10-Q
General Mills Inc (GIS)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☑
QUARTERLY
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE QUARTERLY
PERIOD ENDED
FEBRUARY 25, 2024
☐
TRANSITION
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE TRANSITION PERIOD FROM
TO
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, $.10 par value
GIS
New York Stock Exchange
0.125% Notes due 2025
GIS 25A
New York Stock Exchange
0.450% Notes due 2026
GIS 26
New York Stock Exchange
1.500% Notes due 2027
GIS 27
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
________________
Indicate
by
check
mark
whether
the
registrant
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange Act of 1934
during the preceding 12
months (or for such shorter
period that the registrant
was required to file such
reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
☐
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
every
Interactive
Data
File
required
to
be
submitted
pursuant to Rule 405
of Regulation S-T (§
232.405 of this chapter) during
the preceding 12 months (or
for such shorter period that
the
registrant was required to submit such files).
Yes
☑
No
☐
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
a
smaller
reporting
company,
or
an
emerging
growth
company.
See
the
definitions
of
“large
accelerated
filer,”
“accelerated
filer,”
“smaller
reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☑
Number
of
shares
of
Common
Stock
outstanding
as
of
March
13,
2024:
564,548,763
(excluding
190,080,991
shares
held
in
the
treasury).
3
General Mills, Inc.
Table of Contents
Page
PART I – Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings for the quarters and nine-month periods ended February 25, 2024 and
February 26, 2023
4
Consolidated Statements of Comprehensive Income for the quarters and nine-month periods ended February
25, 2024 and February 26, 2023
5
Consolidated Balance Sheets as of February 25, 2024 and May 28, 2023
6
Consolidated Statements of Total Equity for the quarters and nine-month periods ended February 25, 2024
and February 26, 2023
7
Consolidated Statements of Cash Flows for the nine-month periods ended February 25, 2024 and February
26, 2023
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk
40
Item 4. Controls and Procedures
41
PART II – Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
41
Item 5. Other Information
41
Item 6. Exhibits
42
Signatures
43
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
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net sales
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2
Cost of sales
3,391.8
3,461.1
9,899.5
10,246.6
Selling, general, and administrative expenses
790.9
946.9
2,460.7
2,632.5
Divestitures gain, net
-
(13.7)
-
(444.6)
Restructuring, impairment, and other exit costs
5.8
1.4
130.6
14.1
Operating profit
910.7
730.2
2,652.5
2,615.6
Benefit plan non-service income
(18.6)
(21.6)
(55.7)
(65.0)
Interest, net
121.7
98.3
356.5
277.5
Earnings before income taxes and after-tax earnings
from
joint ventures
807.6
653.5
2,351.7
2,403.1
Income taxes
149.3
108.3
458.5
471.5
After-tax earnings from joint ventures
18.0
12.7
65.7
57.9
Net earnings, including earnings attributable to
noncontrolling interests
676.3
557.9
1,958.9
1,989.5
Net earnings attributable to noncontrolling interests
6.2
4.8
19.8
10.5
Net earnings attributable to General Mills
$
670.1
$
553.1
$
1,939.1
$
1,979.0
Earnings per share – basic
$
1.18
$
0.94
$
3.35
$
3.32
Earnings per share – diluted
$
1.17
$
0.92
$
3.33
$
3.28
See accompanying notes to consolidated financial statements.
5
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net earnings, including earnings attributable to
noncontrolling interests
$
676.3
$
557.9
$
1,958.9
$
1,989.5
Other comprehensive income (loss), net of tax:
Foreign currency translation
2.4
12.5
(38.0)
(98.7)
Other fair value changes:
Hedge derivatives
(6.9)
(5.7)
(7.3)
(23.2)
Reclassification to earnings:
Foreign currency translation
-
-
-
(7.4)
Hedge derivatives
(0.1)
18.9
(2.3)
18.5
Amortization of losses and prior service costs
9.1
13.9
27.4
42.2
Other comprehensive income (loss), net of tax
4.5
39.6
(20.2)
(68.6)
Total comprehensive
income
680.8
597.5
1,938.7
1,920.9
Comprehensive income attributable to noncontrolling
interests
6.0
4.9
20.0
9.9
Comprehensive income attributable to General Mills
$
674.8
$
592.6
$
1,918.7
$
1,911.0
See accompanying notes to consolidated financial statements.
6
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Feb. 25, 2024
May 28, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
588.6
$
585.5
Receivables
1,771.1
1,683.2
Inventories
1,828.0
2,172.0
Prepaid expenses and other current assets
466.8
735.7
Total current
assets
4,654.5
5,176.4
Land, buildings, and equipment
3,643.6
3,636.2
Goodwill
14,433.7
14,511.2
Other intangible assets
6,957.2
6,967.6
Other assets
1,171.5
1,160.3
Total assets
$
30,860.5
$
31,451.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,613.5
$
4,194.2
Current portion of long-term debt
812.2
1,709.1
Notes payable
686.7
31.7
Other current liabilities
1,949.5
1,600.7
Total current
liabilities
7,061.9
7,535.7
Long-term debt
11,015.1
9,965.1
Deferred income taxes
2,023.5
2,110.9
Other liabilities
1,068.7
1,140.0
Total liabilities
21,169.2
20,751.7
Stockholders’ equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,210.3
1,222.4
Retained earnings
20,416.7
19,838.6
Common stock in treasury,
at cost, shares of
190.1
and
168.0
(9,968.4)
(8,410.0)
Accumulated other comprehensive loss
(2,297.3)
(2,276.9)
Total stockholders’
equity
9,436.8
10,449.6
Noncontrolling interests
254.5
250.4
Total equity
9,691.3
10,700.0
Total liabilities and equity
$
30,860.5
$
31,451.7
See accompanying notes to consolidated financial statements.
7
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Feb. 25, 2024
Feb. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
9,631.9
$
10,372.1
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,201.8
1,155.3
Stock compensation plans
(11.1)
21.9
Unearned compensation related to stock unit awards
1.8
(14.8)
Earned compensation
17.8
28.7
Ending balance
1,210.3
1,191.1
Retained earnings:
Beginning balance
20,080.9
18,991.9
Net earnings attributable to General Mills
670.1
553.1
Cash dividends declared ($
0.59
and $
0.54
per share)
(334.3)
(318.5)
Ending balance
20,416.7
19,226.5
Common stock in treasury:
Beginning balance
(185.7)
(9,677.4)
(164.4)
(8,023.5)
Shares purchased, including excise tax of $
2.8
and
$
0.4
million
(4.7)
(303.1)
(2.9)
(251.0)
Stock compensation plans
0.3
12.1
1.1
54.4
Ending balance
(190.1)
(9,968.4)
(166.2)
(8,220.1)
Accumulated other comprehensive loss:
Beginning balance
(2,302.0)
(2,078.0)
Other comprehensive income
4.7
39.5
Ending balance
(2,297.3)
(2,038.5)
Noncontrolling interests:
Beginning balance
253.1
250.9
Comprehensive income
6.0
4.9
Distributions to noncontrolling interest holders
(4.6)
(6.6)
Ending balance
254.5
249.2
Total equity,
ending balance
$
9,691.3
$
10,483.7
See accompanying notes to consolidated financial statements.
8
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
10,700.0
$
10,788.0
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,222.4
1,182.9
Stock compensation plans
(10.3)
23.8
Unearned compensation related to stock unit awards
(78.1)
(100.6)
Earned compensation
76.3
85.0
Ending balance
1,210.3
1,191.1
Retained earnings:
Beginning balance
19,838.6
18,532.6
Net earnings attributable to General Mills
1,939.1
1,979.0
Cash dividends declared ($
2.36
and $
2.16
per share)
(1,361.0)
(1,285.1)
Ending balance
20,416.7
19,226.5
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
Shares purchased, including excise tax of $
15.0
and
$
0.4
million
(23.5)
(1,616.6)
(15.0)
(1,152.3)
Stock compensation plans
1.4
58.2
4.5
210.3
Ending balance
(190.1)
(9,968.4)
(166.2)
(8,220.1)
Accumulated other comprehensive loss:
Beginning balance
(2,276.9)
(1,970.5)
Other comprehensive loss
(20.4)
(68.0)
Ending balance
(2,297.3)
(2,038.5)
Noncontrolling interests:
Beginning balance
250.4
245.6
Comprehensive income
20.0
9.9
Distributions to noncontrolling interest holders
(16.6)
(11.4)
Change in ownership interest
0.7
-
Divestiture
-
5.1
Ending balance
254.5
249.2
Total equity,
ending balance
$
9,691.3
$
10,483.7
See accompanying notes to consolidated financial statements.
9
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
1,958.9
$
1,989.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
412.2
411.0
After-tax earnings from joint ventures
(65.7)
(57.9)
Distributions of earnings from joint ventures
31.4
36.6
Stock-based compensation
76.7
86.7
Deferred income taxes
(85.5)
(71.2)
Pension and other postretirement benefit plan contributions
(20.0)
(20.2)
Pension and other postretirement benefit plan costs
(20.2)
(20.2)
Divestitures gain, net
-
(444.6)
Restructuring, impairment, and other exit costs
119.7
(14.6)
Changes in current assets and liabilities, excluding the effects of
acquisitions and divestitures
(9.6)
21.3
Other, net
41.0
110.6
Net cash provided by operating activities
2,438.9
2,027.0
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(485.6)
(351.3)
Acquisition, net of cash acquired
(25.5)
(251.5)
Proceeds from divestitures, net of cash divested
-
633.1
Investments in affiliates, net
(1.5)
(30.8)
Proceeds from disposal of land, buildings, and equipment
0.2
0.8
Other, net
4.8
(6.4)
Net cash used by investing activities
(507.6)
(6.1)
Cash Flows - Financing Activities
Change in notes payable
654.5
159.2
Issuance of long-term debt
1,000.0
501.8
Payment of long-term debt
(900.0)
(600.0)
Proceeds from common stock issued on exercised options
11.1
168.0
Purchases of common stock for treasury
(1,601.6)
(1,152.3)
Dividends paid
(1,028.0)
(967.4)
Distributions to noncontrolling interest holders
(16.6)
(11.4)
Other, net
(47.0)
(53.5)
Net cash used by financing activities
(1,927.6)
(1,955.6)
Effect of exchange rate changes on cash and cash equivalents
(0.6)
(16.0)
Increase in cash and cash equivalents
3.1
49.3
Cash and cash equivalents - beginning of year
585.5
569.4
Cash and cash equivalents - end of period
$
588.6
$
618.7
Cash Flow from changes in current assets and liabilities, excluding the effects
of
acquisitions and divestitures:
Receivables
$
(83.8)
$
(132.4)
Inventories
347.8
(237.0)
Prepaid expenses and other current assets
269.4
151.5
Accounts payable
(543.7)
(41.6)
Other current liabilities
0.7
280.8
Changes in current assets and liabilities
$
(9.6)
$
21.3
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
interests’
share
of
those
transactions.
Operating
results
for
the
fiscal
quarter
ended
February
25,
2024,
are
not
necessarily indicative of the results that may be expected for the fiscal year ending
May 26, 2024.
These
statements
should
be
read
in
conjunction
with
the
Consolidated
Financial
Statements
and
footnotes
included
in
our
Annual
Report on Form
10-K for the fiscal
year ended May
28, 2023. The
accounting policies used
in preparing these
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
Statements in that Form 10-K with the exception of
new requirements adopted in the first quarter of fiscal 2024.
In the first quarter
of fiscal 2024, we
adopted optional accounting guidance
to ease the burden
in accounting for reference
rate reform.
The new
standard provides
temporary expedients
and exceptions
to existing
accounting requirements
for contract
modifications
and
hedge accounting
related to transitioning
from discontinued
reference rates.
This resulted in
modifying contracts,
where necessary,
to
apply a new reference rate,
primarily SOFR. The adoption of
this accounting guidance did not
have a material impact on our results
of
operations or financial position.
In the
first quarter
of fiscal
2024, we adopted
new requirements
for enhanced
disclosures related
to supplier
financing programs.
The
new standard requires
disclosure of the
key terms of
the program and
a rollforward of
the related obligation
during the annual
period,
including
the
amount
of
obligations
confirmed
and
obligations
subsequently
paid.
