compliance with all of these
covenants.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
(9) Stockholders’ Equity
 
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
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
 
$
605.9553.1
$
2.44.8
$
597.2660.3
$
1.9
$
9.32.3
Other comprehensive income (loss) income::
Foreign currency translation
$
(144.7)3.4
$
29.19.0
(115.6)12.4
0.60.1
$
(29.0)(125.7)
$
27.83.2
(1.2)(122.5)
(13.8)
(23.5)-
Other fair value changes:
Hedge derivatives
26.8(6.3)
(6.0)0.6
20.8(5.7)
-
29.1(23.9)
(11.0)(6.9)
18.1(30.8)
-
0.6
Reclassification to earnings:
Hedge derivativesForeign currency translation (a)
1.8
(0.8)
1.0
-
(12.1)
6.0
(6.1)-
-
(0.3)-
342.2
-
342.2
-
Hedge derivatives (b)
23.1
(4.2)
18.9
-
23.1
7.1
30.2
-
Amortization of losses and
 
prior service costs (b)(c)
18.318.1
(4.1)(4.2)
14.213.9
-
29.228.8
(6.4)(6.5)
22.8
-22.3
-
Other comprehensive (loss) income
$
(97.8)38.3
$
18.21.2
(79.6)39.5
0.60.1
$
17.2244.5
$
16.4(3.1)
33.6241.4
(13.8)
(23.2)-
Total comprehensive income (loss)
$
526.3592.6
$
3.04.9
$
$
630.8901.7
$
(11.9)
$
(13.9)2.3
(a)
 
(Gain) lossLoss reclassified from AOCI into earnings is reported in the divestitures gain.
(b)
Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)(c)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Six-Month
Nine-Month Period Ended
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
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
 
$
1,425.91,979.0
$
5.710.5
$
$
1,224.21,884.5
$
4.97.2
$
17.5
Other comprehensive (loss) income:
Foreign currency translation
$
(86.7)(83.3)
$
(23.8)(14.8)
(110.5)(98.1)
(0.7)(0.6)
$
(40.9)(166.6)
$
50.553.7
9.6(112.9)
(25.0)
(47.0)
Other fair value changes:
Hedge derivatives
(23.0)(29.3)
5.56.1
(17.5)(23.2)
-
31.98.0
(12.0)(18.9)
19.9(10.9)
-
0.5
Reclassification to earnings:
Foreign currency translation (a)
(7.4)
-
(7.4)
-
-342.2
-
-342.2
-
-
Hedge derivatives (b)
(0.1)23.0
(0.3)(4.5)
(0.4)18.5
-
(0.1)23.0
4.511.6
4.434.6
-
(0.2)
Amortization of losses and
 
prior service costs (c)
 
36.554.6
(8.2)(12.4)
28.342.2
-
40.068.8
(8.8)(15.3)
31.253.5
-
-
Other comprehensive (loss) income
$
(80.7)(42.4)
$
(26.8)(25.6)
(107.5)(68.0)
(0.7)(0.6)
$
30.9275.4
$
34.231.1
65.1306.5
(25.0)
(46.7)
Total comprehensive income (loss)
$
1,318.41,911.0
$
5.09.9
$
$
1,289.32,191.0
$
(20.1)(17.8)
$
(29.2)
(a)
 
Gain(Gain) loss reclassified from AOCI into earnings is reported in the divestitures gain, net.gain.
(b)
 
(Gain) lossLoss (gain) reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(c)
 
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
Nov. 27, 2022Feb. 26, 2023
May 29, 2022
Foreign currency translation adjustments
$
(708.6)(696.2)
$
(590.7)
Unrealized gain from hedge derivatives
5.418.6
23.3
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,477.0)(1,459.1)
(1,513.4)
Prior service credits
102.298.2
110.3
Accumulated other comprehensive loss
$
(2,078.0)(2,038.5)
$
(1,970.5)
(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 29, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
Compensation expense related to stock-based payments recognized
 
in the Consolidated Statements of Earnings was as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Compensation expense related to stock-based payments
$
24.129.1
$
13.931.4
$
57.686.7
$
47.578.9
Compensation
 
expense
 
related
 
to
 
stock-based
 
payments
 
recognized
 
in
 
the
 
Consolidated
 
Statements
 
of
 
Earnings
 
includes
 
amounts
recognized in restructuring, impairment, and other exit costs in fiscal 2022.
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Windfall tax benefits from stock-based payments
$
5.66.2
$
1.66.7
$
18.424.6
$
6.313.0
As
 
of
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
unrecognized
 
compensation
 
expense
 
related
 
to
 
non-vested
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
performance share units was $
147.4133.1
 
million. This expense will be recognized over
2320
 
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:
 
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Net cash proceeds
$
118.5168.0
$
26.196.2
Intrinsic value of options exercised
$
55.781.8
$
12.144.4
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.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Estimated fair values of stock options granted
 
$
14.16
$
8.77
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
Expected term
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
Dividend yield
3.1
%
3.4
%
The total grant date fair value of restricted stock unit awards that vested during
 
the period was as follows:
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Total grant date fair
 
value
$
102.6105.4
$
76.0
79.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions, Except per Share Data
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Net earnings attributable to General Mills
$
605.9553.1
$
597.2660.3
$
1,425.91,979.0
$
1,224.21,884.5
Average number
 
of common shares - basic EPS
595.9592.5
606.8
596.2
608.6
598.0
609.5
Incremental share effect from: (a)
Stock options
3.7
2.22.9
3.6
2.12.4
Restricted stock units and performance share units
2.42.8
2.22.7
2.42.6
2.22.5
Average number
 
of common shares - diluted EPS
602.0599.0
613.0612.4
604.0602.4
613.8613.5
Earnings per share – basic
$
1.010.94
$
0.981.09
$
2.383.32
$
2.013.10
Earnings per share – diluted
$
1.010.92
$
0.971.08
$
2.363.28
$
1.993.07
(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
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
1.0
4.60.8
1.0
4.70.9
4.5
(12) Share Repurchases
Share repurchases were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Shares of common stock
5.22.9
3.72.6
12.115.0
6.28.8
Aggregate purchase price
$
400.5251.0
$
224.9175.5
$
901.31,152.3
$
375.0550.5
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Net cash interest payments
$
154.3225.6
$
185.7234.2
Net income tax payments
$
365.4538.4
$
271.1397.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
(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
Nov.Feb. 26,
2023
Feb. 27,
2022
Nov. 28,Feb. 26,
20212023
Nov.Feb. 27,
2022
Nov. 28,Feb. 26,
20212023
Nov.Feb. 27,
2022
Nov. 28,
2021
Service cost
$
17.517.6
$
23.523.2
$
1.21.4
$
1.92.0
$
2.1
$
1.71.8
Interest cost
64.6
46.146.0
4.5
3.1
0.80.7
0.30.4
Expected return on plan assets
(105.0)
(102.9)(102.8)
(7.8)(7.7)
(6.7)(6.6)
-
-
Amortization of losses (gains)
28.428.3
35.535.7
(4.8)(4.9)
(2.7)
-0.1
0.70.8
Amortization of prior service costs (credits)
0.30.4
0.2
(5.7)(5.9)
(5.2)(5.3)
0.1
0.1
Other adjustments
-
-
-
-
2.93.2
3.8
Curtailment loss (gain)
-
0.5
-
(0.2)
-
-4.0
Net expense (income)
$
5.85.9
$
2.92.3
$
(12.6)
$
(9.8)(9.5)
$
5.96.2
$
6.67.1
Defined Benefit
 
Pension Plans
Other Postretirement
 
Benefit Plans
Postemployment
Benefit Plans
Six-MonthNine-Month
Period Ended
Six-MonthNine-Month
Period Ended
Six-MonthNine-Month
Period Ended
In Millions
Nov.Feb. 26,
2023
Feb. 27,
2022
Nov. 28,Feb. 26,
20212023
Nov.Feb. 27,
2022
Nov. 28,Feb. 26,
20212023
Nov.Feb. 27,
2022
Nov. 28,
2021
Service cost
$
35.152.7
$
47.270.4
$
2.64.0
$
3.85.8
$
4.26.3
$
3.55.3
Interest cost
129.2193.8
92.4138.4
9.013.5
6.39.4
1.62.3
0.71.1
Expected return on plan assets
(210.0)(315.0)
(205.7)(308.5)
(15.6)(23.3)
(13.4)(20.0)
-
-
Amortization of losses (gains)
56.785.0
70.4106.1
(9.7)(14.6)
(5.4)(8.1)
0.10.2
1.52.3
Amortization of prior service costs (credits)
0.71.1
0.40.6
(11.5)(17.4)
(10.4)(15.7)
0.20.3
0.20.3
Other adjustments
-
-
-
-
5.99.1
5.79.7
Curtailment gain
-
(14.3)
-
(5.7)
-
-
Net expense (income)
$
11.717.6
$
(9.6)(7.3)
$
(25.2)(37.8)
$
(24.8)(34.3)
$
12.018.2
$
11.618.7
(15) Income Taxes
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
the
 
Inflation
 
Reduction
 
Act
 
(IRA)
 
was
 
signed
 
into
 
law.
 
The
 
IRA
 
introduces
 
a
 
Corporate
Alternative Minimum Tax
 
beginning in our fiscal 2024
 
and an excise tax on the
 
repurchase of corporate
 
stock starting after January
 
1,
2023.
We
 
do not
 
currently expect the
 
IRA to have
 
a material impact
 
on our financial
 
results, including our
 
annual estimated effective
tax rate, or on our liquidity.
 
rate,
or
The amount of excise tax on
 
ourthe repurchase of corporate stock
 
liquidity.was immaterial in the third quarter
of fiscal
2023.
 
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
 
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.
(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
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
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
 
our
 
operating
 
segments.
 
Under
 
our
 
new
 
organization
 
structure,
 
our
19
chief operating decision maker assesses performance
 
and makes decisions about resources to be allocated to
 
our operating segments as
follows: North America Retail; International; Pet;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
 
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, snack
 
bars, and
 
refrigerated
yogurt.
Our
 
International
 
operating
 
segment
 
consists
 
of
 
retail
 
and
 
foodservice
 
businesses
 
outside
 
of
 
the
 
United
 
States
 
and
 
Canada.
 
Our
product categories include super-premium
 
ice cream and frozen desserts, meal kits, salty snacks,
 
snack bars, dessert and baking mixes,
and
 
shelf
 
stable
 
vegetables.
 
We
 
also
 
sell
 
super-premium
 
ice
 
cream
 
and
 
frozen
 
desserts
 
directly
 
to
 
consumers
 
through
 
owned
 
retail
shops. Our
 
International segment
 
also includes
 
products manufactured
 
in the United
 
States for
 
export, mainly
 
to Caribbean
 
and Latin
American markets, as well as
 
products we manufacture
 
for sale to our international
 
joint ventures. Revenues from
 
export activities are
reported in the region or country where the end customer is located.
Our Pet operating segment includes
 
pet food products sold primarily in the
 
United States and Canada in national
 
pet superstore chains,
e-commerce retailers,
 
grocery stores,
 
regional pet
 
store chains,
 
mass merchandisers,
 
and veterinary
 
clinics and
 
hospitals. Our
 
product
categories include dog and cat food (dry
 
foods, wet foods,
and treats) made with
whole meats, fruits,
vegetables and other
high-quality
natural
 
ingredients.
 