We
have
historically
presented
the
key
terms
of
these programs
and the
associated obligation
outstanding
(please see
Note 6).
The rollforward
requirement is
effective
for us
in our
fiscal 2025. The adoption did not have a material impact on our financial
statements and related disclosures.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisition and Divestiture
During
the first
quarter
of fiscal
2023,
we
acquired
TNT Crust,
a
manufacturer
of high-quality
frozen pizza
crusts
for
regional
and
national pizza
chains, foodservice
distributors, and
retail outlets,
for a
purchase price
of $
253.0
million. We
financed the
transaction
with U.S. commercial paper.
We consolidated
the TNT Crust business into
our Consolidated Balance Sheets
and recorded goodwill
of
$
156.7
million. The
goodwill is
included in
the North
America Foodservice
segment and
is not
deductible for
tax purposes.
The pro
forma effects of this acquisition were not material.
During the
first quarter
of fiscal
2023,
we completed
the sale
of our
Helper main
meals and
Suddenly
Salad side
dishes business
to
Eagle Family Foods Group for $
606.8
million and recorded a pre-tax gain of $
442.2
million.
(3) Restructuring, Impairment, and Other Exit Costs
Restructuring and impairment charges were as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Goodwill impairment
$
-
$
-
$
117.1
$
-
Commercial strategy actions
9.0
-
14.1
-
(Recoveries) charges associated with restructuring actions
previously announced
(3.1)
2.1
16.4
16.0
Total
$
5.9
$
2.1
$
147.6
$
16.0
In
the
third
quarter
of
fiscal
2024,
we
did
not
undertake
any
new
restructuring
actions.
We
recorded
$
9.0
million
of
restructuring
charges
in
the
third
quarter
of
fiscal
2024
and
$
14.1
million
of
restructuring
charges
in
the
nine-month
period
ended
February
25,
2024, related to commercial strategy
actions approved in the second quarter
of fiscal 2024. We
recorded a $
3.1
million net recovery of
restructuring
charges
in
the
third
quarter
of
fiscal
2024
and
$
16.4
million
of
restructuring
charges
in
the
nine-month
period
ended
11
February
25,
2024,
related
to
restructuring
actions
previously
announced.
We
recorded
$
2.1
million
of
restructuring
charges
in
the
third quarter
of fiscal
2023
and $
16.0
million of
restructuring charges
in the
nine-month period
ended February
26, 2023,
related to
restructuring actions previously announced.
We expect these actions to
be completed by the end of fiscal 2026.
In the third
quarter of fiscal
2024, we decreased
the estimate of
restructuring charges
that we expect
to incur related
to our previously
announced
actions
to enhance
the
efficiency
of our
global
supply
chain
structure.
We
expect to
incur
approximately
$
44
million
of
restructuring charges and project-related costs related
to these actions, of which approximately $
25
million will be cash. These charges
are
expected
to
consist
of
approximately
$
24
million
of
severance
and
$
20
million
of
other
costs,
primarily
$
8
million
of
asset
impairment and $
13
million of asset write-offs. We
expect these actions to be completed by the end of fiscal 2025.
We
paid
net
$
27.9
million
of cash
in
the
nine-month
period
ended
February
25,
2024,
related
to
restructuring
actions.
We
paid
net
$
30.6
million of cash in the same period of fiscal 2023.
In the second
quarter of fiscal
2024, we recorded
a $
117.1
million non-cash goodwill
impairment charge
related to our Latin
America
reporting unit. Please see Note 4 for additional information.
Restructuring and impairment charges and project-related
costs are recorded in our Consolidated Statements of Earnings as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Restructuring, impairment, and other exit costs
$
5.8
$
1.4
$
130.6
$
14.1
Cost of sales
0.1
0.7
17.0
1.9
Total restructuring
and impairment charges
$
5.9
$
2.1
$
147.6
$
16.0
Project-related costs classified in cost of sales
$
0.5
$
-
$
1.6
$
-
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:
In Millions
Total
Reserve balance as of May 28, 2023
$
47.7
Fiscal 2024 net recoveries, including foreign currency translation
(0.1)
Utilized in fiscal 2024
(27.7)
Reserve balance as of Feb. 25, 2024
$
19.9
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
Feb. 25, 2024
May 28, 2023
Goodwill
$
14,433.7
$
14,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,715.7
6,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
387.0
386.3
Less accumulated amortization
(145.5)
(131.1)
Intangible assets subject to amortization, net
241.5
255.2
Other intangible assets
6,957.2
6,967.6
Total
$
21,390.9
$
21,478.8
12
Based on the
carrying value of
finite-lived intangible assets
as of February
25, 2024, annual amortization
expense for each of
the next
five fiscal years is estimated to be approximately $
20
million.
The changes in the carrying amount of goodwill during the nine-month period
ended February 25, 2024, were as follows:
In Millions
North America
Retail
Pet
North America
Foodservice
International
Corporate and
Joint Ventures
Total
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
Acquisition
-
-
-
-
26.9
26.9
Impairment charge
-
-
-
(117.1)
-
(117.1)
Other activity, primarily
foreign currency translation
1.0
-
(0.1)
8.3
3.5
12.7
Balance as of Feb. 25, 2024
$
6,543.4
$
6,062.8
$
805.5
$
599.6
$
422.4
$
14,433.7
The changes in the carrying amount of other intangible assets during the nine-month
period ended February 25, 2024, were as follows:
In Millions
Total
Balance as of May 28, 2023
$
6,967.6
Amortization, net of foreign currency translation
(10.4)
Balance as of Feb. 25, 2024
$
6,957.2
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2024. As a
result of lower future profitability
projections for our Latin
America reporting unit, we
determined that the fair
value
of the reporting unit was
less than its book value and
recorded a $
117.1
million non-cash goodwill impairment
charge in restructuring,
impairment,
and
other
exit
costs
in
our
Consolidated
Statements
of
Earnings.
Our
estimates
of
fair
value
for
goodwill
impairment
testing were determined based on a discounted cash flow model and
the fair value is a Level 3 asset in the fair value hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
True Chews
and
Uncle Toby’s
brand intangible
assets. In
addition, while
having significant
coverage as
of our
fiscal 2024
assessment date,
the
Progresso
,
Nudges
,
Top
Chews
,
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
Feb. 25, 2024
May 28, 2023
Finished goods
$
1,772.1
$
2,066.9
Raw materials and packaging
501.2
572.2
Grain
103.3
133.8
Excess of FIFO over LIFO cost
(548.6)
(600.9)
Total
$
1,828.0
$
2,172.0
(6) Risk Management Activities
Many commodities we
use in the
production and distribution
of our products
are exposed to
market price risks.
We
utilize derivatives
to manage price risk for our principal
ingredients and energy costs, including
grains (oats, wheat, and corn), oils
(principally soybean),
dairy products, natural
gas, and diesel fuel.
Our primary objective
when entering into
these derivative contracts
is to achieve
certainty
with
regard
to
the
future
price
of
commodities
purchased
for
use
in
our
supply
chain.
We
manage
our
exposures
through
a
combination of purchase orders, long-term
contracts with suppliers, exchange-traded
futures and options, and over-the-counter
options
and swaps.
We
offset
our exposures
based on
current and
projected market
conditions and
generally seek
to acquire
the inputs
at as
close as possible to or below our planned cost.
We
use derivatives
to manage
our exposure
to changes
in commodity
prices. We
do not
perform the
assessments required
to achieve
hedge
accounting
for
commodity
derivative
positions.
Accordingly,
the
changes
in
the
values
of
these
derivatives
are
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
13
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 25, 2024, and February 26, 2023, included:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net loss on mark-to-market valuation of certain
commodity positions
$
(24.5)
$
(30.2)
$
(34.3)
$
(123.4)
Net loss (gain) on commodity positions reclassified from
unallocated corporate items to segment operating profit
11.7
(21.5)
29.5
(85.0)
Net mark-to-market revaluation of certain grain inventories
(12.9)
(14.9)
(1.1)
(58.0)
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
(25.7)
$
(66.6)
$
(5.9)
$
(266.4)
As
of
February
25,
2024,
the
net
notional
value
of
commodity
derivatives
was
$
306.3
million,
of
which
$
124.2
million
related
to
energy inputs and $
182.1
million related to agricultural inputs. These contracts relate to inputs that generally
will be utilized within the
next
12
months.
In
the
third
quarter
of
fiscal
2024,
in
advance
of
our
$
500.0
million
debt
issuance,
we
entered
into
and
settled
$
250.0
million
of
treasury locks, resulting in a gain of $
0.3
million.
We
also have net
investments in
foreign subsidiaries
that are denominated
in euros. As
of February
25, 2024, we
hedged a portion
of
these investments with €
2,967.5
million of euro-denominated bonds.
The
fair
values
of
the
derivative
positions
used
in
our
risk
management
activities
and
other
assets
recorded
at
fair
value
were
not
material as of February 25, 2024,
and were Level 1 or Level 2 assets and
liabilities in the fair value hierarchy.
We did
not significantly
change our valuation techniques from prior periods.
We
offer
certain
suppliers
access
to
third-party
services
that
allow
them
to
view
our
scheduled
payments
online.
The
third-party
services also
allow suppliers
to finance
advances on
our scheduled
payments at
the sole
discretion of
the supplier
and the third
party.
We
have no
economic interest
in these
financing arrangements
and no
direct relationship
with the
suppliers, the
third parties,
or any
financial institutions
concerning these
services, including
not providing
any form
of guarantee
and not
pledging assets
as security
to
the third
parties or
financial institutions.
All of
our accounts
payable remain
as obligations
to our
suppliers as
stated in
our supplier
agreements. As of February
25, 2024, $
1,348.9
million of our total accounts
payable were payable to
suppliers who utilize these third-
party services.
As of
May 28,
2023, $
1,430.1
million of
our total
accounts payable
were payable
to suppliers
who utilize
these third-
party services.
(7) Debt
The components of notes payable were as follows:
In Millions
Feb. 25, 2024
May 28, 2023
U.S. commercial paper
$
683.3
$
-
Financial institutions
3.4
31.7
Total
$
686.7
$
31.7
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
14
The following table details the fee-paid committed and uncommitted credit
lines we had available as of February 25, 2024:
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 February 25, 2024.
Long-Term
Debt
The fair values
and carrying
amounts of long-term
debt, including
the current portion,
were $
11,112.5
million and $
11,827.3
million,
respectively,
as of
February
25,
2024.
The
fair value
of long-term
debt
was estimated
using
market quotations
and
discounted
cash
flows based
on our
current incremental
borrowing rates
for similar
types of
instruments. Long
-term debt
is a
Level 2
liability in
the
fair value hierarchy.
In
the
third
quarter of
fiscal
2024,
we
issued
$
500.0
million
of
4.7
percent
fixed-rate
notes due
January 30, 2027
. We
used
the
net
proceeds to repay $
500.0
million of
3.65
percent fixed-rate notes due
February 15, 2024
.
In the second
quarter of fiscal 2024,
we issued €
250.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
November 10, 2023
.
In the
second quarter
of fiscal
2024, we
issued $
500.0
million of
5.5
percent fixed-rate
notes due
October 17, 2028
. We
used the
net
proceeds to repay $
400.0
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
In the first
quarter of fiscal
2024, we issued
€
500.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to
repay €
500.0
million of floating-rate notes due
July 27, 2023
.
In the fourth quarter
of fiscal 2023, we
issued €
250.0
million of floating-rate notes
due
November 10, 2023
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
May 16, 2023
.
In the
fourth quarter
of fiscal
2023, we
issued €
750.0
million of
3.907
percent fixed-rate
notes due
April 13, 2029
. We
used the
net
proceeds to repay €
500.0
million of
1.0
percent fixed-rate notes due
April 27, 2023
, and €
250.0
million of floating-rate notes due
May
16, 2023
.
In the fourth
quarter of fiscal
2023, we
issued $
1,000.0
million of
4.95
percent fixed-rate
notes due
March 29, 2033
. We
used the net
proceeds to repay our outstanding commercial paper and for general
corporate purposes.
In the second quarter of fiscal 2023, we issued $
500.0
million of
5.241
percent fixed-rate notes due
November 18, 2025
. We used the
net proceeds to repay a portion of our outstanding commercial paper and for general
corporate purposes.
In the second quarter of fiscal 2023, we issued €
250.0
million of floating-rate notes due
May 16, 2023
. We used the net proceeds
to
repay €
250.0
million of
0.0
percent fixed-rate notes due
November 11, 2022
.
In the second quarter of fiscal 2023, we repaid $
500.0
million of
2.6
percent fixed-rate notes due
October 12, 2022
, using proceeds
from the issuance of commercial paper.
Certain of
our long-term
debt agreements
contain restrictive
covenants.
As of February 25, 2024, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most recent
mark-to-market valuation
(currently $
251.5
million). The
floating preferred return
rate on GMC’s
Class A Interests is
the
sum
of
the
three-month Term SOFR
plus
186
basis
points.
The
preferred
return
rate
is
adjusted
every
three years
through
a
negotiated agreement with the Class A Interest holder or through
a remarketing auction.
15
Our noncontrolling interests contain restrictive covenants. As of February 25, 2024, we were in compliance with all of these
covenants.
(9) Stockholders’ Equity
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Feb. 25, 2024
Feb. 26, 2023
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
670.1
$
6.2
$
553.1
$
4.8
Other comprehensive income (loss):
Foreign currency translation
$
10.7
$
(8.1)
2.6
(0.2)
$
3.4
$
9.0
12.4
0.1
Other fair value changes:
Hedge derivatives
(8.8)
1.9
(6.9)
-
(6.3)
0.6
(5.7)
-
Reclassification to earnings:
Hedge derivatives (a)
(0.3)
0.2
(0.1)
-
23.1
(4.2)
18.9
-
Amortization of losses and
prior service costs (b)
11.5
(2.4)
9.1
-
18.1
(4.2)
13.9
-
Other comprehensive income (loss)
$
13.1
$
(8.4)
4.7
(0.2)
$
38.3
$
1.2
39.5
0.1
Total comprehensive income
$
674.8
$
6.0
$
592.6
$
4.9
(a)
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Nine-Month Period Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
1,939.1
$
19.8
$
1,979.0
$
10.5
Other comprehensive (loss) income:
Foreign currency translation
$
(43.7)
$
5.5
(38.2)
0.2
$
(83.3)
$
(14.8)
(98.1)
(0.6)
Other fair value changes:
Hedge derivatives
(9.0)
1.7
(7.3)
-
(29.3)
6.1
(23.2)
-
Reclassification to earnings:
Foreign currency translation (a)
-
-
-
-
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(5.0)
2.7
(2.3)
-
23.0
(4.5)
18.5
-
Amortization of losses and
prior service costs (c)
34.5
(7.1)
27.4
-
54.6
(12.4)
42.2
-
Other comprehensive (loss) income
$
(23.2)
$
2.8
(20.4)
0.2
$
(42.4)
$
(25.6)
(68.0)
(0.6)
Total comprehensive income
$
1,918.7
$
20.0
$
1,911.0
$
9.9
(a)
Gain reclassified from AOCI into earnings is reported in the divestitures gain, net.
(b)
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(c)
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
Feb. 25, 2024
May 28, 2023
Foreign currency translation adjustments
$
(746.8)
$
(708.6)
Unrealized (loss) gain from hedge derivatives
(3.7)
5.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,630.1)
(1,670.6)
Prior service credits
83.3
96.4
Accumulated other comprehensive loss
$
(2,297.3)
$
(2,276.9)
(10) Stock Plans
We
have various
stock-based compensation
programs under
which awards,
including stock
options, restricted
stock, restricted
stock
units, and performance
awards, may be granted
to employees and non-employee
directors. These programs
and related accounting
are
described in Note
12 to the
Consolidated Financial
Statements included
in our Annual
Report on Form
10-K for the
fiscal year ended
May 28, 2023.
16
Compensation expense related to stock-based payments recognized
in the Consolidated Statements of Earnings was as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Compensation expense related to stock-based payments
$
18.2
$
29.1
$
76.7
$
86.7
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Windfall tax benefits from stock-based payments
$
1.2
$
6.2
$
10.1
$
24.6
As
of
February
25,
2024,
unrecognized
compensation
expense
related
to
non-vested
stock
options,
restricted
stock
units,
and
performance share units was $
130.7
million. This expense will be recognized over
21
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:
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Net cash proceeds
$
11.1
$
168.0
Intrinsic value of options exercised
$
3.4
$
81.8
We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-
pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and
dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,
excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We
also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially
those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting
the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 28, 2023.
The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Estimated fair values of stock options granted
$
17.47
$
14.16
Assumptions:
Risk-free interest rate
4.0
%
3.3
%
Expected term
8.5
years
8.5
years
Expected volatility
21.5
%
20.9
%
Dividend yield
2.8
%
3.1
%
The total grant date fair value of restricted stock unit awards that vested during
the period was as follows:
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Total grant date fair
value
$
91.1
$
105.4
17
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
Quarter Ended
Nine-Month Period Ended
In Millions, Except per Share Data
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net earnings attributable to General Mills
$
670.1
$
553.1
$
1,939.1
$
1,979.0
Average number
of common shares – basic EPS
569.5
592.5
578.6
596.2
Incremental share effect from: (a)
Stock options
1.3
3.7
1.8
3.6
Restricted stock units and performance share units
2.0
2.8
2.1
2.6
Average number
of common shares – diluted EPS
572.8
599.0
582.5
602.4
Earnings per share – basic
$
1.18
$
0.94
$
3.35
$
3.32
Earnings per share – diluted
$
1.17
$
0.92
$
3.33
$
3.28
(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
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Anti-dilutive stock options, restricted stock units, and
performance share units
4.2
0.8
2.6
0.9
(12) Share Repurchases
Share repurchases were as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Shares of common stock
4.7
2.9
23.5
15.0
Aggregate purchase price
$
303.1
$
251.0
$
1,616.6
$
1,152.3
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Net cash interest payments
$
294.6
$
225.6
Net income tax payments
$
462.3
$
538.4
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
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Service cost
$
14.5
$
17.6
$
1.1
$
1.4
$
1.8
$
2.1
Interest cost
74.1
64.6
5.3
4.5
1.0
0.7
Expected return on plan assets
(104.5)
(105.0)
(8.6)
(7.7)
-
-
Amortization of losses (gains)
21.6
28.3
(5.1)
(4.9)
-
0.1
Amortization of prior service costs (credits)
0.4
0.4
(5.5)
(5.9)
0.1
0.1
Other adjustments
-
-
-
-
2.6
3.2
Net expense (income)
$
6.1
$
5.9
$
(12.8)
$
(12.6)
$
5.5
$
6.2
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Nine-Month
Period Ended
Nine-Month
Period Ended
Nine-Month
Period Ended
In Millions
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Service cost
$
43.1
$
52.7
$
3.5
$
4.0
$
5.5
$
6.3
Interest cost
222.4
193.8
16.0
13.5
3.0
2.3
Expected return on plan assets
(313.4)
(315.0)
(26.0)
(23.3)
-
-
Amortization of losses (gains)
64.6
85.0
(15.3)
(14.6)
(0.1)
0.2
Amortization of prior service costs (credits)
1.3
1.1
(16.4)
(17.4)
0.4
0.3
Other adjustments
-
-
-
-
7.8
9.1
Curtailment gain
(3.4)
-
-
-
-
-
Net expense (income)
$
14.6
$
17.6
$
(38.2)
$
(37.8)
$
16.6
$
18.2
(15) Income Taxes
During the
second quarter
of fiscal
2024, we
received a
notice of
proposed adjustment
from the
Internal Revenue
Service associated
with a capital loss
from fiscal 2019.
We
believe that we
have meritorious defenses
against this assessment
and will vigorously
defend
our
position. We
do
not
expect
the
resolution
of
the
proposed
adjustment
to
have
a
material
impact
on
our
financial
position
or
liquidity.
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.
The
IRA
does
not
have
a
material
impact
on
our
financial
results,
including
our
annual
estimated
effective
tax
rates
and
liquidity.
(16) Contingencies
During
fiscal
2020,
we
received
notice
from
the
tax
authorities of
the
State of
São
Paulo,
Brazil
regarding
our
compliance
with
its
state sales tax requirements.
As a result, we
have been assessed additional
state sales taxes, interest,
and penalties. We
believe that we
have
meritorious
defenses
against
this
claim
and
will
vigorously
defend
our
position.
As
of
February
25,
2024,
we
are
unable
to
estimate any possible loss and have not recorded a loss contingency for
this matter.
(17) Business Segment and Geographic Information
We
operate
in
the
packaged
foods
industry.
Our
operating
segments
are
as
follows:
North
America
Retail,
International,
Pet,
and
North America Foodservice.
19
Our North America Retail
operating segment reflects business
with a wide variety of
grocery stores, mass merchandisers, membership
stores,
natural
food
chains,
drug,
dollar
and
discount
chains,
convenience
stores,
and
e-commerce
grocery
providers.
Our
product
categories
in
this
business
segment
include
ready-to-eat
cereals,
refrigerated
yogurt,
soup,
meal
kits,
refrigerated
and
frozen
dough
products,
dessert
and
baking
mixes,
frozen
pizza
and
pizza
snacks,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks, and snack bars.
Our
International
operating
segment
consists
of
retail
and
foodservice
businesses
outside
of
the
United
States
and
Canada.
Our
product categories include super-premium
ice cream and frozen desserts, meal kits, salty snacks,
snack bars, dessert and baking mixes,
shelf-stable
vegetables,
and
pet
food
products.
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.
Results from
certain businesses
managed by
our Gold
Medal Ventures
entity are
included within
corporate and
other net
sales and
unallocated corporate
items within
operating
profit. Unallocated
corporate items
also 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
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net sales:
North America Retail
$
3,242.1
$
3,232.0
$
9,620.1
$
9,593.9
International
680.1
700.6
2,079.0
2,024.8
Pet
624.5
645.5
1,773.7
1,818.3
North America Foodservice
551.7
547.8
1,669.7
1,627.2
Total segment net
sales
$
5,098.4
$
5,125.9
$
15,142.5
$
15,064.2
Corporate and other
0.8
-
0.8
-
Total net sales
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2
Operating profit:
North America Retail
$
752.2
$
786.9
$
2,410.3
$
2,401.8
International
18.2
42.4
102.8
95.0
Pet
128.3
102.6
342.0
312.3
North America Foodservice
81.7
82.4
236.3
217.5
Total segment operating
profit
$
980.4
$
1,014.3
$
3,091.4
$
3,026.6
Unallocated corporate items
63.9
296.4
308.3
841.5
Divestitures gain, net
-
(13.7)
-
(444.6)
Restructuring, impairment, and other exit costs
5.8
1.4
130.6
14.1
Operating profit
$
910.7
$
730.2
$
2,652.5
$
2,615.6
Net sales for our North America Retail operating units were as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
U.S. Meals & Baking Solutions
$
1,168.5
$
1,185.3
$
3,453.7
$
3,456.2
U.S. Morning Foods
940.7
918.6
2,725.4
2,731.1
U.S. Snacks
869.2
883.5
2,660.0
2,663.6
Canada
263.7
244.6
781.0
743.0
Total
$
3,242.1
$
3,232.0
$
9,620.1
$
9,593.9
Net sales by class of similar products were as follows:
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Snacks
$
1,052.4
$
1,065.5
$
3,226.4
$
3,236.7
Cereal
843.4
801.9
2,438.2
2,427.5
Convenient meals
840.2
815.6
2,290.8
2,281.2
Dough
605.1
644.8
1,915.1
1,855.2
Pet
627.6
646.2
1,779.8
1,820.7
Baking mixes and ingredients
507.5
517.7
1,536.3
1,554.9
Yogurt
367.0
378.0
1,100.3
1,081.5
Super-premium ice cream
142.0
148.2
534.3
496.6
Other
114.0
108.0
322.1
309.9
Total
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2
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
28,
2023,
for
important
background
regarding,
among other
things, our
key business
drivers.