Our
 
tailored
 
pet
 
product
 
offerings
 
address
 
specific
 
dietary,
 
lifestyle,
 
and
 
life-stage
 
needs
 
and
 
span
 
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
 
functions,
and textures and cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
sell are branded
 
to the consumer
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
Our operating segment results were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Net sales:
North America Retail
$
3,373.13,232.0
$
3,044.62,811.9
$
6,361.99,593.9
$
5,755.28,567.1
International
671.7700.6
914.4721.0
1,324.22,024.8
1,845.02,566.0
Pet
592.9645.5
593.4567.7
1,172.81,818.3
1,081.41,649.1
North America Foodservice
583.0547.8
471.6437.1
1,079.41,627.2
882.31,319.4
Total
$
5,220.75,125.9
$
5,024.04,537.7
$
9,938.315,064.2
$
9,563.914,101.6
Operating profit:
North America Retail
$
837.1786.9
$
675.4611.5
$
1,614.92,401.8
$
1,324.01,935.5
International
17.842.4
59.435.9
52.695.0
120.0155.9
Pet
86.6102.6
131.5110.6
209.7312.3
246.7357.3
North America Foodservice
81.582.4
67.935.2
135.1217.5
139.7174.9
Total segment operating
 
profit
$
1,023.01,014.3
$
934.2793.2
$
2,012.33,026.6
$
1,830.42,623.6
Unallocated corporate items
212.1296.4
131.8140.9
545.1841.5
188.0328.9
Divestitures gain, net
-(13.7)
-(170.1)
(430.9)(444.6)
-(170.1)
Restructuring, impairment, and other exit costs (recoveries)
11.11.4
2.37.1
12.714.1
(2.0)5.1
Operating profit
$
799.8730.2
$
800.1815.3
$
1,885.42,615.6
$
1,644.42,459.7
Net sales for our North America Retail operating units were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
U.S. Meals & Baking Solutions
$
1,321.71,185.3
$
1,203.1968.0
$
2,270.93,456.2
$
2,064.63,032.6
U.S. Morning Foods
908.5918.6
826.7858.0
1,812.52,731.1
1,656.42,514.4
U.S. Snacks
892.9883.5
757.2745.0
1,780.12,663.6
1,537.32,282.3
Canada
250.0244.6
257.6240.9
498.4743.0
496.9737.8
Total
$
3,373.13,232.0
$
3,044.62,811.9
$
6,361.99,593.9
$
5,755.28,567.1
Net sales by class of similar products were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
In Millions
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
Snacks
$
1,102.81,065.5
$
947.6925.3
$
2,171.23,236.7
$
1,902.12,827.4
Cereal
810.9801.9
742.2754.4
1,625.62,427.5
1,473.22,227.6
Convenient meals
786.4815.6
789.8772.8
1,465.62,281.2
1,485.32,258.1
Dough
745.6644.8
607.0446.6
1,210.41,855.2
1,012.21,458.8
Pet
593.7646.2
593.4568.1
1,174.51,820.7
1,081.41,649.5
Baking mixes and ingredients
563.7517.7
517.2465.9
1,037.21,554.9
913.51,379.4
Yogurt
357.5378.0
507.1349.3
703.51,081.5
1,013.01,362.3
Super-premium ice cream
164.9148.2
200.0151.4
348.4496.6
444.8596.2
Other
95.2108.0
119.7103.9
201.9309.9
238.4342.3
Total
$
5,220.75,125.9
$
5,024.04,537.7
$
9,938.315,064.2
$
9,563.9
14,101.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
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,
 
2022
 
for
 
important
background
 
regarding,
 
among other
 
things, our
 
key business
 
drivers.
 
Significant
 
trademarks and
 
service marks
 
used in
 
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
 
“Glossary” section below.
We expect
 
the largest factors impacting our
 
performance in fiscal 2023 will be
 
the economic health of consumers, the
 
inflationary cost
environment, and the frequency and
 
severity of disruptions in the supply
 
chain. We
 
anticipate double-digit input cost inflation
 
in fiscal
2023
 
and
 
are
 
addressing
 
inflation
 
headwinds
 
with
 
Holistic
 
Margin
 
Management
 
(HMM)
 
cost
 
savings
 
and
 
net
 
price
 
realization
generated
 
through
 
our
 
Strategic
 
Revenue
 
Management
 
(SRM)
 
capability.
 
We
 
are
 
planning
 
for
 
volume
 
elasticities
 
to
 
increase
 
but
remain below historical levels and supply chain disruptions to slowly moderate
 
in fiscal 2023 compared to fiscal 2022 levels.
CONSOLIDATED
 
RESULTS
 
OF OPERATIONS
SecondThird Quarter Results
In the
second quarter
of fiscal
2023,
net sales
increased
4 percent
and organic
net sales
increased
11
percent compared
to the
same
period
last
year.
Operating
profit
essentially
matched
 
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2022
at
$800 million
as
favorable2023,
 
net
 
pricesales
increased
realization
13 percent
and
 
mix was offsetorganic
net
sales
increased
16
percent
compared
to
the
same
period last
year.
Operating profit
decreased 10
percent to
$730 million,
primarily driven
 
by higher
 
input costs, a
decrease in contributions
from volume growth
,
lower net corporate
investment
activity,
 
an unfavorable change toincrease
 
the mark-to-market valuation
of certain commodity
positions and grain
inventories, and an increasein selling,
in
certain
selling,
general
 
and
 
administrative
 
(SG&A)
 
expenses.expenses,
 
Operatinga
 
profitlower
 
marginnet
 
of
15.3
percent
decreased
60 basis
points.
Adjusted
operating
profit
of $880
million
increased
7
percentgain
 
on
 
adivestitures,
 
constant-currencyand
an
unfavorable
change
to
the
mark-to-market
valuation of
certain commodity
positions and
grain inventories,
partially offset
by favorable
net price
realization and
mix. Operating
profit margin of 14.2 percent decreased
380 basis points. Adjusted operating profit of
$807 million increased 20 percent on
a constant-
currency
 
basis,
 
primarily
 
driven
 
by
favorable
 
net price
 
pricerealization
realization and
 
mix,
partially
offset
 
by higher
 
input
costs
 
a decrease
in contributions
from volume
growth, and
 
an increase in
 
in
SG&A
expenses.
expenses.
Adjusted
 
operating
profit
 
margin
increased
 
60 basis points80
 
to 16.9basis
 
percent. Diluted
earnings per
share of
$1.01 increased
4
percent in the
second quarter of
fiscal 2023. Adjusted
diluted earnings
per share of
$1.10 increased
12 percent on a
constant-currency
basis comparedpoints
 
to
 
15.7
percent.
Diluted
earnings
per
share
of
$0.92
decreased
15
percent
in
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2022.2023.
 
SeeAdjusted
 
thediluted
 
“Non-GAAPearnings
 
Measures”per
 
section
below
for
a
descriptionshare
 
of
 
our$0.97
 
useincreased
 
of17 percent
on
a
constant-currency basis
compared to
the third
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 secondthird quarter of
 
of fiscal 2023 follows:
 
 
Quarter Ended Nov. 27, 2022Feb. 26, 2023
In millions,
except per share
Quarter Ended
Nov.Feb. 26, 2023 vs.
Feb. 27, 2022 vs.
Nov. 28, 2021
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
 
$
5,220.75,125.9
413
%
Operating profit
799.8730.2
Flat(10)
15.3%
14.2
%
Net earnings attributable to General Mills
605.9553.1
1(16)
%
Diluted earnings per share
$
1.010.92
4(15)
%
Organic net sales growth rate (a)
1116
%
Adjusted operating profit (a)
879.7807.0
719
%
16.915.7
%
720
%
Adjusted diluted earnings per share (a)
$
1.100.97
1115
%
1217
%
(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
Nov.Feb. 26, 2023
Feb. 26, 2023 vs.
Feb. 27, 2022
Nov.Feb. 27, 2022 vs.
Nov. 28, 2021
Nov. 28, 2021
Net sales (in millions)
$
5,220.75,125.9
4%13%
$
5,024.04,537.7
Contributions from volume growth (a)
(12)
ptsFlat
Net price realization and mix
1714
pts
Foreign currency exchange
(1)
pt
Note: Table may
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Net sales in
the third
quarter of
fiscal 2023
increased 13
percent compared
to the
same period
in fiscal
2022, driven
by favorable
net
price realization and mix, partially offset by unfavorable
foreign currency exchange.
 
 
 
 
 
 
 
 
 
 
 
22
Net sales in
 
the second 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.22
Components of organic net sales growth are shown in the following
 
table:
 
 
Quarter Ended Nov. 27, 2022Feb. 26, 2023 vs.
Quarter Ended Nov. 28, 2021Feb. 27, 2022
Contributions from organic volume growth (a)
(6)
ptsFlat
Organic net price realization and mix
1716
pts
Organic net sales growth
1116
pts
Foreign currency exchange
(1)
pt
Acquisitions and divestitures
(5)(2)
pts
Net sales growth
413
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 11
16
 
percent
in
 
the second
third
 
quarter
of
 
fiscal
2023
compared
to
the
same
period
in
fiscal
2022
driven
by
favorable organic net price realization and mix.
Cost of
sales
increased $327 million
to $3,461
million in the
third quarter
of fiscal 2023
 
compared to
 
the same
 
period in fiscal
 
fiscal 2022,
as favorable
organic net price realization and mix was partially offset
by a decrease in contributions from organic volume growth.
Cost of sales
increased $123 million to $3,516 million in the second quarter of
fiscal 2023 compared to the same period in fiscal 2022.
The
increase
 
was primarily
 
driven
by
 
a $489
$290 million
 
increase
attributable
 
to
product
 
rate and
 
mix,
partially
 
offset
 
by
a
 
$40610 million
decrease attributable
 
to lower volume.
 
We
 
recorded a $25 million$67
 
million net increase in
 
in cost of sales
 
sales related to the
 
the mark-to-market
valuation
of certain
commodity positions
and grain
inventories in the second
 
quarter of fiscal 2023 compared to a $12 million net decrease in the
second third
 
quarter of
 
fiscal 2023
compared to
a $20 million
net increase
in the
third quarter of fiscal 2022.
Divestitures gain, net
totaled $14 million in
the third quarter of fiscal 2023,
compared to $170 million recorded
in the third quarter of
fiscal 2022.
 
In the
second quarter
of fiscal
 
2023, we2022,
 
recorded awe sold
 
$3 million chargeour
 
relatedinterests in
 
to aYoplait
 
voluntary recallSAS, Yoplait
 
on
certain international
Häagen-Dazs
Marques
 
ice cream products.SNC,
and
Liberté
Marques
Sàrl and
a European
dough business (please refer to Note 2 to the Consolidated Financial Statements in
Part I, Item 1 of this report).
SG&A
 
expenses
increased
 
$65 196
million
 
to
 
$894947 million
 
in
 
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2023,
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
2022,
 
primarily
 
driven
 
by increased
media
and advertising
expenses,
an increase
in certain
compensation
and benefits
expenses,
an
increase
in
charitable
contributions,
and
unfavorable
 
valuation
 
adjustments
 
and
the
loss
on
sale
of
 
certain
 
corporate
 
investments
 
andin
 
increased
media
and
advertising expenses
in fiscal
 
2023.
 