Significant
trademarks and
service marks
used in
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
“Glossary” section below.
We
expect the largest
factors impacting our performance
in fiscal 2024
will be the economic
health of consumers, the
moderating rate
of
input
cost
inflation,
and
the
increasing
stability
of
the
supply
chain
environment.
We
anticipate
input
cost
inflation
of
approximately
4
percent
in
fiscal
2024
and
expect
to
generate
higher
levels
of
Holistic
Margin
Management
(HMM)
cost
savings
compared to fiscal 2023.
CONSOLIDATED
RESULTS
OF OPERATIONS
Third Quarter Results
In the third quarter of fiscal 2024,
net sales and organic net sales decreased
1 percent compared to the same period
last year. Operating
profit
increased
25
percent
to
$911
million,
primarily
driven
by
favorable
net
price
realization
and
mix,
a
decrease
in
certain
compensation
and
benefits
expenses,
a
favorable
change
in the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories,
and
net
recoveries
from
the
fiscal
2023
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products,
partially
offset
by
higher
input
costs
and
a
decrease
in
contributions
from
volume
growth.
Operating
profit
margin
of
17.9
percent
increased
370
basis
points.
Adjusted
operating
profit
of
$914
million
increased
14
percent
on
a
constant-currency
basis,
primarily
driven
by
favorable
net
price
realization
and
mix
and
a
decrease
in
certain
compensation
and
benefits
expenses,
partially
offset
by
higher input costs and
a decrease in contributions
from volume growth.
Adjusted operating profit margin
increased 220 basis points to
17.9 percent. Diluted earnings per
share of $1.17 increased 27 percent
in the third quarter of fiscal
- Adjusted diluted earnings per
share of
$1.17 increased
22 percent
on a
constant-currency
basis compared
to the
third quarter
of fiscal
2023.
See the
“Non-GAAP
Measures” section below for a description of our use of measures not defined
by GAAP.
A summary of our consolidated financial results for the third quarter of
fiscal 2024 follows:
Quarter Ended Feb. 25, 2024
In millions,
except per share
Quarter Ended
Feb. 25, 2024 vs.
Feb. 26, 2023
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
5,099.2
(1)
%
Operating profit
910.7
25
%
17.9
%
Net earnings attributable to General Mills
670.1
21
%
Diluted earnings per share
$
1.17
27
%
Organic net sales growth rate (a)
(1)
%
Adjusted operating profit (a)
914.5
13
%
17.9
%
14
%
Adjusted diluted earnings per share (a)
$
1.17
21
%
22
%
(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
Feb. 25, 2024
Feb. 25, 2024 vs.
Feb. 26, 2023
Feb. 26, 2023
Net sales (in millions)
$
5,099.2
(1)
%
$
5,125.9
Contributions from volume growth (a)
(2)
pts
Net price realization and mix
2
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Net sales
in the
third quarter
of fiscal
2024 decreased
1 percent
compared to
the same
period in
fiscal 2023,
driven by
a decrease
in
contributions from volume growth, partially offset by
favorable net price realization and mix.
22
Components of organic net sales growth are shown in the following
table:
Quarter Ended Feb. 25, 2024 vs.
Quarter Ended Feb. 26, 2023
Contributions from organic volume growth (a)
(2)
pts
Organic net price realization and mix
2
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Acquisition and divestitures
Flat
Net sales growth
(1)
pt
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Organic
net
sales
decreased
1
percent
in
the
third
quarter
of
fiscal
2024
compared
to
the
same
period
in
fiscal
2023,
driven
by
a
decrease in contributions from organic volume growth,
partially offset by favorable organic net price realization
and mix.
Cost of
sales
decreased $69 million
to $3,392
million in
the third
quarter of
fiscal 2024
compared to
the same
period in
fiscal 2023.
The
decrease
was primarily
driven
by
a $74
million
decline
attributable
to
lower
volume,
partially
offset
by
a
$46
million
increase
attributable to product
rate and mix. We
recorded a $26 million
net increase in cost
of sales related to
the mark-to-market valuation
of
certain
commodity
positions
and
grain
inventories
in
the third
quarter of
fiscal
2024,
compared
to
a $67
million
net increase
in
the
third quarter of fiscal 2023.
Divestitures gain, net
totaled $14 million in the third quarter of fiscal 2023.
Selling, general,
and administrative
(SG&A)
expenses
decreased
$156 million
to $791 million
in the
third quarter
of fiscal
2024,
compared
to
the
same
period
in
fiscal
2023,
primarily
driven
by
a
decrease
in
certain
compensation
and
benefits
expenses,
net
recoveries from
the fiscal 2023
voluntary recall
of certain international
Häagen-Dazs
ice cream products
,
and favorable net
corporate
investment activity.
SG&A expenses
as a
percent of
net sales in
the third
quarter of
fiscal 2024
decreased 300
basis points
compared
to the third quarter of fiscal 2023.
Restructuring, impairment,
and other exit
costs
totaled $6 million
in the third quarter
of fiscal 2024,
compared to $1 million
in the
same
period
last
year.
In
fiscal
2024,
we
approved
restructuring
actions
to
enhance
the
go-to-market
commercial
strategy
and
associated
organizational
structure
of
our
Pet segment,
and
as a
result,
we
recorded
$8 million
of
restructuring
charges
in
the
third
quarter of
fiscal 2024.
In addition,
we recorded
a $3
million net
recovery of
restructuring charges
in the
third quarter
of fiscal
2024
related
to
actions
previously
announced
(please
refer
to
Note
3
to
the
Consolidated
Financial
Statements
in
Part
I,
Item
1
of
this
report).
Benefit plan
non-service income
totaled $19 million
in the
third quarter
of fiscal
2024,
compared to
$22 million in
the same
period
last year, primarily reflecting higher
interest costs, partially offset by lower amortization of losses.
Interest,
net
for the
third quarter
of fiscal
2024 totaled
$122 million, up
$23 million from
the third
quarter of
fiscal 2023,
primarily
driven by higher interest rates and higher average long-term debt levels.
The
effective
tax
rate
for
the third
quarter
of fiscal
2024
was 18.5
percent
compared
to 16.6
percent
for
the
third
quarter
of fiscal
2023.
The
1.9
percentage
point
increase
was
primarily
due
to
certain
favorable
tax
components
related
to
the
divestitures
in
fiscal
2023, partially
offset by
certain nonrecurring
discrete tax
benefits in
the third
quarter of
fiscal 2024.
Our effective
tax rate
excluding
certain items affecting
comparability was 18.4
percent in the third
quarter of fiscal 2024,
compared to 21.6
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
3.2
percentage point decrease was primarily due to certain nonrecurring discrete
tax benefits in the third quarter of fiscal 2024.
23
After-tax earnings
from
joint ventures
for the
third quarter
of fiscal
2024
increased to
$18 million compared
to $13 million
in the
same
period
in
fiscal
2023,
primarily
due
to
higher
net
sales
driven
by
favorable
net
price
realization
and
mix
at
Cereal
Partners
Worldwide
(CPW) and
discrete tax
items at CPW,
partially offset
by higher
input costs
at CPW and
Häagen-Dazs Japan,
Inc. (HDJ).
On
a
constant-currency
basis,
after-tax
earnings
from
joint
ventures
increased
64
percent
(see
the
“Non-GAAP
Measures”
section
below for a description of our use of measures not defined by GAAP).
The components of our joint ventures’ net sales growth are shown in the following
table:
Quarter Ended Feb. 25, 2024 vs.
Quarter Ended Feb. 26, 2023
CPW
HDJ
Total
Contributions from volume growth (a)
(4)
pts
(9)
pts
Net price realization and mix
16
pts
7
pts
Net sales growth in constant currency
11
pts
(2)
pts
9
pts
Foreign currency exchange
(4)
pts
(10)
pts
(5)
pts
Net sales growth
7
pts
(12)
pts
3
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
26
million
in
the
third
quarter
of
fiscal
2024
from
the
same
period
a
year
ago
primarily due to share repurchases, partially offset by option
exercises.
Nine-Month Results
In the
nine-month period
ended February
25, 2024,
net sales
and organic
net sales
increased 1
percent compared
to the
same period
last
year.
Operating
profit
increased
1
percent
to
$2,652
million,
primarily
driven
by
favorable
net
price
realization
and
mix,
a
favorable
change
in
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories,
a
decrease
in
certain
compensation
and
benefits
expense,
favorable
net
corporate
investment
activity,
and
net
recoveries
from
the
fiscal
2023
voluntary
recall on certain
international
Häagen-Dazs
ice cream products
compared to
recall-related charges
in fiscal 2023,
partially offset
by a
net
gain
on
divestitures
in
fiscal
2023,
higher
input
costs,
a
decrease
in
contributions
from
volume
growth,
higher
impairment
and
restructuring
charges,
and higher
media and
advertising expenses.
Operating
profit margin
of 17.5
percent increased
10 basis
points
compared to
the same
period last
year.
Adjusted operating
profit of
$2,803 million
increased 9
percent on
a constant-currency
basis,
primarily
driven
by
favorable
net
price
realization
and
mix
and
a
decrease
in
certain
compensation
and
benefits
expenses,
partially
offset by higher input
costs and a decrease in
contributions from volume growth.
Adjusted operating profit margin
increased 150 basis
points to 18.5
percent. Diluted earnings
per share of $3.33
increased 2 percent in
the nine-month period
ended February 25, 2024,
and
adjusted diluted
earnings per
share of
$3.51 increased
11 percent
on a
constant-currency basis
compared to
the same
period last
year
(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 nine-month period
ended February 25, 2024, follows:
Nine-Month Period Ended Feb. 25, 2024
In millions,
except per share
Nine-Month
Period Ended
Feb. 25, 2024 vs.
Feb. 26, 2023
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
15,143.3
1
%
Operating profit
2,652.5
1
%
17.5
%
Net earnings attributable to General Mills
1,939.1
(2)
%
Diluted earnings per share
$
3.33
2
%
Organic net sales growth rate (a)
1
%
Adjusted operating profit (a)
2,802.9
9
%
18.5
%
9
%
Adjusted diluted earnings per share (a)
$
3.51
10
%
11
%
(a)
See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
24
Consolidated
net sales
were as follows:
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024 vs.
Feb. 26, 2023
Feb. 26, 2023
Net sales (in millions)
$
15,143.3
1
%
$
15,064.2
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
3
pts
Foreign currency exchange
Flat
Note: Table may not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The 1
percent increase
in net
sales for
the nine-month
period ended
February 25,
2024, was
driven
by favorable
net price
realization
and mix, partially offset by a decrease in contributions
from volume growth.
Components of organic net sales growth are shown in the following
table:
Nine-Month Period Ended Feb. 25, 2024 vs.
Nine-Month Period Ended Feb. 26, 2023
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
4
pts
Organic net sales growth
1
pt
Foreign currency exchange
Flat
Acquisition and divestitures
Flat
Net sales growth
1
pt
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
1
percent
in
the
nine-month
period
ended
February
25,
2024,
driven
by
favorable
organic
net
price
realization and mix, partially offset by a decrease in
contributions from organic volume growth.
Cost
of
sales
decreased
$347 million
to
$9,900
million
in
the
nine-month
period
ended
February
25,
2024,
compared
to
the
same
period
in
fiscal
2023.
The
decrease
was
primarily
driven
by
a
$281
million
decline
due
to
lower
volume,
partially
offset
by
a
$202 million increase
attributable to
product rate
and mix. We
recorded a
$6 million net
increase in
cost of
sales related
to the
mark-
to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
nine-month
period
ended
February
25,
2024,
compared to a
$266 million net increase
in the nine-month
period ended February
26, 2023. In
the nine-month period
ended February
26, 2023,
we recorded
a $25 million
charge related
to a voluntary
recall on
certain international
Häagen-Dazs
ice cream
products.
In
addition,
we
recorded
$17
million
of
restructuring
charges
and
$2
million
of
restructuring
initiative
project-related
costs in
cost
of
sales in the
nine-month period
ended February
25, 2024, compared
to $2 million
of restructuring charges
in the same
period last year
(please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of
this report).
SG&A expenses
decreased $171
million to
$2,461 million in the
nine-month period
ended February
25, 2024, compared
to the same
period
in
fiscal
2023,
primarily
driven
by
a
decrease
in
certain
compensation
and
benefits
expenses,
favorable
net
corporate
investment activity,
and net recoveries
from the fiscal
2023 voluntary
recall on
certain international
Häagen-Dazs
ice cream products
in fiscal 2024, partially offset
by higher media and advertising
expenses. SG&A expenses as a percent
of net sales decreased 130 basis
points in the nine-month period ended February 25, 2024, compared to the same
period of fiscal 2023.
Divestitures
gain,
net
totaled
$445
million
in
the
nine-month
period
ended
February
26,
2023,
primarily
related
to
the sale
of
our
Helper main meals
and Suddenly Salad
side dishes business (please
refer to Note 2
to the Consolidated Financial
Statements in Part
I,
Item 1 of this report).
Restructuring, impairment,
and other exit
costs
totaled $131 million in
the nine-month period
ended February 25,
2024, compared
to $14 million in the same period
last year. In
fiscal 2024, we recorded a $117
million non-cash goodwill impairment
charge related to
our
Latin
America
reporting
unit.
In
fiscal
2024,
we
approved
restructuring
actions
to
enhance
the
go-to-market
and
associated
organization
structure
of
our
Pet
segment,
and
as
a
result,
we
recorded
$13
million
of
charges
in
the
nine-month
period
ended
February
25,
2024.
In
addition,
we
also
recorded
$1
million
of
charges
related
to
actions
previously
announced
in
the
nine-month
period ended February 25, 2024 (please refer to Note 3 to the Consolidated
Financial Statements in Part I, Item 1 of this report).
25
Benefit plan non-service
income
totaled $56 million
in the nine-month
period ended February
25, 2024, compared
to $65 million
in
the same period last year, primarily reflecting
higher interest costs, partially offset by lower amortization of
losses.
Interest, net
for the nine-month
period ended February
25, 2024,
increased $79 million
to $356 million
compared to the
same period
of fiscal 2023, primarily driven by higher interest rates and higher
average long-term debt levels.
The
effective
tax rate
for
the nine-month
period ended
February
25,
2024, was
19.5
percent compared
to 19.6
percent in
the same
period
last
year.
The
0.1
percentage
point
decrease
was
primarily
due
to
certain
nonrecurring
discrete
tax
benefits
in
fiscal
2024,
partially offset
by certain
favorable tax
components related
to the
divestitures in
fiscal 2023.
Our effective
tax rate
excluding certain
items affecting
comparability
was 20.1
percent
in the
nine-month
period ended
February 25,
2024,
compared to
20.8 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 0.7 percentage point decrease is primarily due to certain nonrecurring discrete
tax benefits in fiscal 2024.
After-tax
earnings from
joint ventures
increased
to $66 million
for the
nine-month
period ended
February 25,
2024, compared
to
$58 million
in the
same period
in fiscal
2023,
primarily
due to
higher
net sales
driven by
favorable
net price
realization and
mix at
CPW,
partially
offset
by
higher
input
costs
at
CPW
and
HDJ.
On
a
constant-currency
basis,
after-tax
earnings
from
joint
ventures
increased 25
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:
Nine-Month Period Ended Feb. 25, 2024 vs.
Nine-Month Period Ended Feb. 26, 2023
CPW
HDJ
Total
Contributions from volume growth (a)
(7)
pts
(5)
pts
Net price realization and mix
17
pts
8
pts
Net sales growth in constant currency
10
pts
3
pts
9
pts
Foreign currency exchange
(1)
pt
(6)
pts
(2)
pts
Net sales growth
9
pts
(4)
pts
6
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
20 million
in
the
nine-month
period
ended
February
25,
2024,
from
the
same
period a year ago primarily due to share repurchases,
partially offset by option exercises.
SEGMENT OPERATING
RESULTS
Our businesses are
organized into
four operating segments:
North America Retail,
International,
Pet, and North
America Foodservice.
Please
refer
to
Note
17
of
the
Consolidated
Financial
Statements
in
Part
I,
Item
1
of
this
report
for
a
description
of
our
operating
segments.
North America Retail Segment Results
North America Retail net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Net sales (in millions)
$
3,242.1
Flat
$
3,232.0
$
9,620.1
Flat
$
9,593.9
Contributions from volume growth (a)
(2)
pts
(4)
pts
Net price realization and mix
3
pts
5
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 Retail net sales
in the third quarter of
fiscal 2024 and nine-month period ended
February 25, 2024, essentially matched
the same periods
in fiscal 2023.
26
The components of North America Retail organic net
sales growth are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024
Contributions from organic volume growth (a)
(2)
pts
(4)
pts
Organic net price realization and mix
3
pts
5
pts
Organic net sales growth
Flat
1
pt
Foreign currency exchange
Flat
Flat
Divestiture (b)
Flat
Flat
Net sales growth
Flat
Flat
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestiture of our Helper main meals and Suddenly Salad side dishes businesses in
fiscal 2023. Please see Note 2 to the
Consolidated Financial Statements in Part I, Item 1 of this report.
North America Retail organic net sales in the third quarter
of fiscal 2024 essentially matched the same period in fiscal 2023.
North America
Retail organic
net sales increased
1 percent
in the nine
-month period
ended February
25, 2024,
compared to the
same
period
in fiscal
2023,
driven by
favorable
organic
net price
realization
and
mix, partially
offset
by a
decrease in
contributions
from
organic volume growth.
North America Retail net sales percentage change by operating unit are shown
in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024
Canada (a)
8
%
5
%
U.S. Meals & Baking Solutions
(1)
%
Flat
U.S. Snacks
(2)
%
Flat
U.S. Morning Foods
2
%
Flat
Total
Flat
Flat
(a)
On a
constant-currency
basis, Canada
net sales
increased 8
percent in
the third
quarter of
fiscal 2024
and increased
7 percent
in
the nine
-month period
ended February
25, 2024,
compared to
the same
periods in
fiscal 2023.
See the
“Non-GAAP Measures
”
section below for our use of this measure not defined by GAAP.
Segment operating profit decreased
4 percent to $752 million
in the third quarter of
fiscal 2024,
compared to $787 million in the
same
period in
fiscal 2023,
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 4 percent
on a constant-currency
basis in the
third quarter
of fiscal 2024,
compared to the
same period in
fiscal 2023 (see
the “Non-GAAP
Measures” section below
for our use
of this measure
not defined by GAAP).
Segment operating profit
of $2,410 million in the
nine-month period ended
February 25, 2024,
essentially matched the same
period in
fiscal
2023
as
favorable
net
price
realization
and
mix
was
partially
offset
by
higher
input
costs,
a
decrease
in
contributions
from
volume growth,
and an
increase in
SG&A expenses.
Segment operating
profit on
a constant-currency
basis in
the nine-month
period
ended February
25, 2024,
essentially matched
the same
period in
fiscal 2023
(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
Nine-Month Period Ended
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Net sales (in millions)
$
680.1
(3)
%
$
700.6
$
2,079.0
3
%
$
2,024.8
Contributions from volume growth (a)
(4)
pts
(4)
pts
Net price realization and mix
Flat
5
pts
Foreign currency exchange
Flat
1
pt
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
International net
sales decreased 3
percent in the
third quarter of
fiscal 2024, compared
to the same
period in
fiscal 2023, driven
by a
decrease in contributions from volume growth.
International
net sales
increased 3
percent in
the nine-month
period ended
February 25,
2024, compared
to the
same period
in fiscal
2023 that included the impact of
the voluntary recall on certain international
Häagen-Dazs
ice cream products, driven by favorable
net
price realization and mix and favorable foreign currency exchange, partially
offset by a decrease in contributions from volume growth.
The components of International organic net sales growth
are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024
Contributions from organic volume growth (a)
(4)
pts
(4)
pts
Organic net price realization and mix
Flat
5
pts
Organic net sales growth
(3)
pts
2
pts
Foreign currency exchange
Flat
1
pt
Net sales growth
(3)
pts
3
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
International
organic
net
sales
decreased
3
percent
in
the
third
quarter
of
fiscal
2024,
compared
to
the
same
period
in
fiscal
2023,
driven by a decrease in contributions from organic volume
growth.
International organic
net sales increased
2 percent in
the nine-month period
ended February 25,
2024, compared to
the same period
in
fiscal
2023
that
included
the
impact
of
the
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products,
driven
by
favorable organic net price realization and mix, partially offset
by a decrease in contributions from organic volume growth.
Segment operating
profit decreased 57
percent to
$18 million in the
third quarter
of fiscal 2024,
compared to $42
million in the
same
period in
fiscal 2023,
primarily driven
by higher
input costs
and a
decrease in
contributions from
volume growth.
Segment operating
profit decreased 53 percent
on a constant-currency basis
in the third quarter of
fiscal 2024,
compared to the same period
in fiscal 2023
(see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
Segment
operating
profit
increased
8
percent
to
$103
million
in
the
nine-month
period
ended
February
25,
2024,
compared
to
$95 million
in
the
same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix,
the
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products
in
fiscal
2023,
and
a
decrease
in
SG&A
expenses,
partially
offset
by
higher
input costs and a decrease
in contributions from volume growth.
Segment operating profit increased
14 percent on a constant-currency
basis in the nine
-month period ended
February 25, 2024,
compared to the
same period in fiscal
2023 (see the
“Non-GAAP Measures”
section below for our use of this measure not defined by GAAP).
28
Pet Segment Results
Pet net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Net sales (in millions)
$
624.5
(3)
%
$
645.5
$
1,773.7
(2)
%
$
1,818.3
Contributions from volume growth (a)
(5)
pts
(7)
pts
Net price realization and mix
2
pts
5
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 decreased
3 percent
in the
third quarter of
fiscal 2024,
compared to
the same period
in fiscal 2023,
driven by
a decrease
in contributions from volume growth, partially offset by
favorable net price realization and mix.
Pet
net
sales
decreased
2
percent
in
the
nine-month
period
ended
February
25,
2024,
compared
to
the
same
period
in
fiscal
2023,
driven by a decrease in contributions from volume growth, partially offset
by favorable net price realization and mix.
The components of Pet organic net sales growth are shown in the following
table:
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024
Contributions from organic volume growth (a)
(5)
pts
(7)
pts
Organic net price realization and mix
2
pts
5
pts
Organic net sales growth
(3)
pts
(2)
pts
Foreign currency exchange
Flat
Flat
Net sales growth
(3)
pts
(2)
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
Pet organic
net sales
decreased 3
percent in
the third
quarter of
fiscal 2024,
compared to
the same
period in
fiscal 2023,
driven by
a
decrease in contributions from organic volume growth,
partially offset by favorable organic net price
realization and mix.
Pet organic
net sales
decreased 2
percent in
the nine-month
period
ended February
25, 2024,
compared to
the same
period in
fiscal
2023,
driven by a decrease in contributions
from organic volume growth,
partially offset by favorable
organic net price realization and
mix.
Segment
operating
profit
increased
25
percent
to
$128
million
in
the
third
quarter
of
fiscal
2024,
compared
to
$103 million
in
the
same
period
in
fiscal
2023,
primarily
driven
by
lower
input
costs
and
favorable
net
price
realization
and
mix,
partially
offset
by
a
decrease in contributions from
volume growth and an increase
in SG&A expenses.
Segment operating profit increased
25 percent on a
constant-currency basis in the third quarter of fiscal 2024,
compared to the same period in fiscal 2023 (see the “Non-GAAP Measures”
section below for our use of this measure not defined by GAAP).
Segment
operating
profit
increased
10
percent
to
$342 million
in
the
nine-month
period
ended
February
25,
2024,
compared
to
$312 million
in
the
same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix
and
lower
input
costs,
partially
offset
by
a
decrease
in
contributions
from
volume
growth
and
an
increase
in
SG&A
expenses.