SG&A
expenses as
 
as a
percent of
net sales
in the
second quarter
 
of fiscalnet
 
2023 increased
60 basis
points compared to the second quarter of fiscal 2022.
Restructuring,
impairment,
and other
exit costs
totaled $11
million of
expensesales in
 
the secondthird
 
quarter of
 
fiscal 2023
 
comparedincreased 190
 
basis points
compared to
the third
quarter of
fiscal
$22022.
Restructuring, impairment,
and other exit
costs
totaled $1 million in
the third quarter
of expensefiscal 2023,
compared to $7 million
 
in the
same period
last year (please refer
to Note 3
to the Consolidated Financial
 
Financial Statements in
Part I, Item
1 of
this report).
Benefit plan
non-service income
totaled $22 million
in the second
third quarter
 
of fiscal
2023, compared to $28
 
to $27 million
in the
same period
last year,
primarily reflecting
an increase
 
in interest
costs, partially
offset by
lower amortization
of losses.losses
and higher
expected return
on plan assets.
 
Interest,
 
net
for
 
the
second third
 
quarter
 
of
fiscal
 
2023
 
totaled
 
$9298 million,
 
downup $12
 
$1 million
 
from
the
 
secondthird
 
quarter
of
 
fiscal
 
2022,
primarily
primarily driven by higher interest rates, partially offset by lower
average long-term debt levels, levels.
The
effective
tax
rate
for
the third
quarter
of fiscal
2023
was 16.6
percent
compared
to 16.3
percent
for
the
third
quarter
of fiscal
2022. The
0.3 percentage
point increase
was primarily
due to
certain unfavorable
nonrecurring discrete
tax items,
partially offset
 
by higher interest rates.
The
effective tax rate
favorable changes in
 
for the second quarter
of fiscal 2023 was 20.2
percent compared to 21.7
percent for the second
quarter of fiscal
2022.
The
1.5
percentage
point
decrease
was
primarily
due
to
certain
nonrecurring
discrete
tax
benefits
and
favorable
changes
in
earnings mix
by jurisdiction
 
in fiscal 2023. Our effective
 
2023. Ourtax rate excluding certain
 
effective taxitems affecting comparability
was
 
rate excluding
certain items
affecting comparability
was 21.121.6 percent
 
in
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2023,
 
compared
 
to
 
22.321.0
 
percent
 
in
 
the
 
same
 
period
 
last
 
year
 
(see
 
the
 
“Non-GAAP
Measures”
 
section
below
below
for
a
description
 
of
our
use
of
 
measures
not
defined
by
 
GAAP).
The 1.2
0.6
percentage
 
point decrease was
 
increase
was
primarily
due
to
 
certain
unfavorable
nonrecurring
discrete
tax benefits and
items,
partially
offset
by
favorable
changes
in
earnings
 
mix
by
jurisdiction in fiscal 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
After-tax earnings
from joint
 
ventures
 
for the second
third quarter
of fiscal
2023
decreased to $25
$13 million compared to $33 million
 
to $30
million in
the
same period
 
in fiscal 2022,
 
2022, primarily driven
 
driven by higher
 
higher input
costs and
unfavorable nonrecurring
discrete tax
items at
 
Cereal Partners
Worldwide
 
(CPW) and Häagen,
 
-Dazs Japan, Inc.
(HDJ) and
lower net
sales at
HDJ, partially
 
offset
by
 
favorable
net
 
price
realization
 
and
mix
 
at
CPW.
 
On
a
 
constant-currency
basis,
after-tax
after-tax earnings
 
from
joint
 
ventures
decreased
 
851 percent (see
(see
the
 
“Non-GAAP
Measures”
 
section
below
 
for
a
description
 
of
our
 
use
of
of measures not defined by GAAP).
 
The components of our joint ventures’ net sales growth are shown in the following
 
table:
 
Quarter Ended Nov. 27, 2022Feb. 26, 2023 vs.
Quarter Ended Nov. 28, 2021Feb. 27, 2022
CPW
HDJ (a)
Total
Contributions from volume growth (a)(b)
(13)
pts
(10)(2)
pts
Net price realization and mix
15
pts
(1)3
ptpts
Net sales growth in constant currency
2
pts
(10)1
pt
2
pts
(1)
pt
Foreign currency exchange
(5)
pts
(14)
pts
(20)
pts
(15)(7)
pts
Net sales growth
(11)(3)
pts
(30)(13)
pts
(16)(5)
pts
Note: Table may
not foot due to rounding.
(a)
Häagen-Dazs Japan, Inc.
(b)
 
Measured in tons based on the stated weight of our product shipments.
Average
 
diluted
shares
 
outstanding
decreased
by
 
1113 million
 
in
the
 
second third
quarter
 
of
fiscal
 
2023
from
 
the
same
 
period
a
 
year
ago
primarily due to share repurchases, partially offset by option
exercises.
Six-MonthNine-Month Results
In the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
net sales
 
increased 47
 
percent compared
 
to the
 
same period
 
last year,
 
and organic
net
sales
increased
11 12
 
percent compared to the
 
comparedsame period last year.
Operating profit increased 6
percent to $2,616 million,
primarily
driven by favorable net price realization and
mix and a higher net gain on divestitures, partially
offset by higher input costs, a decrease
in
contributions
from
volume
growth,
an
unfavorable
change
 
to
 
the
 
same
period
last
year.
Operating
profit
increased
15
percent
to
$1,885 million,
primarily
driven
by
favorable
net
price
realization
and
mix
and
a
net
gain
on
divestitures,
partially
offset
by
higher
input
costs,
a
decrease in contributions from
volume growth, an unfavorable
change to the mark-to-market
 
valuation of certain commodity
positions
and
grain
inventories,
lower
net
corporate
investment
activity,
and
an
increase
in
SG&A
expenses.
Operating
profit
margin
 
of
 
19
percentcertain
 
increasedcommodity
 
180positions
 
basisand
grain inventories, an increase in
 
pointsSG&A expenses,
 
comparedand lower net corporate investment
 
toactivity. Operating
 
profit margin of 17.4 percent
essentially matched the
 
same
period
last
year.
 
Adjusted
operating
profit
of
 
$1,7612,568 million increased 11
 
increasedpercent on a constant-currency
8 percent
on
a
constant-currency
basis,
 
primarily
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
higher
 
input
costs,
 
costs, a
 
decrease
 
in
 
contributions
from
volume
 
growth,
and
 
an
increase
in
 
SG&A
expenses.
 
Adjusted
operating
 
profit margin
 
margin
increased 50
 
60 basis points
 
compared to 17.0
 
the same
period in fiscal
2022. Diluted
earnings per
share of $2.36
increased 19
percent in
thepercent.
six-month
period
ended
November
27,
2022,
and
adjusted
dilutedDiluted
 
earnings
 
per
 
share
 
of
 
$2.21 3.28
increased
 
137
 
percent
 
onin
 
the
nine-month
period
ended
February
26,
2023,
and
adjusted
diluted
earnings per
share of
$3.18 increased
14 percent
on a
 
constant-
currency basisconstant-currency
 
basis compared
 
to the
 
same period
 
last year
 
(see the
 
“Non-GAAPNon-
GAAP Measures” section below for a description of our use of measures
 
section below
for a
description of
our use
of
measures not defined by GAAP).
A summary of our consolidated financial results for the six-monthnine-month period
 
ended November 27, 2022,February 26, 2023, follows:
Six-MonthNine-Month Period Ended Nov.
27, 2022Feb. 26, 2023
In millions,
except per
share
Six-MonthNine-Month
Period Ended
Nov.Feb. 26, 2023 vs.
Feb. 27, 2022
vs. Nov. 28,
2021
Percent of Net
Sales
Constant-
Currency
 
Growth (a)
Net sales
 
$
9,938.315,064.2
47
%
Operating profit
1,885.42,615.6
156
%
19.017.4
%
Net earnings attributable to General Mills
1,425.91,979.0
165
%
Diluted earnings per share
$
2.363.28
197
%
Organic net sales growth rate (a)
1112
%
Adjusted operating profit (a)
1,760.92,567.9
711
%
17.717.0
%
811
%
Adjusted diluted earnings per share (a)
$
2.213.18
1213
%
1314
%
(a)
 
See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
Consolidated
net sales
 
were as follows:
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 26, 2023 vs.
Feb. 27, 2022
Nov.Feb. 27, 2022 vs.
Nov. 28, 2021
Nov. 28, 2021
Net sales (in millions)
$
9,938.315,064.2
47
%
$
9,563.914,101.6
Contributions from volume growth (a)
(12)(8)
pts
Net price realization and mix
1716
pts
Foreign currency exchange
(1)
pt
Note: Table may not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
The 47
 
percent increase
 
in net
 
sales for
 
the six-monthnine-month
 
period ended
 
November 27,February 26,
 
2022,2023, was
 
driven
 
by favorable
 
net price
 
realization
and mix, partially offset by a decrease in contributions
 
from volume
growth and unfavorable foreign currency exchange.
Components of organic net sales growth are shown in the following
 
table:
Six-MonthNine-Month Period Ended Nov.
27, 2022Feb. 26, 2023 vs.
Six-MonthNine-Month Period Ended Nov.
28, 2021Feb. 27, 2022
Contributions from organic volume growth (a)
(5)(3)
pts
Organic net price realization and mix
16
pts
Organic net sales growth
1112
pts
Foreign currency exchange
(1)
pt
Acquisition and divestitures
(5)(4)
pts
Net sales growth
47
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
 
1112
 
percent
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
driven
 
by
 
favorable
 
organic
 
net
 
price
realization and mix, partially offset by a decrease in
 
contributions from organic volume growth.
 
Cost
 
of
 
sales
 
increased
 
$450777 million
 
to
 
$6,78610,247 million
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
compared
 
to
 
the
 
same
period in
 
in fiscal
2022.
 
The increase
 
was
driven
 
by a
 
$9391,229 million
increase
 
attributable to
 
to product
rate
 
and
mix,
 
partially
offset
 
by
a
$749759
 
million
 
decrease due
 
to lower
 
volume.
 
We
 
recorded
 
a $200$266
 
million
 
net increase
 
in cost
 
of sales
 
related
 
to the
 
mark-to-market
valuation
 
of
 
certain
 
commodity
 
positions
 
and
 
grain
 
inventories
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
compared
 
to
 
a
$3616 million net
 
decrease in
 
the six-monthnine-month
 
period ended
 
November 28,February 27,
 
2021.2022. In
 
the six-monthnine-month
 
period ended
 
November 27, 2022,February 26,
 
2023, we
recorded a $24$25 million charge related to a voluntary recall
 
on certain international
Häagen-Dazs
 
ice cream products.
SG&A expenses
increased
$99 $295 million
 
to $1,686$2,632 million
 
in the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
compared to
 
the same
period
 
in
fiscal
 
2022,
primarily
 
driven
 
by
unfavorable
valuation
 
adjustments
and
 
the
loss
 
on
sale
 
of
certain
 
corporate
investments,
increased
media
and
advertising
expenses,
an
increase
 
in
certain
compensation
and
benefits expenses,
and
an
increase
in
charitable
contributions
in
fiscal
 
2023
and a recovery related to a Brazil indirect tax item in fiscal2023.
 