Segment
operating
profit
increased 10
percent on a
constant-currency basis in
the nine-month period
ended February 25,
2024, compared
to the same
period in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
29
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Feb. 25,
2024
Feb. 25, 2024 vs
Feb. 26, 2023
Feb. 26,
2023
Net sales (in millions)
$
551.7
1
%
$
547.8
$
1,669.7
3
%
$
1,627.2
Contributions from volume growth (a)
Flat
2
pts
Net price realization and mix
Flat
1
pt
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
sales
increased
1
percent
in
the
third
quarter
of
fiscal
2024,
compared
to
the
same
period
in
fiscal
2023,
driven by slightly favorable net price realization and mix and a slight increase in contributions
from volume growth.
North
America
Foodservice net
sales increased
3 percent
in the
nine-month
period ended
February 25,
2024,
compared to
the same
period in fiscal 2023, driven by an increase in contributions from volume growth
and favorable net price realization and mix.
The components of North America Foodservice organic
net sales growth are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 25, 2024
Contributions from organic volume growth (a)
Flat
1
pt
Organic net price realization and mix
Flat
Flat
Organic net sales growth
1
pt
1
pt
Foreign currency exchange
Flat
Flat
Acquisition (b)
Flat
1
pt
Net sales growth
1
pt
3
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 1
percent in
the third
quarter of
fiscal 2024,
compared to
the same
period in
fiscal
2023,
driven
by
slightly
favorable
organic
net
price
realization
and
mix
and
a
slight
increase
in
contributions
from
organic
volume growth.
North America Foodservice
organic net
sales increased 1
percent in the
nine-month period
ended February 25,
2024, compared
to the
same period in fiscal 2023, driven by an increase in contributions from organic
volume growth.
Segment operating
profit decreased
1 percent
to $82
million in
the third
quarter of
fiscal 2024,
compared to
$82 million in
the same
period in fiscal
2023, 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
1
percent
on
a
constant-currency
basis
in
the
third
quarter
of
fiscal
2024,
compared to the
same period in
fiscal 2023 (see
the “Non-GAAP Measures”
section below for
our use of
this measure not
defined by
GAAP).
Segment
operating
profit
increased
9
percent
to
$236
million
in
the
nine-month
period
ended
February
25,
2024,
compared
to
$218 million in
the same
period in
fiscal 2023,
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 9 percent
on a constant-currency
basis in the nine-
month period ended February 25, 2024,
compared to the same period in fiscal
2023 (see the “Non-GAAP Measures” section
below for
our use of this measure not defined by GAAP).
30
UNALLOCATED
CORPORATE
ITEMS
Unallocated corporate expenses
totaled $64 million in
the third quarter
of fiscal 2024, compared
to $296 million in the
same period in
fiscal
2023.
In
the
third
quarter
of
fiscal
2024,
certain
compensation
and
benefits
expenses
and
charitable
contributions
decreased
compared to the
same period last year.
In the third
quarter of fiscal 2024
,
we recorded a $26 million
net increase in expense
related to
the mark-to-market valuation
of certain commodity
positions and grain inventories
,
compared to a $67 million
net increase in expense
in the same period
last year.
We
recorded $3 million
of net losses related
to valuation adjustments
on certain corporate
investments in
the third quarter
of fiscal
2024, compared
to $20 million
of net
losses in
the third
quarter of
fiscal 2023.
In the
third quarter
of fiscal
2024,
we recorded $31 million
of net recoveries
related to a voluntary
recall on certain
international
Häagen-Dazs
ice cream products
in fiscal 2023, compared to a $1 million charge
in the same period last year.
We recorded
$1 million of restructuring charges in cost of
sales in the
third quarter of
fiscal 2023.
In addition, we
recorded $1 million
of integration costs
primarily related
to our acquisition
of
TNT Crust in the third quarter of fiscal 2023.
Unallocated corporate
expenses totaled $308
million in the
nine-month period
ended February
25, 2024, compared
to $842 million
in
the
same
period
last
year.
We
recorded
a
$6
million
net
increase
in
expense
related
to
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
nine-month
period
ended
February
25,
2024,
compared
to
a
$266
million
net
increase in expense in the same
period last year.
In the nine-month period ended February
25, 2024, certain compensation and
benefits
expenses and
charitable contributions
decreased compared
to the same
period last year.
We
recorded $25
million of net
losses related
to valuation adjustments on certain
corporate investments in the nine-month
period ended February 25, 2024,
compared to $82 million
of net
losses related
to valuation
adjustments and
the sale
of certain
corporate investments
in the
same period
last year.
In the
nine-
month period ended
February 25, 2024,
we recorded $31 million
of net recoveries related
to a voluntary recall
on certain international
Häagen-Dazs
ice
cream
products
in
fiscal
2023,
compared
to
a
$26
million
charge
in
the
same
period
last
year.
We
recorded
$17
million of restructuring
charges and $2
million of restructuring
initiative project-related costs in
cost of sales in
the nine-month period
ended February 25,
2024, compared to
$2 million of restructuring
charges in cost
of sales in the
same period last year.
In addition, we
recorded $5 million of
integration costs primarily related
to our acquisition of TNT
Crust and $2 million of
transaction costs primarily
related
to the
sale of
our
Helper
main meals
and Suddenly
Salad
side dishes
business
in the
nine-month
period ended
February
26,
2023.
LIQUIDITY
AND CAPITAL
RESOURCES
During the
nine-month period
ended February
25, 2024,
cash provided
by operations
was $2,439 million
compared to
$2,027 million
in the
same period
last year.
The $412
million increase
was mainly
driven by
a $414
million increase
in net
earnings, excluding
the
$445 million net divestitures gain in fiscal 2023.
Cash used by
investing activities during
the nine-month period
ended February 25,
2024, was $508
million compared to
cash used by
investing activities
of $6 million
for the
same period
in fiscal
- During
the first
quarter of
fiscal 2023,
we completed
the sale
of
the Helper main
meals and Suddenly
Salad side dishes
business for
$607 million
cash. In the
first quarter
of fiscal
2023, we
acquired
TNT
Crust
for
$252
million
cash,
net
of
cash
acquired.
In
addition,
we
spent
$486
million
on
purchases
of
land,
buildings,
and
equipment in the nine months ended February 25, 2024, compared
to $351 million in the same period last year.
Cash
used
by
financing
activities
during
the
nine-month
period
ended
February
25,
2024,
was
$1,928
million
compared
to
$1,956 million of cash
used by financing activities
in the same period
in fiscal 2023. We
paid $1,028 million of
dividends in the nine-
month period
ended February 25,
2024, compared
to $967 million in
the same period
last year.
We
paid $1,602 million
for purchases
of common
stock for
treasury in
the nine-month
period ended
February 25,
2024, compared
to $1,152
million in
the same
period in
fiscal 2023.
In addition,
we had
$754 million
of net
debt issuances
in the
nine-month period
ended February
25, 2024,
compared to
$61 million of net debt issuances in the same period a year ago.
As
of
February
25,
2024,
we
had
$511 million
of
cash
and
cash
equivalents
in
foreign
jurisdictions. In
anticipation
of
repatriating
funds from
foreign jurisdictions,
we record
local country
withholding taxes
on our
international earnings,
as applicable.
Furthermore,
we
may
repatriate
our
cash
and
cash
equivalents
held
by
our
foreign
subsidiaries
without
such
funds
being
subject
to
further
U.S.
income tax liability.
Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently
reinvested in those jurisdictions.
31
The following table details the fee-paid committed and uncommitted credit
lines we had available as of February 25, 2024:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
and uncommitted credit facilities
$
3.3
$
-
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most
recent mark
-to-market valuation
(currently
$252 million). The
floating preferred
return rate
on GMC’s
Class A Interests
is
the sum of three
-month Term
SOFR plus 186
basis points. The preferred
return rate is adjusted
every three years
through a negotiated
agreement with the Class A Interest holder or through a remarketing auction.
We
have an option
to purchase the
Class A Interests for
consideration equal to
the then current
capital account value,
plus any unpaid
preferred return
and the
prescribed make-whole
amount. If
we purchase
these interests,
any change
in the
third-party holder’s
capital
account
from
its
original
value
will
be
charged
directly
to
retained
earnings
and
will
increase
or
decrease
the
net
earnings
used
to
calculate EPS in that period.
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
Certain
of
our
long-term
debt
agreements,
our
credit
facilities,
and
our
noncontrolling
interests
contain
restrictive
covenants.
As
of
February 25, 2024, we were in compliance with all of these covenants.
We
have
$812
million
of
long-term
debt
maturing
in
the
next
12
months
that
is
classified
as
current,
including
€750
million
of
floating-rate notes
due November
8, 2024.
We
believe that
cash flows
from operations,
together with
available short-
and long-term
debt financing, will be adequate to meet our liquidity and capital needs for
at least the next 12 months.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
to the Consolidated Financial Statements included in
our Annual Report on
Form
10-K for
the fiscal
year ended
May 28,
- The
accounting policies
used in
preparing our
interim fiscal
2024 Consolidated
Financial
Statements
are
the
same
as
those
described
in
our
Form
10-K
with
the
exception
of
the
new
accounting
requirements
adopted in the first quarter of fiscal 2024. Please see Note 1
to the Consolidated Financial Statements in Part I, Item 1 of
this report for
additional information.
Our
critical
accounting
estimates
are
those
that
have
meaningful
impact
on
the
reporting
of
our
financial
condition
and
results
of
operations.
These
estimates
include
our
accounting
for
revenue
recognition,
valuation
of
long-lived
assets,
intangible
assets,
stock-
based compensation,
income taxes,
and defined
benefit pension,
other postretirement
benefit, and
postemployment benefit
plans. The
assumptions and methodologies
used in the
determination of
those estimates as
of February 25,
2024, are the
same as those
described
in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023.
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2024. As a
result of lower future profitability
projections for our Latin
America reporting unit,
we determined that the
fair value
of the
reporting unit
was less
than its
book value
and recorded
a $117
million non-cash
goodwill impairment
charge in
restructuring,
impairment,
and
other
exit
costs
in
our
Consolidated
Statements
of
Earnings.
Our
estimates
of
fair
value
for
goodwill
impairment
testing
were
determined
based
on
a
discounted
cash
flow
model
using
inputs
from
our
long-range
planning
process
to
determine
growth
rates
for
sales
and
profits.
Other
significant
assumptions
include
weighted
average
cost
of
capital
rates,
perpetuity
growth
assumptions, market comparables, and tax rates. The fair value is a Level 3
asset in the fair value hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
True Chews
and
Uncle Toby’s
brand intangible
assets. In
addition, while
having significant
coverage as
of our
fiscal 2024
assessment date,
the
Progresso
,
Nudges
,
Top
Chews
,
and
EPIC
brand
intangible
assets
had
risk
of
decreasing
coverage.
We
will
continue
to
monitor
these
businesses
for
potential impairment.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
In March 2024, the
Securities and Exchange Commission
issued final rules on
the enhancement and standardization
of climate-related
disclosures. The
rules require
disclosure of,
among other
things: material
climate-related risks;
activities to
mitigate or
adapt to
such
32
risks; governance
and management of
such risks; and
material greenhouse gas
(GHG) emissions from
operations owned
or controlled
(Scope
1)
and/or
indirect
emissions
from
purchased
energy
consumed
in
operations
(Scope
2).
Additionally,
the
rules
require
disclosure in the notes to the financial statements of the effects of
severe weather events and other natural conditions, subject to
certain
materiality thresholds. The rules will become effective
on a phased-in timeline starting in fiscal years beginning
in calendar year 2025,
which for us is fiscal 2026. We
are in the process of analyzing the impact of the rules on our disclosures.
In December 2023, the
Financial Accounting Standards Board
(FASB) issued
Accounting Standards Update (ASU)
2023-09 requiring
enhanced
income
tax
disclosures.
The
ASU
requires
disclosure
of
specific
categories
and
disaggregation
of
information
in
the
rate
reconciliation table. The
ASU also requires
disclosure of disaggregated
information related to
income taxes paid,
income or loss
from
continuing
operations
before
income
tax
expense
or
benefit,
and
income
tax
expense
or
benefit
from
continuing
operations.
The
requirements
of
the
ASU
are
effective
for
annual
periods
beginning
after
December
15,
2024,
which
for
us
is
fiscal
2026.
Early
adoption is permitted
and the amendments
should be applied
on a prospective
basis. Retrospective application
is permitted. We
are in
the process of analyzing the impact of the ASU on our related disclosures.
In
November
2023,
the
FASB
issued
ASU
2023-07
requiring
enhanced
segment
disclosures.
The
ASU
requires
disclosure
of
significant
segment
expenses
regularly
provided
to
the
chief
operating
decision
maker
(CODM)
included
within
segment
operating
profit
or
loss.
Additionally,
the
ASU
requires
a
description
of
how
the
CODM
utilizes
segment
operating
profit
or
loss
to
assess
segment performance.
The requirements
of the
ASU are effective
for annual
periods beginning
after December
15, 2023,
and interim
periods within
fiscal years
beginning after
December 15,
- For
us, annual
reporting requirements
will be
effective for
our fiscal
2025 and
interim reporting
requirements will
be effective
beginning with
our first
quarter of
fiscal 2026.
Early adoption
is permitted
and retrospective
application is
required
for all
periods presented.
We
are in
the process
of analyzing
the impact
of the
ASU on
our
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.
Goodwill impairment
Non-cash
goodwill
impairment
charge
related
to
our
Latin
America
reporting
unit
in
fiscal
2024.
Please
see
Note
4
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Product recall, net
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
ice cream products, net of recoveries.
Restructuring charges and project-related costs
Restructuring
charges
and
project-related
costs
related
to
commercial
strategy
restructuring
actions
and
previously
announced
restructuring actions
recorded in
fiscal 2024.
Restructuring charges
for previously
announced restructuring
actions recorded
in fiscal
- Please see Note 3 to the Consolidated Financial Statements in Part I, Item 1
of this report.
Investment activity, net
Valuation
adjustments of
certain corporate
investments in
fiscal 2024. Valuation
adjustments and the
loss on sale
of certain corporate
investments in fiscal 2023.
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.
33
Transaction costs
Immaterial
transaction
costs
incurred
in
fiscal
2024.
Transaction
costs
primarily
related
to
the
sale
of
our
Helper
main
meals
and
Suddenly Salad side dishes
business in fiscal 2023. Please
see Note 2 to the
Consolidated Financial Statements in Part
I, Item 1 of
this
report.
Acquisition integration costs
Integration
costs
primarily
resulting
from
the
acquisition
of
TNT
Crust
in
fiscal
2024
and
fiscal
2023.
Please
see
Note
2
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Divestitures gain, net
Net divestitures
gain primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
fiscal 2023.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
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.
34
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
Margin)
We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit margin
on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Feb. 25, 2024
Feb. 26, 2023
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
910.7
17.9
%
$
730.2
14.2
%
Product recall, net
(31.1)
(0.6)
%
1.1
-
%
Restructuring charges
5.9
0.1
%
2.1
-
%
Investment activity, net
2.7
0.1
%
20.1
0.4
%
Mark-to-market effects
25.7
0.5
%
66.6
1.3
%
Project-related costs
0.5
-
%
-
-
%
Acquisition integration costs
-
-
%
0.7
-
%
Divestitures gain, net
-
-
%
(13.7)
(0.3)
%
Adjusted operating profit
$
914.5
17.9
%
$
807.0
15.7
%
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
2,652.5
17.5
%
$
2,615.6
17.4
%
Goodwill impairment
117.1
0.8
%
-
-
%
Product recall, net
(30.7)
(0.2)
%
25.5
0.2
%
Restructuring charges
30.5
0.2
%
16.0
0.1
%
Investment activity, net
25.2
0.2
%
82.1
0.5
%
Mark-to-market effects
5.9
-
%
266.4
1.8
%
Project-related costs
1.6
-
%
-
-
%
Transaction costs
0.6
-
%
2.0
-
%
Acquisition integration costs
0.2
-
%
5.0
-
%
Divestitures gain, net
-
-
%
(444.6)
(3.0)
%
Adjusted operating profit
$
2,802.9
18.5
%
$
2,567.9
17.0
%
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.
35
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
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Change
Feb. 25, 2024
Feb. 26, 2023
Change
Operating profit as reported
$
910.7
$
730.2
25
%
$
2,652.5
$
2,615.6
1
%
Goodwill impairment
-
-
117.1
-
Product recall, net
(31.1)
1.1
(30.7)
25.5
Restructuring charges
5.9
2.1
30.5
16.0
Investment activity, net
2.7
20.1
25.2
82.1
Mark-to-market effects
25.7
66.6
5.9
266.4
Project-related costs
0.5
-
1.6
-
Transaction costs
-
-
0.6
2.0
Acquisition integration costs
-
0.7
0.2
5.0
Divestitures gain, net
-
(13.7)
-
(444.6)
Adjusted operating profit
$
914.5
$
807.0
13
%
$
2,802.9
$
2,567.9
9
%
Foreign currency exchange impact
Flat
Flat
Adjusted operating profit growth,
on a constant-currency basis
14
%
9
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rates
This measure
is used in
reporting to
our Board of
Directors and executive
management. We
believe that
this measure provides
useful
information to
investors because it
is the profitability
measure we use
to evaluate earnings
performance on
a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
EPS and the related constant-currency growth rates follows:
Quarter Ended
Nine-Month Period Ended
Per Share Data
Feb. 25, 2024
Feb. 26, 2023
Change
Feb. 25, 2024
Feb. 26, 2023
Change
Diluted earnings per share, as reported
$
1.17
$
0.92
27
%
$
3.33
$
3.28
2
%
Goodwill impairment
-
-
0.14
-
Product recall, net
(0.04)
-
(0.04)
0.03
Restructuring charges
0.01
-
0.04
0.02
Investment activity, net
-
0.03
0.03
0.11
Mark-to-market effects
0.04
0.09
0.01
0.34
Acquisition integration costs
-
-
-
0.01
Divestitures gain, net
-
(0.08)
-
(0.62)
Adjusted diluted earnings per share
$
1.17
$
0.97
21
%
$
3.51
$
3.18
10
%
Foreign currency exchange impact
(1)
pt
(1)
pt
Adjusted diluted earnings per share
growth, on a constant-currency basis
22
%
11
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
below of the effective
income tax rate as
reported to the adjusted
effective income tax
rate for the tax
impact of
each item affecting comparability.
36
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 Feb. 25, 2024
42
%
(22)
pts
64
%
Nine-Month Period Ended Feb. 25, 2024
14
%
(11)
pts
25
%
Note: Table may
not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency
Basis
We
believe
that
this
measure
of
our
Canada
operating
unit
net
sales
provides
useful
information
to
investors
because
it
provides
transparency to
the underlying
performance for
the Canada operating
unit within our
North America Retail
segment by
excluding the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility
in
foreign
currency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currency
basis are calculated as follows:
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Feb. 25, 2024
8
%
Flat
8
%
Nine-Month Period Ended Feb. 25, 2024
5
%
(2)
pts
7
%
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.
37
Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:
Quarter Ended Feb. 25, 2024
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
(4)
%
Flat
(4)
%
International
(57)
%
(4)
pts
(53)
%
Pet
25
%
Flat
25
%
North America Foodservice
(1)
%
Flat
(1)
%
Nine-Month Period Ended Feb. 25, 2024
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
Flat
Flat
Flat
International
8
%
(6)
pts
14
%
Pet
10
%
Flat
10
%
North America Foodservice
9
%
Flat
9
%
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
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
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
$
807.6
$
149.3
$
653.5
$
108.3
$
2,351.7
$
458.5
$
2,403.1
$
471.5
Goodwill impairment
-
-
-
-
117.1
34.7
-
-
Product recall, net
(31.1)
(7.2)
1.1
0.3
(30.7)
(7.1)
25.5
5.9
Restructuring charges
5.9
(1.2)
2.1
0.7
30.5
8.0
16.0
4.5
Investment activity, net
2.7
2.2
20.1
4.5
25.2
7.4
82.1
18.0
Mark-to-market effects
25.7
6.0
66.6
15.3
5.9
1.4
266.4
61.3
Project-related costs
0.5
0.1
-
-
1.6
0.5
-
-
Transaction costs
-
-
-
-
0.6
-
2.0
0.6
Acquisition integration costs
-
-
0.7
0.1
0.2
0.1
5.0
1.1
Divestitures gain, net
-
-
(13.7)
28.7
-
-
(444.6)
(73.2)
As adjusted
$
811.3
$
149.4
$
730.3
$
157.8
$
2,502.1
$
503.6
$
2,355.4
$
489.6
Effective tax rate:
As reported
18.5%
16.6%
19.5%
19.6%
As adjusted
18.4%
21.6%
20.1%
20.8%
Sum of adjustment to income taxes
$
0.1
$
49.5
$
45.1
$
18.1
Average number
of common shares
- diluted EPS
572.8
599.0
582.5
602.4
Impact of income tax adjustments
on adjusted diluted EPS
$
-
$
(0.08)
$
(0.08)
$
(0.03)
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.
38
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit
margin.
Operating profit adjusted
for certain items
affecting year-over-year
comparability,
divided by net
sales.
Constant currency.
Financial results
translated to
United States
dollars using
constant foreign
currency exchange
rates based
on the
rates
in
effect
for
the
comparable
prior-year
period.
To
present
this
information,
current
period
results
for
entities
reporting
in
currencies other
than United
States dollars
are translated
into United
States dollars
at the
average exchange
rates in
effect during
the
corresponding
period
of
the
prior
fiscal
year,
rather
than
the
actual
average
exchange
rates
in
effect
during
the
current
fiscal
year.
Therefore,
the
foreign
currency
impact
is
equal
to
current
year
results
in
local
currencies
multiplied
by
the
change
in
the
average
foreign currency exchange rate between the current fiscal period and the corresponding
period of the prior fiscal year.
Core working capital.
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments such
as futures, swaps,
options, and forward
contracts that we
use to manage
our risk arising
from
changes in commodity prices, interest rates, foreign exchange rates, and stock
prices.
Euribor.
Euro Interbank Offered Rate.
Fair value
hierarchy.
For purposes
of fair
value measurement,
we categorize
assets and
liabilities into
one of
three levels
based on
the assumptions
(inputs) used
in valuing
the asset or
liability.
Level 1 provides
the most reliable
measure of
fair value, while
Level 3
generally requires significant management judgment. The three levels are
defined as follows:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Observable inputs other than quoted prices included in
Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:
Unobservable inputs reflecting management’s
assumptions about the inputs used in pricing the asset or liability.
Free cash flow.
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted
Accounting Principles
(GAAP).
Guidelines, procedures,
and practices
that we
are required
to use in
recording
and reporting accounting information in our financial statements.
Goodwill.
The difference
between the purchase
price of acquired
companies plus the fair
value of any noncontrolling
and redeemable
interests and the related fair values of net assets acquired.
Gross margin.
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
hedges that allows changes in
a hedging instrument’s
fair value to offset
corresponding
changes in
the hedged
item in
the same
reporting period.
Hedge accounting
is permitted
for certain
hedging instruments
and hedged
items
only
if
the
hedging
relationship
is
highly
effective,
and
only
prospectively
from
the
date
a
hedging
relationship
is
formally
documented.
Holistic Margin Management
(HMM).
Company-wide initiative to
use productivity savings, mix
management, and price realization
to offset input cost inflation, protect margins,
and generate funds to reinvest in sales-generating activities.
Interest
bearing
instruments.
Notes
payable,
long-term
debt,
including
current
portion,
cash
and
cash
equivalents,
and
certain
interest bearing investments classified within prepaid expenses and other current
assets and other assets.
Mark-to-market.
The act of determining a value for
financial instruments, commodity contracts, and
related assets or liabilities based
on the current market price for that item.
39
Net
mark-to-market
valuation of
certain
commodity
positions.
Realized
and
unrealized
gains
and
losses on
derivative
contracts
that will be allocated to segment operating profit when the exposure we are hedging
affects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other price
promotion costs.
Net realizable
value.
The estimated
selling price
in the
ordinary course
of business,
less reasonably
predictable costs
of completion,
disposal, and transportation.
Noncontrolling interests.
Interests of subsidiaries held by third parties.
Notional
amount.