2022. SG&A
expenses
as
a
percent
of
net
sales
increased
 
40 90
basis
points
in
the
nine-month
period
ended
the six-month period ended November 27, 2022,February 26, 2023, compared to the same period
of fiscal 2022.
Divestitures
 
gain,
 
net
 
totaled
 
$431445
 
million
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
primarily
 
related
 
to the
 
the sale
of
 
our
Helper main meals
 
meals and
Suddenly Salad
 
side dishes
business.
During the
nine-month period
ended February
27, 2022,
we recorded
a
$170 million divestitures gain related to the sale of our interest in Yoplait
SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl and a
European dough 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
$13 million
of
expense
in
the
six-month
period
ended
November 27,
2022, compared
to $2 million
of net recoveries
in the same
period last year
(please refer
to Note 3
to the Consolidated
Financial Statements in Part I, Item 1 of this report).
Restructuring, impairment,
and other
exit costs
totaled $14 million
in the
nine-month period
ended February
26, 2023,
compared
to
$5 million
in
the
same
period
last
year
(please
refer
to Note
3
to
the
Consolidated
Financial
Statements
in
Part
I,
Item
1
of
this
report).
Benefit plan non-service
 
income
 
totaled $43$65 million
 
in the six-monthnine-month
 
period ended November
 
27, 2022,February 26,
 
2023, compared
to $57$84 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
six-month period
ended November
27, 2022,
decreased $9 million
to $179 million
compared to
the same
 
period
of fiscal 2022, primarily driven by lower average long-term debt balances last
 
,year, primarily
reflecting an
increase in
interest costs,
 
partially offset by higher interest rates.
The
effective
 
taxby lower
 
rate
amortization of
 
forlosses and
 
the six-month
period
ended
November
27,
2022,
was
20.8
percent
compared
to
21.7
percent
in
the
six-higher
month
period
ended
November
28,
2021.
The
0.9
percentage
point
decrease
was
primarily
due
to
certain
nonrecurring
discrete
taxexpected return on plan assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
benefits and favorable changes inInterest, net
 
earnings mix by jurisdictionfor the nine-month period ended February 26, 2023,
 
in fiscal 2023, partially offsetincreased $2 million to $278 million compared to the same period
 
by unfavorable tax componentsof
fiscal 2022.
The
effective
 
related totax rate
the divestitures
 
incurredfor
 
in the
six-month nine-month
 
period ended
 
November 27,February
 
2022. Our26,
 
effective
tax rate
excluding certain
items affecting
comparability2023, was
 
20.4 percent in19.6
 
the six-month
period ended
November 27,
2022,percent compared
 
to 22.019.9
 
percent in
 
the samenine-
month
 
period
ended
February
27,
2022.
The
0.3
percentage
point
decrease
was
primarily
due
to
certain
nonrecurring
discrete
tax
benefits
and favorable
changes in
earnings
mix by
jurisdiction,
partially offset
by certain
unfavorable
tax components
related
to the
divestitures
incurred
in
the
nine-month
period
ended
February
26,
2023.
Our
effective
tax
rate
excluding
certain
items
affecting
comparability
was 20.8 percent
in the
nine-month period
ended February
26, 2023,
compared to
21.7 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
 
1.60.9
percentage
 
point
 
decrease
 
is
 
primarily
 
due
 
to
 
certain
 
nonrecurring
 
discrete
 
tax
 
benefits
 
and
 
favorable
 
changes
 
in
 
earnings
 
mix
 
by
jurisdiction in fiscalthe nine-month period ended February 26, 2023.
After-tax earnings
 
earnings from
 
joint ventures
 
decreased to
 
to $45$58 million for
 
for the
six-month nine-month
 
period ended
 
November 27,February 26,
 
20222023, compared
 
to
$6292 million
 
in the
 
same period
 
in fiscal
 
2022,
 
primarily
 
driven by
 
higher input
 
costs at
 
CPW and
 
HDJ and
 
lower net
 
net sales at
 
at HDJ,
,
partially offset by favorable net price realization
 
and mix at CPW.
 
On a constant-currency basis, after-tax earnings from
 
joint ventures
decreased 1728
 
percent (see the
 
“Non-GAAP Measures”
 
section below
 
for a description
 
of our use
 
of measures
 
not defined
 
by GAAP).
The components of our joint ventures’ net sales growth are shown in the following
 
table:
Six-MonthNine-Month Period Ended Nov.
27, 2022Feb. 26, 2023 vs.
Six-MonthNine-Month Period Ended Nov.
28, 2021Feb. 27, 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(9)(10)
pts
(9)(7)
pts
Net price realization and mix
1213
pts
(1)
ptFlat
Net sales growth in constant currency
3
pts
(9)(6)
pts
Flat1
pt
Foreign currency exchange
(12)(10)
pts
(18)(17)
pts
(13)(11)
pts
Net sales growth
(9)(7)
pts
(28)(23)
pts
(14)(11)
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
 
1011 million
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
from
 
the
 
same
period a year ago primarily due to share repurchases, partially offset
 
by option exercises.
SEGMENT OPERATING
 
RESULTS
Our businesses are
 
organized into four
 
four operating segments: North
 
North America Retail; International;Retail,
 
International, Pet, and North
 
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
Six-MonthNine-Month Period Ended
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022
Feb. 27,
2022
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Nov.Feb. 27,
2022
Nov. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Net sales (in millions)
$
3,373.13,232.0
1115
%
$
3,044.62,811.9
$
6,361.99,593.9
1112
%
$
5,755.28,567.1
Contributions from volume growth (a)
(8)(1)
ptspt
(7)(5)
pts
Net price realization and mix
1917
pts
1817
pts
Foreign currency exchange
(1)
pt
Flat
Note: Table may not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
North America
 
America Retail net
 
net sales
increased
 
1115 percent
 
in the second
 
third quarter of
 
of fiscal 2023
 
2023, compared to
 
to the same
 
same period in
 
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.
North America
 
Retail net sales
 
increased 1112
 
percent in the
 
six-monthnine-month period
 
ended November 27,February
 
2022, compared26, 2023,
 
compared to the same
 
same period
in fiscal 2022, driven by favorable net price realization and mix, partially offset
 
by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26
The components of North America Retail organic net
 
sales growth are shown in the following table:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov. 27, 2022Feb. 26, 2023
Nov. 27, 2022Feb. 26, 2023
Contributions from organic volume growth (a)
(7)Flat
pts
(6)(4)
pts
Organic net price realization and mix
2018
pts
18
pts
Organic net sales growth
1318
pts
1314
pts
Foreign currency exchange
(1)
pt
Flat
DivestitureDivestitures (b)
(2)(3)
pts
(2)
pts
Net sales growth
1115
pts
1112
pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) DivestitureDivestitures primarily include the impact of the sale of our Helper main meals and Suddenly Salad side dishes businesses in fiscal 2023. Please
see Note 2 to the Consolidated Financial
Statements in Part I, Item 1 of this report.
North
America
 
Retail
organic
 
net
sales
 
increased 18
 
13percent in
 
the third
quarter of
fiscal 2023,
compared to
the same
period in
fiscal
2022, driven by favorable organic net price realization
and mix.
North America Retail organic
net sales increased 14 percent
 
in
the
second
quarter
of
fiscal
2023
and
the
six-month
nine-month period
 
ended
November 27,
2022, February 26, 2023, compared
 
to the same
periodsperiod
 
in fiscal 2022
 
,2022,
 
driven by
 
favorable
organic
 
net price
realization
 
and
mix, partially
offset
offset
by a
decrease in contributions from organic
 
contributions
from
organic volume growth.
North America Retail net sales percentage change by operating unit are shown
 
are shown in the following table:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov. 27, 2022Feb. 26, 2023
Nov. 27, 2022
U.S. Snacks
18
%
16
%Feb. 26, 2023
U.S. Meals & Baking Solutions
1022
%
1014
%
U.S. Snacks
19
%
17
%
U.S. Morning Foods
107
%
9
%
Canada (a)
(3)2
%
Flat1
%
Total
1115
%
1112
%
(a)
 
On a constant-currency basis, Canada net
sales increased 48 percent in the second
third quarter of fiscal 2023 and
increased 6 percent for the six-monthnine-month
period ended February 26, 2023,
 
November 27,
2022, compared
to the
same periods
 
in fiscal 2022. See the
 
2022. See
the "Non-GAAP
"Non-GAAP Measures" section
below for
 
our use
of this
this measure not defined by GAAP.
Segment
 
operating
 
profit
increased
 
2429
 
percent
 
to $837
$787 million
 
in
the
 
secondthird
 
quarter
of
 
fiscal
2023,
 
compared
 
to $675
$612 million
 
in
the
same
 
period
 
in
 
fiscal
 
2022,
 
primarily
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
higher
 
input
 
costs
 
aand
decreasehigher SG&A expenses.
 
Segment operating profit
increased 29 percent
on a constant-currency
basis in the third
quarter of fiscal
2023
compared to the
same period in
 
contributionsfiscal 2022 (see
 
fromthe “Non-GAAP Measures”
 
volumesection below for
 
growth,our use of
 
andthis measure not
 
higherdefined by
GAAP).
SG&A
expenses.
Segment
 
operating
 
profit
 
increased
 
24
 
percent
 
onto
 
a
constant-currency
basis$2,402 million
 
in
 
the
 
secondnine-month
 
quarterperiod
 
ofended
 
fiscalFebruary
26,
 
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).
Segment
operating
profit
increased
22
percent
to
$1,615 million
in
the
six-month
period
ended
November
27,
2022,
compared
to
$1,3241,936 million in the
 
same period in fiscal
 
2022, primarily driven by
 
favorable net price realization
 
and mix, partially offset
 
by higher
input
 
costs,
 
a
 
decrease
 
in
 
contributions
 
from
 
volume
 
growth,
 
and
 
higher
 
SG&A
 
expenses.
 
Segment
 
operating
 
profit
 
increased
 
2224
percent on
 
a constant-currency
 
basis in
 
the six-monthnine-month
 
period ended
 
November 27,February 26,
 
2022,2023, 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).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
International Segment Results
International net sales were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022
Feb. 27,
2022
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Nov.Feb. 27,
2022
Nov. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Net sales (in millions)
$
671.7700.6
(27)(3)
%
$
914.4721.0
$
1,324.22,024.8
(28)(21)
%
$
1,845.02,566.0
Contributions from volume growth (a)
(39)(10)
pts
(39)(31)
pts
Net price realization and mix
1811
pts
1615
pts
Foreign currency exchange
(6)(4)
pts
(6)(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
27 3
 
percent
in
the
 
second
third quarter
of
 
fiscal
2023,
 
and
28
percent
in
the
six-month
period
ended
November
27,
2022,
compared
to
the
 
same
periods period
 
in
fiscal
2022,
 
driven
by
 
a
decrease
 
in
 
contributions
 
from
 
volume
 
growth,
including
 
the
 
impact
 
of
volume
 
declines
 
from
 
divestitures,
 
and
 
unfavorable
foreign
currency exchange,
partially offset by favorable net price realization and mix.
International net
sales decreased 21
percent in the
 
voluntarynine-month period
 
recallended February 26,
 
on certain2023, 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
 
offset
by favorable net price realization and mix.
The components of International organic net sales growth
 
are shown in the following table:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov. 27, 2022Feb. 26, 2023
Nov. 27, 2022Feb. 26, 2023
Contributions from organic volume growth (a)
(7)(4)
pts
(7)(6)
pts
Organic net price realization and mix
1211
pts
89
pts
Organic net sales growth
58
pts
13
ptpts
Foreign currency exchange
(6)(4)
pts
(6)(5)
pts
Divestitures (b)
(26)(6)
pts
(24)(19)
pts
Net sales growth
(27)(3)
pts
(28)(21)
pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestitures primarily include the impact of the sale of our interests in Yoplait SAS, Yoplait
 
Marques SNC, and Liberté Marques Sàrl and our
 
 
European dough businesses in fiscal 2022. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
International
 
organic
 
net
 
sales increased
 
5 8
percent
 
in
the
 
second third
quarter
 
of
fiscal
 
2023
 
and 3
percent
in
the
nine-month
period
ended
February 26,
2023, compared
 
to the
 
same periods
 
period in
fiscal
 
2022, driven
driven by favorable
organic net
price realization
 
and mix,
partially
offset by a decrease in contributions from organic
 
volume growth.
International organicSegment operating
 
net salesprofit increased
 
118 percent
to $42 million
in the
 
six-month period endedthird quarter
 
November 27, 2022,of fiscal
2023,
 
compared to
$36 million in
the same
period in
fiscal
2022,
primarily driven
 
by
favorable
organic
net
price
realization
 
and
mix and a decrease in SG&A expenses,
 
partially
offset
by
a
decrease
in
contributions
from
organic
volume growth.
Segment operating profit
decreased 70 percent to
$18 million in the second
quarter of fiscal 2023
from $59 million in the
same period
in
fiscal
2022,
primarily
driven by
higher
 
input
 
costs
and
 
a
 
decrease
 
in
 
contributions
 
from
 
volume
 
growth,
 
including
 
the
 
impact
 
of
volume declines from divestitures and the voluntary recall on certain
 
international
Häagen-Dazs
declines
 
ice cream products, partially offset by
favorablefrom
 
netdivestitures.
Segment operating
 
priceprofit increased
 
realization27 percent
 
and
mix
and
on a
 
decreaseconstant-currency basis
 
in the
 
SG&Athird quarter
 
expenses.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).
Segment
 
operating
 
profit
 
decreased
 
6839
 
percent
 
onto
 
a
constant-currency
basis$95 million
 
in
 
the
 
secondnine-month
 
quarterperiod
 
ofended
 
fiscalFebruary
26,
 
2023,
 
compared
 
to
$156 million
in
 
the
 
same
 
period
 
in
 
fiscal
 
2022,
 
(seeprimarily
 
the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 56
percent to $53 million in the six-month
period ended November 27, 2022, from $120
million in
the same
period in
fiscal 2022,
primarily driven
 
by
a
 
decrease
in
 
contributions
from
 
volume
growth,
 
including the
 
the
impact
of
 
volume declines
declines from
 
divestitures
and
 
the voluntary
 
recall on
 
on certain
international
Häagen-Dazs
 
ice
cream
 
products,
 
and
higher
 
input costs,
partially
partially
offset
 
by favorable
 
net price
 
realization and
 
mix and
 
a decrease
 
in SG&A
 
expenses. Segment
 
Segment operating
profit
 
decreased 51
percent on
 
33
percent
on a
constant-currency
 
basis in
 
the six-month
nine-month
 
period ended
 
November 27,ended February
 
2022, 26,
2023,
compared
 
to
the
 
same
period
in fiscal
2022
(see (see the “Non-GAAP Measures” section below
for our use of this measure
not defined by GAAP).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
Pet Segment Results
Pet net sales were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022
Feb. 27,
2022
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Nov.Feb. 27,
2022
Nov. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Net sales (in millions)
$
592.9645.5
Flat
$
593.4
$
1,172.8
814
%
$
1,081.4567.7
$
1,818.3
10
%
$
1,649.1
Contributions from volume growth (a)
(11)6
pts
(6)(2)
pts
Net price realization and mix
118
pts
1513
pts
Foreign currency exchange
Flat
Flat
Note: Table may not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Pet net
sales increased
14 percent
 
in the second
 
third quarter
of fiscal 2023,
 
2023 essentiallycompared to
 
matched the same period
 
period in fiscal 2022,
 
2022, asdriven by
 
favorable
net price
realization
and mix was offset by a decreaseand an increase in contributions from volume growth
 
growth..
Pet net sales
increased 810
 
percent during the
nine-month period ended February
26, 2023, compared to
 
the six-month
period ended November
27, 2022, 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.
The components of Pet organic net sales growth are shown in the following
 
table:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov. 27, 2022Feb. 26, 2023
Nov. 27, 2022Feb. 26, 2023
Contributions from organic volume growth (a)
(11)6
pts
(7)(3)
pts
Organic net price realization and mix
118
pts
1312
pts
Organic net sales growth
Flat14
6pts
9
pts
Foreign currency exchange
Flat
Flat
Acquisition (b)
Flat
21
ptspt
Net sales growth
Flat14
8pts
10
pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of Tyson Foods’ pet treats business in fiscal 2022. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of
 
this report.
Pet organic
 
net sales
 
in theincreased 14
 
second quarterpercent in
 
of fiscalthe third
 
2023 essentiallyquarter of
 
matched thefiscal 2023,
 
same periodcompared to
 
in fiscalthe same
 
2022 asperiod in
 
fiscal 2022,
driven by
favorable organic
net
price realization and mix was offset by a decreaseand
an increase in contributions
from organic volume growth.
Pet organic
 
net sales
 
sales increased
 
69 percent
 
in the
 
six-monthnine-month
 
period
 
ended NovemberFebruary
 
27,26,
 
2022,2023,
 
compared
 
to the
 
the same
period
 
in fiscal
2022,
 
driven by
 
favorable organic
 
net price
 
realization and
 
mix,
 
partially offset
 
by a
 
decrease in
 
contributions from
 
organic
 
volume
growth.
Segment
operating
profit
decreased
34
percent
to
$87 million
in
the
second
quarter
of
fiscal
2023
compared
to
$132 million
in
the
same period in fiscal 2022,
primarily driven by higher
input costs and a decrease in
contributions from volume
growth, partially offset
by favorable
net price
realization and
mix. Segment
operating profit
 
decreased 347 percent to $103
 
percent onmillion in the third quarter
 
a constant-currency
basis in
the second
quarter of
fiscal 2023,
 
compared to $111
 
million in the same
period in
fiscal 2022
(see the
“Non-GAAP Measures”
section below
for our
use of
this
measure not defined by GAAP).
Segment
operating
profit
decreased
15
percent
to
$210 million
in
the
six-month
period
ended
November
27,
2022,
compared
to
$247 million
in
the
same
period
 
in
 
fiscal
 
2022,
 
primarily
 
driven
 
by
 
higher
 
input
 
costs
 
a
decrease
in
contributions
from
volume
growth,
and
 
an
increase
inhigher
 
SG&A
 
expenses,
 
partially
 
offset
 
by
 
favorable
 
net
 
price
realization
and mix and
 
mix.an increase in contributions
 
from volume growth.
Segment operating profit decreased
7 percent on a constant-
currency basis in
the third
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).
Segment
 
operating
 
profit
decreased
decreased 15
13
percent
 
on a constant-currencyto
 
basis $312 million
in
the six-month
nine-month
 
period ended November
 
27, 2022, ended
February
26,
2023,
compared
 
to
$357 million in
the same period
 
in
fiscal 2022, (see
primarily driven
by higher input
costs, an increase
in SG&A expenses,
and a decrease
in contributions
from volume
growth, partially
offset
by favorable
net price
realization and
mix. Segment
operating profit
decreased
13 percent on a constant-currency basis in the nine-month
period ended February 26, 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).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022
Feb. 27,
2022
Nov.Feb. 26,
2023
Feb. 26, 2023 vs
Feb. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Nov.Feb. 27,
2022
Nov. 27, 2022 vs
Nov. 28, 2021
Nov. 28,
2021
Net sales (in millions)
$
583.0547.8
2425
%
$
471.6437.1
$
1,079.41,627.2
2223
%
$
882.31,319.4
Contributions from volume growth (a)
26
pts
12
ptpts
Net price realization and mix
2120
pts
2221
pts
Foreign currency exchange
Flat
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
 
net sales
increased
 
2425 percent
 
in the
 
secondthird quarter
 
of fiscal
 
2023, compared
 
compared to the
 
the same
period in
fiscal
2022, driven by favorable net price realization and mix and an increase
 
in fiscal
2022,
driven
by
favorable
net
price
realization
and
mix,
including
market
index
pricing
on
bakery
flour,
and
an
increase
in
contributions from volume growth.
North America
 
Foodservice net
 
sales increased
 
2223 percent
 
in the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
compared to
 
the same
period
 
in
 
fiscal
 
2022,
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
 
including
 
market
 
index
 
pricing
 
on
 
bakery
 
flour,
 
and
 
an
increase in contributions from volume growth.
The components of North America Foodservice organic
 
net sales growth
are shown in the following
table:
 
Quarter Ended
Six-MonthNine-Month Period Ended
Nov. 27, 2022Feb. 26, 2023
Nov. 27, 2022Feb. 26, 2023
Contributions from organic volume growth (a)
(2)1
ptspt
(3)(1)
ptspt
Organic net price realization and mix
1918
pts
2019
pts
Organic net sales growth
1719
pts
1718
pts
Foreign currency exchange
Flat
Flat
Acquisition (b)
6
pts
5
pts
Net sales growth
2425
pts
2223
pts
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of TNT Crust in fiscal 2023. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
North America
Foodservice organic
 
net sales
increased 17 19
percent in
 
the second third
quarter of fiscal
2023,
 
and the six-month period ended
November 27, 2022, compared to
 
the same
period in
fiscal 2022, driven by favorable organic net price realization and
mix and an increase in contributions from organic volume growth
.
North America Foodservice organic net
sales increased 18 percent in the nine-month period
ended February 26, 2023, compared to the
same periodsperiod in
 
in fiscal 2022, driven
 
driven by favorable organic
 
net price realization and
 
and mix, including
market index pricing
on bakery flour,
partially
offset by a decrease in contributions from organic
 
volume growth.
Segment operating profit increased
 
20increased 134 percent
to $82 million in
 
the third quarter of
fiscal 2023,
compared to $35 million
in the secondsame
period
 
in
fiscal
2022,
primarily
driven
by
favorable
net
price
realization
and
mix,
partially
offset
by
higher
input
costs.
Segment
operating profit
increased 134
percent on
a constant-currency
basis in the
third quarter
of fiscal 2023
 
compared to $68 million in
 
the same
period in fiscal 2022,
primarily driven by favorable
net price realization and
mix, partially offset
by higher input costs
and an increase
in SG&A
expenses.
Segment operating
profit increased
20 percent
on a
constant-currency basis
 
in the
second 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
 
this measure not
defined by
GAAP).
Segment
 
operating
 
profit
 
decreasedincreased
 
324
 
percent
 
to
 
$135218
 
million
 
in
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
compared
 
to
$140175 million
in the
same period
in fiscal
2022,
primarily
driven by
higher input
costs and
an increase
in SG&A
expenses,
partially
offset by favorable net
price realization and mix.
Segment operating profit decreased
3 percent on a constant-currency
basis in the six-
month period
ended November
27, 2022,
compared to
 
the same
 
period in
 
fiscal 2022,
 
primarily driven
by favorable
net price
realization and
mix, partially
offset by
higher
input
costs
and
an
increase
in
SG&A
expenses.
Segment
operating
profit
increased
24
percent
on
a
constant-currency
basis
in
the
nine-month
period
ended
February
26,
2023,
compared
to
the
same
period
in
fiscal
2022
(see
the
 
“Non-GAAP
Measures”
 
section below
below for our use of this measure not defined by GAAP).
 
 
30
UNALLOCATED
 
CORPORATE
 
ITEMS
Unallocated corporate expense
 
totaled $212$296 million in the
 
the secondthird quarter of fiscal
 
of fiscal 2023,
compared to $132 million$141
 
million in the same period
in
in fiscal
 
2022.
In
 
the second
third
 
quarter
of
 
fiscal
2023,
 
we
recorded
 
a $25
$67 million
 
net
increase
 
in
expense
 
related
to
 
the
mark-to-market
valuation of
 
certain commodity
 
positions and
 
grain inventories
 
compared to
 
a $12$20 million
 
net decreaseincrease
 
in expense
 
in the same
 
same period
last
year.
 
We
 
recorded $20 million
of net
losses related
to valuation
adjustments on
certain corporate
investments
in the
third quarter
of fiscal
2023, compared
to $11 million
of net
gains related
to the
sale of
certain corporate
investments and
valuation adjustments
in
the third
quarter of
fiscal 2022.
In addition,
we recorded
 
$361 million
of integration
costs primarily
related to
our acquisition
of
TNT
Crust
in
the
third
quarter
of fiscal
2023,
compared
to $4 million
 
of
 
netintegration
 
losses
costs related
 
to
 
valuationour
 
adjustmentsacquisition
of
Tyson
Foods’
pet
treats business in the third
quarter of fiscal 2022. In
the third quarter of fiscal 2022, we
recorded $9 million of transaction costs related
to
the
sale
of
our
interests
in
Yoplait
SAS,
Yoplait
Marques
SNC,
and
Liberté
Marques
Sàrl
 
and
 
the
 
sale
 
of
 
aour
 
corporateEuropean
 
investmentdough
businesses.
 
inIn addition, certain compensation
 
and benefits expenses and charitable
contributions increased in the
secondthird quarter of fiscal
2023,
 
compared to $10 million of
net gains in the second
quarter of fiscal 2022.
��
In the second quarter of
fiscal
2023,
we
recorded
a
$3
million
charge
related
to
a
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products.
In
addition, we
recorded $3
million of
integration costs
primarily related
to our
acquisition of
TNT Crust
in the
second quarter
of fiscal
2023 compared to $4 million of integration
costs related to our acquisition of Tyson
Foods’ pet treats business in the
second quarter of
fiscal 2022. In the second
quarter of fiscal 2023, we recorded
$2 million of transaction costs
primarily related to the
sale of our Helper
main meals and Suddenly
Salad side dishes business
compared to $38 million
of transaction costs related to
the sale of our
interests in
Yoplait
SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl
and the sale of our European dough
businesses in the second quarter of
fiscal 2022.same period last year.
Unallocated corporate
 
expense totaled
 
$545842 million
 
in the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
compared to
 
$188329 million
 
in
the
 
same
 
period
 
last
 
year.
 
We
 
recorded
 
a
 
$200266
 
million
 
net
 
increase
 
in
 
expense
 
related
 
to
 
the
 
mark-to-market
 
valuation
 
of
 
certain
commodity positions and grain
 
inventories in the six-month periodnine-month
 
period ended November 27, 2022, comparedFebruary 26, 2023,
 
compared to a $36$16 million
net decrease
in
 
expense
 
in
 
the
 
same
 
period
 
last
 
year.
 
We
 
recorded
 
$6282
 
million
 
of
 
net
 
losses
 
related
 
to
 
valuation
 
adjustments
 
and
 
the
 
sale
 
of
corporate investments in the six-month
 
nine-month period ended November 27, 2022,February
 
26, 2023, compared to $10 $21
million of net gains in
 
gains in the same period last
year.
 
In
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
we
 
recorded
 
a
 
$2426
 
million
 
charge
 
related
 
to
 
a
 
voluntary
 
recall
on
 
certain
international
Häagen-Dazs
 
ice
 
cream
 
products.
 
In
 
addition,
 
we
 
recorded
 
$45
 
million
 
of
 
integration
 
costs
 
primarily
 
related
 
to
 
our
acquisition of
 
TNT Crust
 
in the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
compared to
 
$1620 million
 
of integration
 
costs related
 
to
our
acquisition
of
Tyson
 
Foods’ pet treats business
 
in the six-monthpet
 
period ended November 28,
2021.
In the six-month period
ended
November 27,
2022, we recorded
$2 million of
transaction costs primarily
related to
the sale of
our Helper
main meals and
Suddenly
Salad
side
dishestreats
 
business
 
comparedin
 
to $48the
nine-month
period
ended
February
27,
2022.
In
the
nine-month
period
ended
February
26,
2023,
we
recorded
$2
 
million
 
of
 
transaction
 
costs
primarily
related
 
to
 
the
 
sale
of
 
our
Helper
main
meals
and
Suddenly Salad
side dishes
business compared
to $57
million of
transaction costs
related to
the sale
of our
 
interests in
 
YoplaYoplait
 
it SAS,
Yoplait
Marques SNC, LibertéYoplait
 
Marques SNC,
Liberté Marques
Sàrl and
 
the sale of
 
of our European
 
European dough
businesses. In
 
addition, we
 
recorded a $21
 
$20 million recovery
recovery related to
a Brazil indirect tax
item and a $13
$13 million insurance
recovery in the
nine-month period ended
February 27, 2022.
In
addition,
certain
compensation
and
benefits
expenses
and
charitable
contributions
increased
 
in
the
nine-month
period
ended
February 26, 2023, compared to the six-monthsame period ended November 28, 2021.last year.
LIQUIDITY
 
AND CAPITAL
 
RESOURCES
During the
 
six-monthnine-month period
 
ended NovemberFebruary
 
27, 2022,26, 2023,
 
cash provided by
 
operations was
 
$1,2012,027 million compared
 
compared to $1,498
$2,228 million
in the
 
same period
 
last year.
 
The $297$201
 
million decrease
 
was primarily
 
driven by
 
an increase in
 
inventory and
 
higher cash
 
income tax
payments in the six-monthnine-month period ended November 27, 2022February 26, 2023, as compared
 
to the same period a year ago.
Cash provided used
by investing activities during the
 
six-month activities
during
the nine
-month
period ended November 27, 2022,
February
26, 2023,
was $125$6
 
million
compared
to cash used
of $1,396 million
 
used of
$1,462 million for the
same period
 
in fiscal 2022. During the first quarter
 
2022. During
of the first
quarter2023, we completed the sale of
 
the 2023,
we completed
the sale
of the
Helper main meals
meals and Suddenly
 
Salad side dishes
 
business
for
 
$607 million
 
million cash. In
 
In the
first
 
quarter of
 
of fiscal
2023,
 
we
acquired
 
TNT Crust
 
for
$252
 
$252
million
cash, net
of cash
acquired.
 
In the
first quarter
of fiscal
2022,
 
we acquired
the Tyson
 
Foods’ pet treats business for an
 
pet treats
business
for
anaggregate
aggregate purchase price
of $1.2 billion. In
 
addition, we spent $227
million on purchases of
land, buildings, and
equipment in the six-
months ended November 27, 2022, compared to $224 million in
the same period last year.
Cash
 
used
 
by
 
financing
 
activities
 
during
 
the
 
six-monthnine-month
 
period
 
ended
 
NovemberFebruary
 
27,26,
 
2022,2023,
 
was
 
$1,230
1,956 million
 
compared
 
to
$4271,398 million
of
 
cash
used
 
by
financing
 
activities
in
 
the
same
 
period
in
 
fiscal
2022.
 
We
 
paid
$648 $967
 
million
of
 
dividends
in
 
the
six- nine-
month period ended NovemberFebruary 26, 202
 
27, 2022,3, compared to
$623 $934 million in the
same period
last year.
 
We purchased
 
$9011,152 million of shares
of common
 
stock in the
 
six-monthnine-month period
 
ended November 27,February 26,
 
2022,2023, compared
 
to $375$550 million
 
in the same
 
period in fiscal
 
2022.
 
In
addition, we had $61 million of net debt issuances in the
 
had $253
million of
net debt
issuances in
the six-month
nine-month period ended
November 27,
2022, February 26, 2023, compared
 
to $568$128 million
of net
net debt issuances in the same period a year ago.
As
of
 
NovemberFebruary
 
27,26,
 
2022, 2023,
we
 
had
 
$542553 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 permanentpermanently
 
ly reinvested in those jurisdictions.
 
 
 
 
 
 
 
 
 
 
 
31
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of November 27, 2022:February 26, 2023:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
��
and uncommitted credit facilities
$
3.3
$
-
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
 
Cereals,
 
LLC
 
(GMC)
 
Class A
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).
 
OnThe floating
 
June 1,preferred return
 
2021,rate on
GMC’s
Class A Interests
is
the
sum
of
 
the
 
floatingthree-month
Term
SOFR
plus
186
basis
points.
The
 
preferred
 
return
 
rate
 
onis
 
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
years through a negotiated agreement with the Class A Interest holder or through
 
or through a remarketing auction.
 
We
 
have an option
 
to purchase the
 
Class A Interests for
 
consideration equal to
 
the then current
 
capital account value,
 
plus any unpaid
preferred return
 
and the
 
prescribed make-whole
 
amount. If
 
we purchase
 
these interests,
 
any change
 
in the
 
third-party holder’s
 
capital
account
 
from
 
its
 
original
 
value
 
will
 
be
 
charged
 
directly
 
to
 
retained
 
earnings
 
and
 
will
 
increase
 
or
 
decrease
 
the
 
net
 
earnings
 
used
 
to
calculate EPS in that period.
 
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
 
Certain
 
of
 
our
 
long-term
 
debt
 
agreements,
 
our
 
credit
 
facilities,
 
and
 
our
 
noncontrolling
 
interests
 
contain
 
restrictive
 
covenants.
 
As
 
of
November 27, 2022,February 26, 2023, we were in compliance with all of these covenants.
 
We
 
have
$1,964
$2,487 million
 
of
long-term
debt
 
maturing
in
the
 
next
12
months
 
that
is
classified
 
as
current,
including
$400
million
of
floating-rate
notes
due
October
17,
2023,
 
€500
million
of
 
1.00
percent fixed-rate notes due
 
April 27, 2023, €250
million of 0.00 percent
 
fixed-rate
notes
due
April
27,
2023,
€250
million
of
0.00
percent
fixed-rate
notes
due
May
16,
2023,
€500
million
of
0.00
percent
fixed-rate
notes
due
July
27,
2023,
and
€250
million
of
floating-rate notes
due May
 
16, 2023.2023, €250 million
 
of floating-
rate notes due
May 16, 2023,
€500 million
of 0.00 percent
fixed-rate notes
due July 27,
2023, and $400
million of
floating-rate notes
due October 17, 2023. We
 
believe that
cash flows
from operations,
together with
 
available short-
 
and long-term
debt
financing, will be
adequate to meet our liquidity and capital needs for
at least the next 12 months.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
 
to the Consolidated Financial Statements included in
 
in our Annual Report on
Form
 
10-K for
 
the fiscal
 
year ended
 
May 29,
 
2022. The
 
accounting policies
 
used in
 
preparing our
 
interim fiscal
 
2023
Consolidated
Financial Statements are the same as those described in our Form 10-K.
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 February 26,
2023, are the
same as those
 
estimates as of November 27, 2022, are the same as those described
in our Annual Report on Form 10-K for the fiscal year ended May 29, 2022.
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
 
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
brand intangible assets had
 
risk of decreasing coverage.
 
We
 
will continue to
monitor these businesses for potential impairment.
RECENTLY
 
ISSUED ACCOUNTING PRONOUNCEMENTS
In September
December
2022,
the
Financial
Accounting
Standards
 
Board
(FASB)
 
issued Accounting Standards Update (ASU) 2022-04 requiring
enhanced
 
disclosuresoptional
 
relatedaccounting
guidance
for
a
limited
period
of
time
 
to
 
supplier
financing
programs.
The
ASU
requires
disclosure
ofease
 
the
 
keypotential
 
terms
of
the
program
and
a
rollforward
of
the
related
obligation
during
the
annual
period,
including
the
amount
of
obligations
confirmed
and
obligations
subsequently
paid.
The
new
disclosure
requirements
are
effective
for
fiscal
years
beginning
after
December
15,
2022,
with
the
exception
of the
rollforward requirement,
which is
effective
for fiscal
years beginning
after December
15, 2023,
which for
us is
the
first
quarter
of
fiscal
2024
for
the
primary
requirement
and
the
first
quarter
of
fiscal
2025
for
the
rollforward
requirement.
Early
adoption is
permitted. We
have historically
presented the
key terms
of these
programs and
the associated
obligation outstanding.
We
do not expect this ASU to have a material impact on our financial statements and
related disclosures.
32
In March
2020, the 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
 
existingfor 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
 
forcan
 
contractbe
applied
modificationsthrough December 31, 2024. We
are in the process of reviewing our contracts and hedge accountingarrangements
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.
In September 2022,
the FASB
issued Accounting Standards
Update (ASU) 2022-04
requiring enhanced disclosures
 
related to transitioning from discontinued
reference rates, such as LIBOR, to
alternative referencesupplier
rates, if
certain criteria
are met.financing programs.
 
The newASU
 
accounting requirements
can be
applied asrequires disclosure
 
of the
 
beginningkey terms
of the
program and
a rollforward
of the
related obligation
during
32
the annual period,
including the amount of
 
the interimobligations confirmed and
 
period including
March 12,obligations subsequently paid.
 
2020,The new disclosure requirements
are effective
 
orfor fiscal years beginning
 
anyafter December 15, 2022,
 
datewith the exception
 
thereafter,of the rollforward requirement,
 
throughwhich is effective
for fiscal years beginning
 
after December 31,15,
 
2022.2023, which for us
is the first quarter
of fiscal 2024 for
the primary requirement
and the
first quarter
of fiscal
2025 for
the rollforward
requirement. Early
adoption is
permitted. We
have historically
presented the
key terms
of these
programs
and the
associated obligation
outstanding.
 
We
 
aredo not
 
inexpect this
 
theASU to
 
process
of
reviewing
our
contracts
and
arrangements
that
will
be
affected
by
have a
 
discontinued
reference
rate
and
are
analyzing
thematerial
 
impact
of
this guidance
on
 
our
results
of financial
operationsstatements and financial position.related disclosures.
NON-GAAP MEASURES
We
 
have
 
included
 
in
 
this
 
report
 
measures
 
of
 
financial
 
performance
 
that
 
are not
 
defined
 
by
 
GAAP.
 
We
 
believe
 
that
 
these
 
measures
provide useful information to investors, and include these measures in other
 
communications to investors.
 
For each
 
of these
 
non-GAAP financial
 
measures, we
 
are providing
 
below a
 
reconciliation of
 
the differences
 
between the
 
non-GAAP
measure and the most
 
directly comparable GAAP measure,
 
an explanation of why
 
we believe the non-GAAP
 
measure provides useful
information to
 
investors, and
 
any additional
 
material purposes
 
for which
 
our management
 
or Board
 
of Directors
 
uses the
 
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
 
in lieu of, the comparable GAAP measure.
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.
Divestitures gain related
to the sale of our
interests in Yoplait
SAS, Yoplait
Marques SNC, and Liberté
Marques Sàrl and the
sale of a
European dough business in fiscal 2022. Please see Note 2 to the Consolidated
Financial Statements in Part I, Item 1 of this report
.report.
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.
Investment activity,
 
net
Valuation
 
adjustments and the
 
loss on sale of
 
certain corporate investments
 
in fiscal 2023.
 
Valuation
 
adjustments and the
 
gain on sale
of certain corporate investments in fiscal 2022.
Product recall
Voluntary
 
recall costs recorded in fiscal 2023 related to certain international
Häagen-Dazs
 
ice cream products.
Restructuring charges (recoveries)
Restructuring charges
 
for previously announced
 
restructuring actions recorded
 
in fiscal 2023
 
and fiscal 2022.
 
Please see Note 3
 
to the
Consolidated Financial Statements in Part I, Item 1 of this report.
Acquisition integration costs
Integration costs
 
primarily resulting
 
from the acquisition
 
of TNT Crust
 
in fiscal 2023.
 
Integration costs
 
resulting from
 
the acquisition
of TyTyson
 
son Foods’ pet treats business
 
treats business in fiscal 2022.
 
2022. Please see Note
 
Note 2 to the
 
the Consolidated Financial Statements
 
Statements in Part I,
 
I, Item 1 of
 
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
 
and the sale
 
of
our
 
European
 
dough
 
businesses 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
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
 
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
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
In Millions
Value
Percent of
Net Sales
Value
 
Percent of
Net Sales
Operating profit as reported
$
799.8730.2
15.314.2
%
$
800.1815.3
15.918.0
%
Divestitures gain, net
(13.7)
(0.3)
%
(170.1)
(3.7)
%
Mark-to-market effects
25.166.6
0.51.3
%
(12.1)20.0
(0.2)0.4
%
Investment activity, net
35.720.1
0.70.4
%
(10.5)(11.1)
(0.2)
%
Product recall
2.91.1
0.1-
%
-
-
%
Restructuring charges
11.62.1
0.2-
%
2.79.3
0.10.2
%
Acquisition integration costs
2.80.7
0.1-
%
3.54.3
0.1
%
Transaction costs
1.8-
-
%
37.68.6
0.70.2
%
Non-income tax recovery
-
-
%
0.2
-
%
Adjusted operating profit
$
879.7807.0
16.915.7
%
$
821.3676.5
16.314.9
%
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
In Millions
Value
 
Percent of
Net Sales
Value
 
Percent of
Net Sales
Operating profit as reported
$
1,885.42,615.6
19.017.4
%
$
1,644.42,459.7
17.217.4
%
Divestitures gain, net
(430.9)(444.6)
(4.3)(3.0)
%
-(170.1)
-(1.2)
%
Mark-to-market effects
199.8266.4
2.01.8
%
(36.2)(16.2)
(0.4)(0.1)
%
Investment activity, net
62.082.1
0.60.5
%
(9.8)(20.9)
(0.1)
%
Product recall
24.425.5
0.2
%
-
-
%
Restructuring charges (recoveries)
13.916.0
0.1
%
(1.4)7.9
-0.1
%
Acquisition integration costs
4.35.0
-
%
15.920.2
0.20.1
%
Transaction costs
2.0
-
%
48.256.8
0.50.4
%
Non-income tax recovery
-
-
%
(20.6)(20.4)
(0.2)(0.1)
%
Adjusted operating profit
$
1,760.92,567.9
17.717.0
%
$
1,640.52,317.0
17.216.4
%
Note: Tables
 
may not foot due to rounding.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34
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
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Change
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Change
Operating profit as reported
$
799.8730.2
$
800.1815.3
Flat(10)
%
$
1,885.42,615.6
$
1,644.42,459.7
156
%
Divestitures gain, net
-(13.7)
-(170.1)
(430.9)(444.6)
-(170.1)
Mark-to-market effects
25.166.6
(12.1)20.0
199.8266.4
(36.2)(16.2)
Investment activity, net
35.720.1
(10.5)(11.1)
62.082.1
(9.8)(20.9)
Product recall
2.91.1
-
24.425.5
-
Restructuring charges (recoveries)
11.62.1
2.79.3
13.916.0
(1.4)7.9
Acquisition integration costs
2.8
3.50.7
4.3
15.95.0
20.2
Transaction costs
1.8-
37.68.6
2.0
48.256.8
Non-income tax recovery
-
-0.2
-
(20.6)(20.4)
Adjusted operating profit
$
879.7807.0
$
821.3676.5
719
%
$
1,760.92,567.9
$
1,640.52,317.0
711
%
Foreign currency exchange impact
Flat(1)
pt
(1)
pt
Adjusted operating profit growth,
 
on a constant-currency basis
720
%
811
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rates
This measure
 
is used in
 
reporting to
 
our Board of
 
Directors and executive
 
management. We
 
believe that
 
this measure provides
 
useful
information to
 
investors because it
 
is the profitprofitability
 
ability measure we use
 
use to evaluate earnings
 
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
Six-MonthNine-Month Period Ended
Per Share Data
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Change
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021
Change
Diluted earnings per share, as reported
$
1.010.92
$
0.971.08
4(15)
%
$
2.363.28
$
1.993.07
197
%
Divestitures gain, net
-(0.08)
-(0.28)
(0.54)(0.62)
-(0.28)
Mark-to-market effects
0.09
0.03
(0.02)0.34
0.25
(0.05)(0.02)
Investment activity, net
0.040.03
(0.02)(0.01)
0.080.11
(0.02)(0.03)
Product recall
 
-
-
0.03
-
Restructuring charges (recoveries)
0.02
-
0.02
(0.01)0.02
0.01
Acquisition integration costs
0.01
-
0.01
0.020.01
0.03
Transaction costs
-
0.050.01
-
0.060.07
Non-income tax recovery
-
-
-
(0.02)
Adjusted diluted earnings per share
$
1.100.97
$
0.990.84
1115
%
$
2.213.18
$
1.982.82
1213
%
Foreign currency exchange impact
(1)
pt
(1)
pt
Adjusted diluted earnings per share
 
growth, on a constant-currency basis
1217
%
1314
%
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.
35
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.
35
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 Nov. 27,
2022Feb. 26, 2023
(23)(58)
%
(15)(7)
pts
(8)(51)
%
Six-MonthNine-Month Period Ended Nov.
27, 2022Feb. 26, 2023
(27)(37)
%
(10)(9)
pts
(17)(28)
%
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
 
Retail segment by
 
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 Nov. 27,
2022Feb. 26, 2023
(3)2
%
(7)(6)
pts
48
%
Six-MonthNine-Month Period Ended Nov.
27, 2022Feb. 26, 2023
Flat1
(5)%
(6)
pts
6
%
Note: Table may
 
not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
 
We
 
believe that
 
this measure
 
provides useful
 
information to
 
investors because
 
it provides
 
transparency to
 
underlying performance
 
of
our
 
segments
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
 
year-to-year
 
comparability
 
given
volatility in foreign currency exchange markets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36
Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:
Quarter Ended Nov. 27, 2022
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
24
%
Flat
24
%
International
(70)
%
(2)
pts
(68)
%
Pet
(34)
%
Flat
(34)
%
North America Foodservice
20
%
Flat
20
%
Six-Month Period Ended Nov.
27, 2022
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
22
%
Flat
22
%
International
(56)
%
(5)
pts
(51)
%
Pet
(15)
%
Flat
(15)
%
North America Foodservice
(3)
%
Flat
(3)
%
Note: Tables may not
foot due to rounding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3736
Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:
Quarter Ended Feb. 26, 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
29
%
Flat
29
%
International
18
%
(8)
pts
27
%
Pet
(7)
%
Flat
(7)
%
North America Foodservice
134
%
Flat
134
%
Nine-Month Period Ended Feb. 26, 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
24
%
Flat
24
%
International
(39)
%
(6)
pts
(33)
%
Pet
(13)
%
Flat
(13)
%
North America Foodservice
24
%
Flat
24
%
Note: Tables may not
foot due to rounding.
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
 
Six-MonthNine-Month Period Ended
Nov.Feb. 26, 2023
Feb. 27, 2022
Nov. 28, 2021Feb. 26, 2023
Nov.Feb. 27, 2022
Nov. 28, 2021
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
730.0653.5
$
147.1108.3
$
735.1755.9
$
159.7123.2
$
1,749.62,403.1
$
363.2471.5
$
1,513.12,269.0
$
328.6451.8
Divestitures gain, net
-(13.7)
-28.7
-(170.1)
-0.4
(430.9)(444.6)
(101.9)(73.2)
-(170.1)
-0.4
Mark-to-market effects
25.166.6
5.815.3
(12.1)20.0
(2.8)4.6
199.8266.4
46.061.3
(36.2)(16.2)
(8.3)(3.7)
Investment activity, net
35.720.1
13.04.5
(10.5)(11.1)
(0.2)
82.1
18.0
(20.9)
0.3
62.0
13.5
(9.8)
0.5
Product recall
 
2.91.1
0.70.3
-
-
24.425.5
5.65.9
-
-
Restructuring charges
(recoveries)2.1
11.60.7
3.29.3
2.71.7
2.816.0
13.94.5
3.87.9
(1.4)
1.93.6
Acquisition integration costs
2.8
0.7
3.5
0.80.1
4.3
1.0
15.95.0
3.61.1
20.2
4.6
Transaction costs
1.8-
0.6-
37.68.6
7.8(1.2)
2.0
0.6
48.256.8
12.411.2
Non-income tax recovery
-
-
-0.2
0.1
-
-
-(20.4)
(20.6)
(7.0)(6.9)
As adjusted
$
809.9730.3
$
171.0157.8
$
756.4617.1
$
168.8129.5
$
1,625.12,355.4
$
331.8489.6
$
1,509.22,126.3
$
331.8461.3
Effective tax rate:
As reported
20.2%16.6%
21.7%16.3%
20.8%19.6%
21.7%19.9%
As adjusted
21.1%21.6%
22.3%21.0%
20.4%20.8%
22.0%21.7%
Sum of adjustment to
 
 
income taxes
$
23.949.5
$
8.96.4
$
(31.4)18.1
$
3.19.5
Average number
 
of common
 
 
shares - diluted EPS
602.0599.0
613.0612.4
604.0602.4
613.8613.5
Impact of income tax adjustments
 
 
on adjusted diluted EPS
$
(0.04)(0.08)
$
(0.01)
$
0.05(0.03)
$
-(0.02)
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.
3837
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
 
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
 
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.
39
38
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.
 
 
 
 
 
 
 
 
 
 
 
4039
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
 
by a variety of factors, such
 
factors, such as: the impact of the
 
of the COVID-19 pandemic on
 
on our business, suppliers,
consumers,
 
customers,
 
and
 
employees;
 
disruptions
 
or
 
inefficiencies
 
in
 
the
 
supply
 
chain,
 
including
 
any
 
impact
 
of
 
the
 
COVID-19
pandemic;
 
competitive
 
dynamics
 
in
 
the
 
consumer
 
foods
 
industry
 
and
 
the
 
markets
 
for
 
our
 
products,
 
including
 
new
 
product
introductions,
 
advertising
 
activities,
 
pricing
 
actions,
 
and
 
promotional
 
activities
 
of
 
our
 
competitors;
 
economic
 
conditions,
 
including
changes
 
in
 
inflation
 
rates,
 
interest
 
rates,
 
tax
 
rates,
 
or
 
the
 
availability
 
of
 
capital;
 
product
 
development
 
and
 
innovation;
 
consumer
acceptance
 
of
 
new
 
products
 
and
 
product
 
improvements;
 
consumer
 
reaction
 
to
 
pricing
 
actions
 
and
 
changes
 
in
 
promotion
 
levels;
acquisitions
 
or
 
dispositions
 
of
 
businesses
 
or
 
assets;
 
changes
 
in
 
capital
 
structure;
 
changes
 
in
 
the
 
legal
 
and
 
regulatory
 
environment,
including
 
tax
 
legislation,
 
labeling
 
and
 
advertising
 
regulations,
 
and
 
litigation;
 
impairments
 
in
 
the
 
carrying
 
value
 
of
 
goodwill,
 
other
intangible assets,
 
or other
 
long-lived assets,
 
or changes
 
in the
 
useful lives
 
of other
 
intangible assets;
 
changes in
 
accounting standards
and
 
the impact
 
of critical
 
accounting
 
estimates; product
 
quality and
 
safety issues,
 
including
 
recalls and
 
product
 
liability; changes
 
in
consumer
 
demand
 
for
 
our
 
products;
 
effectiveness
 
of
 
advertising,
 
marketing,
 
and
 
promotional
 
programs;
 
changes
 
in
 
consumer
behavior,
 
trends,
 
and
 
preferences,
 
including
 
weight
 
loss
 
trends;
 
consumer
 
perception
 
of
 
health-related
 
issues,
 
including
 
obesity;
consolidation
 
in the
 
retail environment;
 
changes in
 
purchasing and
 
inventory levels
 
of significant
 
customers; fluctuations
 
in the
 
cost
and
 
availability
 
of
 
supply
 
chain
 
resources,
 
including
 
raw
 
materials,
 
packaging,
 
energy,
 
and
 
transportation;
 
effectiveness
 
of
restructuring
 
and
 
cost
 
saving
 
initiatives;
 
volatility
 
in
 
the
 
market
 
value
 
of
 
derivatives
 
used
 
to
 
manage
 
price
 
risk
 
for
 
certain
commodities; benefit plan
 
expenses due to
 
changes in plan
 
asset values and discount
 
rates used to
 
determine plan liabilities;
 
failure or
breach of
 
our information
 
technology systems;
 
foreign economic
 
conditions, including
 
currency rate
 
fluctuations; and
 
political unrest
in foreign markets and economic uncertainty due to terrorism or war.
You
 
should also
 
consider the risk
 
factors that we
 
identify in Item
 
1A of Part
 
I of our
 
Annual Report on
 
Form 10-K for
 
the fiscal year
ended May 29, 2022 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 November 27,February 26, 2023,
 
2022, was as follows:
 
In Millions
One-day Risk
of Loss
Change During
Six-MonthNine-Month
Period Ended
Nov. 27, 2022Feb. 26, 2023
Analysis of Change
Interest rate instruments
$
5147
$
106
Rising interest rates
Foreign currency instruments
3538
1518
Increase in portfolio basis
Commodity instruments
119
(2)(4)
Decrease in commodity prices
Equity instruments
3
1
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4140
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 February
 
as
of
November
27,
2022,
26, 2023, our
disclosure
 
controls
and
procedures
were
 
effective
to
ensure
 
that information
information required to
 
be disclosed
by us
 
in reports
that we file
 
file or submit under
 
under the
Securities Exchange Act
 
Act of
1934 is (1)
 
recorded, processed,
processed, summarized,
and reported
within the
time periods
specified in
Securities and
Exchange Commission
rules and
forms, and
(2)
accumulated
 
and
 
communicatedreported
 
towithin
 
ourthe
 
management,time
 
includingperiods
 
ourspecified
 
Chiefin
 
Executive
OfficerSecurities
 
and
 
ChiefExchange
 
Commission
rules
and
forms,
and
(2)
accumulated and
communicated to
our management,
including our
Chief Executive
Officer and
Chief Financial
 
Officer,
 
in a
 
amanner
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 February
 
quarter
ended
November
27,
2022
26, 2023 that
materially
 
affected,
or
are
 
reasonably
likely
to
 
materially affect, our
 
affect,
ourinternal
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
November 27, 2022:February 26, 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)
August 29,November 28, 2022 -
October 2, 2022January 1, 2023
1,888,0001,961,407
$
76.6684.61
1,888,0001,961,407
94,104,93888,860,531
October 3, 2022January 2, 2023 -
OctoberJanuary 29, 2023
1,016,544
82.85
1,016,544
87,843,987
January 30, 2022
1,905,000
77.19
1,905,000
92,199,938
October 31, 20222023 -
November 27, 2022February 26, 2023
1,378,0002,330
78.5377.99
1,378,0002,330
90,821,93887,841,657
Total
5,171,0002,980,281
$
77.3584.00
5,171,0002,980,281
90,821,93887,841,657
(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 a
 
new authorization
 
for the
 
repurchase of
 
up to
 
100,000,000 shares
 
of our
 
common stock
and terminated
 
the prior
 
authorization. Purchases
 
can be
 
made in
 
the open
 
market or
 
in privately
 
negotiated transactions,
 
including the
 
use of
call options
 
and other
 
derivative instruments,
 
Rule 10b5-1
 
trading plans,
 
and accelerated
 
repurchase programs.
 
The Board
 
did not
 
specify an
expiration date for the authorization.
 
4241
PART
 
II. OTHER INFORMATION
Item 6.
Exhibits.
10.1
 
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 November
 
27,February 26,
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 Redeemable
 
Interest; (v) Consolidated
 
Statements of Cash
 
Flows; and (vi)
 
Notes to
Consolidated Financial Statements.
 
104
Cover Page, formatted in Inline Extensible Business Reporting Language
 
and contained in Exhibit 101.
 
 
4342
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: December 20, 2022March 23, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
 
Officer
(Principal Accounting Officer and Duly Authorized
 
Officer)