The
amount
of
a
position
or
an
agreed
upon
amount
in
a
derivative
contract
on
which
the
value
of
financial
instruments are calculated.
OCI.
Other Comprehensive Income.
Organic net sales growth
. Net sales growth adjusted
for foreign currency translation,
acquisitions, divestitures and a
53
rd
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
charges.
Reporting unit
. An operating segment or a business one level below an operating
segment.
SOFR.
Secured Overnight Financing Rate.
Strategic
Revenue
Management
(SRM).
A
company-wide
capability
focused
on
generating
sustainable
benefits
from
net
price
realization
and
mix
by
identifying
and
executing
against
specific
opportunities
to
apply
tools
including
pricing,
sizing,
mix
management, and promotion optimization across each of our businesses.
Supply chain
input costs.
Costs incurred
to produce
and deliver
product,
including costs
for
ingredients
and
conversion, inventory
management, logistics, and warehousing.
Translation
adjustments.
The impact
of the conversion
of our foreign
affiliates’ financial
statements to United
States dollars
for the
purpose of consolidating our financial statements.
Working capital
. Current assets and current liabilities, all as of the last day of our fiscal year.
40
CAUTIONARY STATEMENT
RELEVANT
TO FORWARD
-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995
This report
contains or
incorporates by
reference
forward-looking
statements within
the meaning
of the
Private Securities
Litigation
Reform Act
of 1995
that are
based on
our current
expectations and
assumptions. We
also may
make written
or oral
forward-looking
statements,
including
statements
contained
in
our
filings
with
the
Securities
and
Exchange
Commission
and
in
our
reports
to
stockholders.
The words or
phrases “will likely
result,” “are expected
to,” “will continue,”
“is anticipated,” “estimate,”
“plan,” “project,” or
similar
expressions identify
“forward-looking statements”
within the
meaning of
the Private
Securities Litigation
Reform Act
of 1995.
Such
statements are
subject to
certain risks
and uncertainties
that could
cause actual
results to
differ
materially from
historical results
and
those currently anticipated or projected. We
caution you not to place undue reliance on any such forward-looking statements.
In connection
with the “safe
harbor” provisions
of the Private
Securities Litigation
Reform Act of
1995, we are
identifying important
factors
that could
affect
our financial
performance
and could
cause our
actual results
in future
periods
to differ
materially
from any
current opinions or statements.
Our
future
results
could
be
affected
by
a
variety
of
factors,
such
as:
disruptions
or
inefficiencies
in
the
supply
chain;
competitive
dynamics in the consumer foods
industry and the markets for
our products, including new product
introductions, advertising activities,
pricing actions, and promotional
activities of our competitors;
economic conditions, including
changes in inflation rates,
interest rates,
tax
rates,
or
the
availability
of
capital;
product
development
and
innovation;
consumer
acceptance
of
new
products
and
product
improvements;
consumer
reaction
to
pricing
actions
and
changes
in
promotion
levels;
acquisitions
or
dispositions
of
businesses
or
assets; changes in capital structure;
changes in the legal and regulatory
environment, including tax legislation, labeling
and advertising
regulations, and litigation; impairments in the carrying
value of goodwill, other intangible assets, or other long
-lived assets, or changes
in the
useful lives
of other
intangible assets;
changes in
accounting standards
and the impact
of critical
accounting estimates;
product
quality
and
safety
issues,
including
recalls
and
product
liability;
changes
in
consumer
demand
for
our
products;
effectiveness
of
advertising,
marketing,
and
promotional
programs;
changes
in
consumer
behavior,
trends,
and
preferences,
including
weight
loss
trends; consumer perception
of health-related issues,
including obesity; consolidation
in the retail environment;
changes in purchasing
and
inventory
levels
of
significant
customers;
fluctuations
in
the
cost
and
availability
of
supply
chain
resources,
including
raw
materials,
packaging,
energy,
and
transportation;
effectiveness
of
restructuring
and
cost
saving
initiatives;
volatility
in
the
market
value of
derivatives used to
manage price
risk for certain
commodities; benefit
plan expenses due
to changes
in plan asset
values and
discount rates used to determine plan liabilities; failure or
breach of our information technology systems; foreign
economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
and economic uncertainty due to terrorism or war.
You
should also
consider the risk
factors that we
identify in Item
1A of Part
I of our
Annual Report on
Form 10-K for
the fiscal year
ended May 28, 2023, which could also affect our future results.
We undertake
no obligation to publicly revise any forward-looking
statements to reflect events or circumstances
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
The
estimated
maximum
potential
value-at-risk
arising
from
a
one-day
loss
in
fair
value
for
our
interest
rate,
foreign
exchange,
commodity, and equity
market-risk-sensitive instruments outstanding as of February 25, 2024,
was as follows:
In Millions
One-day Risk
of Loss
Change During
Nine-Month
Period Ended
Feb. 25, 2024
Analysis of Change
Interest rate instruments
$
55
$
(11)
Lower interest rate volatility
Foreign currency instruments
26
(11)
Net price stability in portfolio
Commodity instruments
5
(3)
Decrease in commodity prices
Equity instruments
2
(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 28, 2023.
41
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
25, 2024, our disclosure
controls and procedures were
effective to ensure
that information
required to
be disclosed
by us
in reports
that we file
or submit
under the
Securities Exchange
Act of
1934 is (1)
recorded, processed,
summarized,
and
reported
within
the
time
periods
specified
in
Securities
and
Exchange
Commission
rules
and
forms,
and
(2)
accumulated and
communicated to
our management,
including our
Chief Executive
Officer and
Chief Financial
Officer,
in a
manner
that allows timely decisions regarding required disclosure.
There were no changes in our internal
control over financial reporting (as defined
in Rule 13a-15(f) under the Securities Exchange
Act
of 1934) during the quarter
ended February 25, 2024, that
materially affected, or are
reasonably likely to materially
affect, our internal
control over financial reporting.
PART
II.
OTHER INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
The
following
table
sets forth
information
with
respect
to
shares
of
our
common
stock
that we
purchased
during
the quarter
ended
February 25, 2024:
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)
November 27, 2023 -
December 31, 2023
2,167,357
$
65.65
2,167,357
63,863,833
January 1, 2024 -
January 28, 2024
1,794,160
64.76
1,794,160
62,069,673
January 29, 2024 -
February 25, 2024
685,856
65.03
685,856
61,383,817
Total
4,647,373
$
65.21
4,647,373
61,383,817
(a)
The total number
of shares purchased
includes shares of
common stock withheld
for the payment
of withholding taxes
upon the distribution
of
deferred option units.
(b)
On June
27, 2022,
our Board
of Directors approved
an authorization
for the
repurchase of
up to
100,000,000 shares of
our common stock
and
terminated the
prior authorization.
Purchases can
be made
in the
open market
or in
privately negotiated
transactions, including
the use
of call
options
and
other
derivative
instruments,
Rule
10b5-1
trading
plans,
and
accelerated
repurchase
programs.
The
Board
did
not
specify
an
expiration date for the authorization.
Item 5.
Other Information.
During
the
fiscal
quarter
ended
February
25,
2024,
no
director
or
officer
of
the
Company
adopted
or
terminated
a
“Rule
10b5-1
trading arrangement” or “
non-Rule
10b5-1
trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
42
PART
II. OTHER INFORMATION
Item 6.
Exhibits.
3.1
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Financial Statements
from the
Quarterly Report
on Form
10-Q of
the Company
for the
quarter ended
February 25,
2024,
formatted
in
Inline
Extensible
Business
Reporting
Language:
(i)
Consolidated
Statements
of
Earnings;
(ii)
Consolidated
Statements
of
Comprehensive
Income,
(iii)
Consolidated
Balance
Sheets;
(iv)
Consolidated
Statements of
Total
Equity; (v)
Consolidated Statements
of Cash
Flows; and
(vi) Notes
to Consolidated
Financial
Statements.
104
Cover Page, formatted in Inline Extensible Business Reporting Language
and contained in Exhibit 101.
43
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: March 20, 2024
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
Officer
(Principal Accounting Officer and Duly Authorized
Officer)
EX-31.1
1
Exhibit 31.1
I, Jeffrey L. Harmening, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of General Mills, Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to make
the statements
made,
in light
of the
circumstances under
which such
statements were
made,
not misleading
with respect to the period covered by this report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented in this report;
4.
The registrant’s
other certifying officer
and I are responsible
for establishing and
maintaining disclosure controls
and procedures
(as
defined
in
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such
disclosure controls
and procedures,
or caused
such disclosure
controls and
procedures to
be designed
under
our
supervision,
to
ensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b)
designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
our
supervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
evaluated
the
effectiveness
of
the
registrant’s
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about the
effectiveness
of the
disclosure
controls and
procedures,
as of
the end
of the
period covered
by this
report based on such evaluation; and
(d)
disclosed
in
this
report
any
change
in
the
registrant’s
internal
control
over
financial
reporting
that
occurred
during
the
registrant’s
most
recent
fiscal
quarter
(the
registrant’s
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over
financial reporting; and
5.
The
registrant’s
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
the
registrant’s
auditors
and
the
audit
committee
of
the
registrant’s
board
of
directors
(or
persons
performing the equivalent functions):
(a)
all significant
deficiencies
and
material
weaknesses in
the
design
or operation
of internal
control
over
financial reporting
which
are
reasonably
likely
to
adversely
affect
the
registrant’s
ability
to
record,
process,
summarize
and
report
financial
information; and
(b)
any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant’s internal control
over financial reporting.
Date: March 20, 2024
/s/ Jeffrey L. Harmening
Jeffrey L. Harmening
Chief Executive Officer
EX-31.2
1
Exhibit 31.2
I, Kofi A. Bruce, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of General Mills, Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to make
the statements
made,
in light
of the
circumstances under
which such
statements were
made,
not misleading
with respect to the period covered by this report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented in this report;
4.
The registrant’s
other certifying officer
and I are responsible
for establishing and
maintaining disclosure controls
and procedures
(as
defined
in
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such
disclosure controls
and procedures,
or caused
such disclosure
controls and
procedures to
be designed
under
our
supervision,
to
ensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b)
designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
our
supervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
evaluated
the
effectiveness
of
the
registrant’s
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about the
effectiveness
of the
disclosure
controls and
procedures,
as of
the end
of the
period covered
by this
report based on such evaluation; and
(d)
disclosed
in
this
report
any
change
in
the
registrant’s
internal
control
over
financial
reporting
that
occurred
during
the
registrant’s
most
recent
fiscal
quarter
(the
registrant’s
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over
financial reporting; and
5.
The
registrant’s
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
the
registrant’s
auditors
and
the
audit
committee
of
the
registrant’s
board
of
directors
(or
persons
performing the equivalent functions):
(a)
all significant
deficiencies
and
material
weaknesses in
the
design
or operation
of internal
control
over
financial reporting
which
are
reasonably
likely
to
adversely
affect
the
registrant’s
ability
to
record,
process,
summarize
and
report
financial
information; and
(b)
any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant’s internal control
over financial reporting.
Date: March 20, 2024
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer
EX-32.1
1
Exhibit 32.1
I,
Jeffrey
L.
Harmening,
Chief
Executive
Officer
of
General
Mills,
Inc.
(the
“Company”),
certify,
pursuant
to
Section
906
of
the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)
the Quarterly Report on
Form 10-Q of the Company
for the fiscal quarter ended
February 25, 2024 (the “Report”)
fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2)
the information
contained in
the Report
fairly presents,
in all
material respects,
the financial
condition and
results of
operations
of the Company.
Dated: March 20, 2024
/s/ Jeffrey L. Harmening
Jeffrey L. Harmening
Chief Executive Officer
EX-32.2
1
Exhibit 32.2
I, Kofi
A. Bruce,
Chief Financial
Officer
of General
Mills, Inc.
(the “Company”),
certify,
pursuant
to Section
906 of
the Sarbanes-
Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)
the Quarterly Report on
Form 10-Q of the Company
for the fiscal quarter ended
February 25, 2024 (the “Report”)
fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2)
the information
contained in
the Report
fairly presents,
in all
material respects,
the financial
condition and
results of
operations
of the Company.
Dated: March 20, 2024
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer