General Mills Inc 10-Q for FY2022 Q3
General Mills Inc (GIS)
About this 10-Q
General Mills Inc filed this 10-Q on March 23, 2022, covering the quarter ended February 27, 2022 (FY2022 Q3).
Headline figures
Quarter ended February 27, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.54B
- up 0.4% from $4.52B a year earlier
- Net income
- $660.3M
- up 10.8% from net income of $595.7M a year earlier
- Diluted EPS
- $1.08
- up 12.5% from $0.96 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
Commission file number:
________________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification No.) |
|
|
| |
(Address of principal executive offices) |
(Zip Code) |
|
|
(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 | ||
|
|
|||||
|
|
|||||
|
|
|||||
|
|
|||||
|
|
|||||
|
|
| ||||
________________
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
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 14, 2022:
General Mills, Inc.
Table of Contents
3
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. 27, 2022 |
|
Feb. 28, 2021 |
|
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | |||
Net sales |
$ |
|
$ |
|
$ |
|
$ |
||||
Cost of sales |
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
|
|
|
|
|
|
||||
Divestitures gain |
|
( |
|
|
|
|
( |
|
|
||
Restructuring, impairment, and other exit costs |
|
|
|
|
|
|
|
||||
Operating profit |
|
|
|
|
|
|
|
||||
Benefit plan non-service income |
|
( |
|
|
( |
|
|
( |
|
|
( |
Interest, net |
|
|
|
|
|
|
|
||||
Earnings before income taxes and after-tax earnings from joint ventures |
|
|
|
|
|
|
|
||||
Income taxes |
|
|
|
|
|
|
|
||||
After-tax earnings from joint ventures |
|
|
|
|
|
|
|
||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests |
|
|
|
|
|
|
|
||||
Net earnings attributable to redeemable and noncontrolling interests |
|
|
|
|
|
|
|
||||
Net earnings attributable to General Mills |
$ |
|
$ |
|
$ |
|
$ |
||||
Earnings per share – basic |
$ |
|
$ |
|
$ |
|
$ |
||||
Earnings per share – diluted |
$ |
|
$ |
|
$ |
|
$ |
||||
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements. | |||||||||||
4
Consolidated Statements of Comprehensive Income | |||||||||||
GENERAL MILLS, INC. AND SUBSIDIARIES | |||||||||||
(Unaudited) (In Millions) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
|
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Net earnings, including earnings attributable to redeemable and noncontrolling interests |
$ |
|
$ |
|
$ |
|
$ |
||||
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
( |
|
|
|
|
( |
|
|
||
Other fair value changes: |
|
|
|
|
|
|
|
|
|
|
|
Hedge derivatives |
|
( |
|
|
|
|
( |
|
|
( | |
Reclassification to earnings: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
|
|
|
|
|
||||
Amortization of losses and prior service costs |
|
|
|
|
|
|
|
||||
Hedge derivatives |
|
|
|
|
|
|
|
||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
||||
Total comprehensive income |
|
|
|
|
|
|
|
||||
Comprehensive income (loss) attributable to redeemable and noncontrolling interests |
|
|
|
|
|
( |
|
|
|||
Comprehensive income attributable to General Mills |
$ |
|
$ |
|
$ |
|
$ |
||||
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements. | |||||||||||
5
Consolidated Balance Sheets | |||||
GENERAL MILLS, INC. AND SUBSIDIARIES | |||||
(In Millions, Except Par Value) | |||||
|
Feb. 27, 2022 |
|
May 30, 2021 | ||
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
|
$ |
||
Receivables |
|
|
|
||
Inventories |
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
||
Total current assets |
|
|
|
||
Land, buildings, and equipment |
|
|
|
||
Goodwill |
|
|
|
||
Other intangible assets |
|
|
|
||
Other assets |
|
|
|
||
Total assets |
$ |
|
$ |
||
LIABILITIES AND EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
|
$ |
||
Current portion of long-term debt |
|
|
|
||
Notes payable |
|
|
|
||
Other current liabilities |
|
|
|
||
Total current liabilities |
|
|
|
||
Long-term debt |
|
|
|
||
Deferred income taxes |
|
|
|
||
Other liabilities |
|
|
|
||
Total liabilities |
|
|
|
||
Redeemable interest |
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
Common stock, |
|
|
|
||
Additional paid-in capital |
|
|
|
||
Retained earnings |
|
|
|
||
Common stock in treasury, at cost, shares of |
|
( |
|
|
( |
Accumulated other comprehensive loss |
|
( |
|
|
( |
Total stockholders' equity |
|
|
|
||
Noncontrolling interests |
|
|
|
||
Total equity |
|
|
|
||
Total liabilities and equity |
$ |
|
$ |
||
|
|
|
|
|
|
See accompanying notes to consolidated financial statements. |
|
|
|
|
|
6
Consolidated Statements of Total Equity and Redeemable Interest | |||||||||
GENERAL MILLS, INC. AND SUBSIDIARIES | |||||||||
(Unaudited) (In Millions, Except per Share Data) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended | ||||||||
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||||
|
Shares |
|
Amount |
|
Shares |
|
Amount | ||
Total equity, beginning balance |
|
|
$ |
|
|
|
$ |
||
Common stock, |
|
|
|
|
|
||||
Additional paid-in capital: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Stock compensation plans |
|
|
|
|
|
|
|
( | |
Unearned compensation related to stock unit awards |
|
|
|
( |
|
|
|
|
( |
Earned compensation |
|
|
|
|
|
|
|
||
Decrease in redemption value of redeemable interest |
|
|
|
|
|
|
|
||
Reversal of cumulative redeemable interest value adjustments |
|
|
|
( |
|
|
|
|
|
Acquisition of noncontrolling interest |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
|
|
|
|
|
||
Retained earnings: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Net earnings attributable to General Mills |
|
|
|
|
|
|
|
||
Cash dividends declared ($ |
|
|
|
( |
|
|
|
|
( |
Ending balance |
|
|
|
|
|
|
|
||
Common stock in treasury: |
|
|
|
|
|
|
|
|
|
Beginning balance |
( |
|
|
( |
|
( |
|
|
( |
Shares purchased |
( |
|
|
( |
|
|
|
( | |
Stock compensation plans |
|
|
|
|
|
||||
Ending balance |
( |
|
|
( |
|
( |
|
|
( |
Accumulated other comprehensive loss: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
( |
|
|
|
|
( |
Other comprehensive income |
|
|
|
|
|
|
|
||
Ending balance |
|
|
|
( |
|
|
|
|
( |
Noncontrolling interests: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Comprehensive income |
|
|
|
|
|
|
|
||
Distributions to noncontrolling interest holders |
|
|
|
( |
|
|
|
|
( |
Reclassification from redeemable interest |
|
|
|
|
|
|
|
||
Reversal of cumulative redeemable interest value adjustments |
|
|
|
|
|
|
|
||
Divestiture |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
|
|
|
|
|
||
Total equity, ending balance |
|
|
$ |
|
|
|
$ |
||
Redeemable interest: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
$ |
|
|
|
$ |
||
Comprehensive income |
|
|
|
|
|
|
|
||
Decrease in redemption value of redeemable interest |
|
|
|
|
|
|
|
( | |
Distributions to redeemable interest holder |
|
|
|
|
|
|
|
( | |
Reclassification to noncontrolling interest |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
$ |
|
|
|
$ |
||
See accompanying notes to consolidated financial statements. | |||||||||
7
Consolidated Statements of Total Equity and Redeemable Interest | |||||||||
GENERAL MILLS, INC. AND SUBSIDIARIES | |||||||||
(Unaudited) (In Millions, Except per Share Data) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
Nine-Month Period Ended | ||||||||
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||||
|
Shares |
|
Amount |
|
Shares |
|
Amount | ||
Total equity, beginning balance |
|
|
$ |
|
|
|
$ |
||
Common stock, |
|
|
|
|
|
||||
Additional paid-in capital: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Stock compensation plans |
|
|
|
|
|
|
|
||
Unearned compensation related to stock unit awards |
|
|
|
( |
|
|
|
|
( |
Earned compensation |
|
|
|
|
|
|
|
||
Decrease in redemption value of redeemable interest |
|
|
|
|
|
|
|
||
Reversal of cumulative redeemable interest value adjustments |
|
|
|
( |
|
|
|
|
|
Acquisition of noncontrolling interest |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
|
|
|
|
|
||
Retained earnings: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Net earnings attributable to General Mills |
|
|
|
|
|
|
|
||
Cash dividends declared ($ |
|
|
|
( |
|
|
|
|
( |
Adoption of current expected credit loss accounting requirements |
|
|
|
|
|
|
|
( | |
Ending balance |
|
|
|
|
|
|
|
||
Common stock in treasury: |
|
|
|
|
|
|
|
|
|
Beginning balance |
( |
|
|
( |
|
( |
|
|
( |
Shares purchased |
( |
|
|
( |
|
|
|
( | |
Stock compensation plans |
|
|
|
|
|
||||
Ending balance |
( |
|
|
( |
|
( |
|
|
( |
Accumulated other comprehensive loss: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
( |
|
|
|
|
( |
Other comprehensive income |
|
|
|
|
|
|
|
||
Ending balance |
|
|
|
( |
|
|
|
|
( |
Noncontrolling interests: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
|
|
|
|
|
||
Comprehensive (loss) income |
|
|
|
( |
|
|
|
|
|
Distributions to noncontrolling interest holders |
|
|
|
( |
|
|
|
|
( |
Reclassification from redeemable interest |
|
|
|
|
|
|
|
||
Reversal of cumulative redeemable interest value adjustments |
|
|
|
|
|
|
|
||
Divestiture |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
|
|
|
|
|
||
Total equity, ending balance |
|
|
$ |
|
|
|
$ |
||
Redeemable interest: |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
$ |
|
|
|
$ |
||
Comprehensive (loss) income |
|
|
|
( |
|
|
|
|
|
Decrease in redemption value of redeemable interest |
|
|
|
( |
|
|
|
|
( |
Distributions to redeemable interest holder |
|
|
|
- |
|
|
|
|
( |
Reclassification to noncontrolling interest |
|
|
|
( |
|
|
|
|
|
Ending balance |
|
|
$ |
|
|
|
$ |
||
See accompanying notes to consolidated financial statements. |
|
|
|
|
|
|
|
|
|
8
Consolidated Statements of Cash Flows | |||||
GENERAL MILLS, INC. AND SUBSIDIARIES | |||||
(Unaudited) (In Millions) | |||||
|
Nine-Month Period Ended | ||||
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||
Cash Flows - Operating Activities |
|
|
|
|
|
Net earnings, including earnings attributable to redeemable and noncontrolling interests |
$ |
|
$ |
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
|
||
After-tax earnings from joint ventures |
|
( |
|
|
( |
Distributions of earnings from joint ventures |
|
|
|
||
Stock-based compensation |
|
|
|
||
Deferred income taxes |
|
|
|
||
Pension and other postretirement benefit plan contributions |
|
( |
|
|
( |
Pension and other postretirement benefit plan costs |
|
( |
|
|
( |
Divestitures gain |
|
( |
|
|
|
Restructuring, impairment, and other exit costs |
|
( |
|
|
|
Changes in current assets and liabilities, excluding the effects of acquisition and divestitures |
|
|
|
( | |
Other, net |
|
( |
|
|
( |
Net cash provided by operating activities |
|
|
|
||
Cash Flows - Investing Activities |
|
|
|
|
|
Purchases of land, buildings, and equipment |
|
( |
|
|
( |
Acquisition |
|
( |
|
|
|
Proceeds from divestitures, net of cash divested |
|
|
|
||
Investments in affiliates, net |
|
|
|
||
Proceeds from disposal of land, buildings, and equipment |
|
|
|
||
Other, net |
|
|
|
( | |
Net cash used by investing activities |
|
( |
|
|
( |
Cash Flows - Financing Activities |
|
|
|
|
|
Change in notes payable |
|
|
|
( | |
Issuance of long-term debt |
|
|
|
||
Payment of long-term debt |
|
( |
|
|
( |
Debt exchange participation incentive cash payment |
|
|
|
( | |
Proceeds from common stock issued on exercised options |
|
|
|
||
Purchases of common stock for treasury |
|
( |
|
|
( |
Dividends paid |
|
( |
|
|
( |
Distributions to noncontrolling and redeemable interest holders |
|
( |
|
|
( |
Other, net |
|
( |
|
|
( |
Net cash used by financing activities |
|
( |
|
|
( |
Effect of exchange rate changes on cash and cash equivalents |
|
( |
|
|
|
(Decrease) increase in cash and cash equivalents |
|
( |
|
|
|
Cash and cash equivalents - beginning of year |
|
|
|
||
Cash and cash equivalents - end of period |
$ |
|
$ |
||
Cash Flow from changes in current assets and liabilities, excluding the effects of acquisition and divestitures: |
|
|
|
|
|
Receivables |
$ |
( |
|
$ |
( |
Inventories |
|
|
|
( | |
Prepaid expenses and other current assets |
|
|
|
||
Accounts payable |
|
( |
|
|
|
Other current liabilities |
|
|
|
||
Changes in current assets and liabilities |
$ |
|
$ |
( | |
See accompanying notes to consolidated financial statements. |
|
|
|
|
|
9
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Background
The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, General Mills, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature, including the elimination of all intercompany transactions and any noncontrolling and redeemable interests’ share of those transactions. Operating results for the quarter ended February 27, 2022, are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 2022.
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 30, 2021. The accounting policies used in preparing these Consolidated Financial Statements are the same as those described in Note 2 to the Consolidated Financial Statements in that Form 10-K.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisition and Divestitures
During the third quarter of fiscal 2022, we completed the sale of our interests in Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl to Sodiaal International (Sodiaal) in exchange for Sodiaal’s interest in our Canadian yogurt business, a modified agreement for the use of Yoplait and Liberté brands in the United States and Canada, and cash. We recorded a net pre-tax gain of $
During the second quarter of fiscal 2022, we entered into definitive agreements to sell our European dough businesses. During the third quarter of fiscal 2022, we recorded a net pre-tax gain on sale of $
During the first quarter of fiscal 2022, we acquired the Tyson Foods’ pet treats business for $
(3) Restructuring, Impairment, and Other Exit Costs
Restructuring charges were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
International manufacturing and logistics operations |
$ |
|
$ |
|
$ |
|
$ |
||||
Charges (recoveries) associated with restructuring actions previously announced |
|
|
|
|
|
( |
|
|
|||
Total restructuring charges |
$ |
|
$ |
|
$ |
|
$ |
||||
In the third quarter of fiscal 2022, we did not undertake any new restructuring actions. We recorded $
10
previously announced. We recorded $
In the third quarter of fiscal 2022, we decreased the estimate of expected restructuring charges that we expect to incur related to actions designed to better align our organizational structure and resources with strategic initiatives to approximately $
We paid net $
Restructuring charges are recorded in our Consolidated Statements of Earnings as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Restructuring, impairment, and other exit costs |
$ |
|
$ |
|
$ |
|
$ |
||||
Cost of sales |
|
|
|
|
|
|
|
||||
Total restructuring charges |
$ |
|
$ |
|
$ |
|
$ |
||||
In Millions |
Total | |
Reserve balance as of May 30, 2021 |
$ |
|
Fiscal 2022 charges, including foreign currency translation |
|
|
Utilized in fiscal 2022 |
|
( |
Reserve balance as of Feb. 27, 2022 |
$ |
|
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. 27, 2022 |
|
May 30, 2021 | ||
Goodwill |
$ |
|
$ |
||
Other intangible assets: |
|
|
|
|
|
Intangible assets not subject to amortization: |
|
|
|
|
|
Brands and other indefinite-lived intangibles |
|
|
|
||
Intangible assets subject to amortization: |
|
|
|
|
|
Franchise agreements, customer relationships, and other finite-lived intangibles |
|
|
|
||
Less accumulated amortization |
|
( |
|
|
( |
Intangible assets subject to amortization, net |
|
|
|
||
Other intangible assets |
|
|
|
||
Total |
$ |
|
$ |
||
Based on the carrying value of finite-lived intangible assets as of February 27, 2022, annual amortization expense for each of the next five fiscal years is estimated to be approximately $
11
During the third quarter of fiscal 2022, we changed our organizational and management structure to streamline our global operations. As a result of these changes, we reassessed our operating segments as well as our reporting units. Under our new organizational structure, our chief operating decision maker assesses performance and makes decisions about resources to be allocated to our segments at the North America Retail, International, Pet, and North America Foodservice operating segment level. See Note 17 for additional information on our operating segments.
The changes in the carrying amount of goodwill during the nine-month period ended February 27, 2022, were as follows:
In Millions |
|
North America Retail |
|
Pet |
|
North America Foodservice |
|
International |
|
Joint Ventures |
|
Total | ||||||
Balance as of May 30, 2021 |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Divestitures |
|
|
|
|
|
|
|
|
( |
|
|
|
|
( | ||||
Other activity, primarily foreign currency translation |
|
|
( |
|
|
|
|
|
|
( |
|
|
( |
|
|
( | ||
Balance as of Feb. 27, 2022 |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
In Millions |
|
|
Total |
Balance as of May 30, 2021 |
|
$ |
|
Acquisition |
|
|
|
Divestitures |
|
|
( |
Intellectual property intangible asset |
|
|
|
Other activity, primarily foreign currency translation |
|
|
( |
Balance as of Feb. 27, 2022 |
|
$ |
Our annual goodwill and indefinite-lived intangible assets impairment test was performed on the first day of the second quarter of fiscal 2022, and we determined there was
The excess fair value as of the fiscal 2022 test date of the Uncle Toby’s brand intangible asset is as follows:
In Millions |
|
Carrying Value of Intangible Asset |
|
|
Excess Fair Value as of Fiscal 2022 Test Date |
Uncle Toby's |
$ |
|
|
In addition, while having significant coverage as of our fiscal 2022 assessment date, the Progresso, Green Giant, and EPIC brand intangible assets had risk of decreasing coverage. We will continue to monitor these businesses for potential impairment.
The organizational changes also resulted in changes in certain reporting units, one level below the segment level, and were considered a triggering event that required a goodwill impairment test during the third quarter of fiscal 2022. We determined there was no impairment of the goodwill of the impacted reporting units as their related fair values were substantially in excess of the carrying values.
(5) Inventories
The components of inventories were as follows:
12
In Millions |
Feb. 27, 2022 |
|
May 30, 2021 | ||
Raw materials and packaging |
$ |
|
$ |
||
Finished goods |
|
|
|
||
Grain |
|
|
|
||
Excess of FIFO over LIFO cost |
|
( |
|
|
( |
Total |
$ |
|
$ |
||
|
|
|
|
|
|
(6) Risk Management Activities
Many commodities we use in the production and distribution of our products are exposed to market price risks. We utilize derivatives to manage price risk for our principal ingredients and energy costs, including grains (oats, wheat, and corn), oils (principally soybean), dairy products, natural gas, and diesel fuel. Our primary objective when entering into these derivative contracts is to achieve certainty with regard to the future price of commodities purchased for use in our supply chain. We manage our exposures through a combination of purchase orders, long-term contracts with suppliers, exchange-traded futures and options, and over-the-counter options and swaps. We offset our exposures based on current and projected market conditions and generally seek to acquire the inputs at as close as possible to or below our planned cost.
We use derivatives to manage our exposure to changes in commodity prices. We do not perform the assessments required to achieve hedge accounting for commodity derivative positions. Accordingly, the changes in the values of these derivatives are recorded currently in cost of sales in our Consolidated Statements of Earnings.
Although we do not meet the criteria for cash flow hedge accounting, we believe that these instruments are effective in achieving our objective of providing certainty in the future price of commodities purchased for use in our supply chain. Accordingly, for purposes of measuring segment operating performance, these gains and losses are reported in unallocated corporate items outside of segment operating results until such time that the exposure we are managing affects earnings. At that time we reclassify the gain or loss from unallocated corporate items to segment operating profit, allowing our operating segments to realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in unallocated corporate items.
Unallocated corporate items for the quarters and nine-month periods ended February 27, 2022, and February 28, 2021, included:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Net gain on mark-to-market valuation of certain commodity positions |
$ |
|
$ |
|
$ |
|
$ |
||||
Net (gain) loss on commodity positions reclassified from unallocated corporate items to segment operating profit |
|
( |
|
|
( |
|
|
( |
|
|
|
Net mark-to-market revaluation of certain grain inventories |
|
( |
|
|
|
|
|
|
|||
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items |
$ |
( |
|
$ |
|
$ |
|
$ |
|||
As of February 27, 2022, the net notional value of commodity derivatives was $
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 27, 2022 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. All of our accounts payable remain as obligations to our suppliers as stated in our supplier agreements. As of February 27, 2022, $
13
(7) Debt
The components of notes payable were as follows:
In Millions |
Feb. 27, 2022 |
|
May 30, 2021 | ||
U.S. commercial paper |
$ |
|
$ |
||
Financial institutions |
|
|
|
||
Total |
$ |
|
$ |
||
To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States and Europe. We also have committed and asset-backed credit lines that support our foreign operations.
In Billions |
Facility Amount |
|
Borrowed Amount | ||
Credit facility expiring: |
|
|
|
|
|
April 2026 |
$ |
|
$ |
||
Total committed credit facilities |
|
|
|
||
Uncommitted credit facilities |
|
|
|
||
Total committed and uncommitted credit facilities |
$ |
|
$ |
||
The credit facilities contain covenants, including a requirement to maintain a fixed charge coverage ratio of at least times.
Long-Term Debt
The fair values and carrying amounts of long-term debt, including the current portion, were $
In the second quarter of fiscal 2022, we repaid €
In the second quarter of fiscal 2022, we issued €
In the second quarter of fiscal 2022, we repaid $
In the first quarter of fiscal 2022, we issued €
In the first quarter of fiscal 2022, we repaid €
In the fourth quarter of fiscal 2021, we repaid $
In the third quarter of fiscal 2021, we completed an offer to exchange certain series of outstanding notes for a combination of newly issued notes and cash. Holders exchanged $
In the second quarter of fiscal 2021, we issued €
14
In the first quarter of fiscal 2021, we issued €
Certain of our long-term debt agreements contain restrictive covenants.
(8) Redeemable and Noncontrolling Interests
During the third quarter of fiscal 2022, we completed the sale of our interests in Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl to Sodiaal in exchange for Sodiaal’s interest in our Canadian yogurt business, a modified agreement for the use of Yoplait and Liberté brands in the United States and Canada, and cash. Please see Note 2 to the Consolidated Financial Statements.
Up to the date of the divestiture, Sodiaal held the remaining interests in each of the entities. On the acquisition date, we recorded the fair value of Sodiaal’s
A subsidiary of Yoplait SAS had an exclusive milk supply agreement for its European operations with Sodiaal through November 28, 2021. Net purchases totaled $
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 $
(9) Stockholders’ Equity
The following tables provide details of total comprehensive income:
|
|
Quarter Ended |
|
Quarter Ended | ||||||||||||||||
|
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||||||||||||||
|
|
General Mills |
|
Noncontrolling Interests |
|
Redeemable Interest |
|
General Mills |
|
Noncontrolling Interests |
|
Redeemable Interest | ||||||||
In Millions |
|
Pretax |
|
Tax |
|
Net |
|
Net |
|
Net |
|
Pretax |
|
Tax |
|
Net |
|
Net |
|
Net |
Net earnings, including earnings attributable to redeemable and noncontrolling interests |
|
|
|
|
$ |
$ |
|
|
|
|
|
$ |
$ |
$ |
||||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
$ |
( |
$ |
|
( |
|
|
$ |
( |
$ |
|
( |
|
|
||||||
Other fair value changes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge derivatives |
|
( |
|
( |
|
( |
|
|
|
|
( |
|
|
|
( | |||||
Reclassification to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation (a) |
|
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- | |||
Amortization of losses and prior service costs (b) |
|
|
( |
|
|
|
|
|
( |
|
|
|
||||||||
Hedge derivatives (c) |
|
|
|
|
|
|
|
( |
|
|
|
|||||||||
Other comprehensive income (loss) |
$ |
$ |
( |
|
|
|
$ |
$ |
( |
|
|
|
||||||||
Total comprehensive income |
|
|
|
|
$ |
$ |
$ |
|
|
|
|
$ |
$ |
$ |
||||||
(a)Loss reclassified from AOCI into earnings is reported in divestitures gain related to the divestiture of our interests in Yoplait SAS, Yoplait Marques SNC and Liberte Marques Sarl to Sodiaal in the third quarter of fiscal 2022.
(b)Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
(c)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.
15
|
|
Nine-Month Period Ended |
|
Nine-Month Period Ended | ||||||||||||||||
|
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||||||||||||||
|
|
General Mills |
|
Noncontrolling Interests |
|
Redeemable Interest |
|
General Mills |
|
Noncontrolling Interests |
|
Redeemable Interest | ||||||||
In Millions |
|
Pretax |
|
Tax |
|
Net |
|
Net |
|
Net |
|
Pretax |
|
Tax |
|
Net |
|
Net |
|
Net |
Net earnings, including earnings attributable to redeemable and noncontrolling interests |
|
|
|
|
$ |
$ |
$ |
|
|
|
|
$ |
$ |
$ |
||||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
$ |
( |
$ |
|
( |
|
( |
|
( |
$ |
( |
$ |
|
|
|
|||||
Other fair value changes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge derivatives |
|
|
( |
|
( |
|
|
|
( |
|
|
( |
|
|
( | |||||
Reclassification to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Amortization of losses and prior service costs (b) |
|
|
( |
|
|
|
|
|
( |
|
|
|
||||||||
Hedge derivatives (c) |
|
|
|
|
|
( |
|
|
( |
|
|
|
( | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
$ |
$ |
|
|
( |
|
( |
$ |
$ |
|
|
|
||||||||
Total comprehensive income (loss) |
|
|
|
|
$ |
$ |
( |
$ |
( |
|
|
|
|
$ |
$ |
$ |
||||
(a)Loss reclassified from AOCI into earnings is reported in divestitures gain related to the divestiture of our interests in Yoplait SAS, Yoplait Marques SNC and Liberte Marques Sarl to Sodiaal in the third quarter of fiscal 2022.
(b)Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
(c)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.
In Millions |
Feb. 27, 2022 |
|
May 30, 2021 | ||
Foreign currency translation adjustments |
$ |
( |
|
$ |
( |
Unrealized gain (loss) from: |
|
|
|
|
|
Hedge derivatives |
|
|
|
( | |
Pension, other postretirement, and postemployment benefits: |
|
|
|
|
|
Net actuarial loss |
|
( |
|
|
( |
Prior service credits |
|
|
|
||
Accumulated other comprehensive loss |
$ |
( |
|
$ |
( |
(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 30, 2021.
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. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Compensation expense related to stock-based payments |
$ |
|
$ |
|
$ |
|
$ |
||||
Compensation expense related to stock-based payments recognized in the Consolidated Statements of Earnings includes amounts recognized in restructuring, impairment, and other exit costs in fiscal 2022.
Windfall tax benefits from stock-based payments in income tax expense in our Consolidated Statements of Earnings were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Windfall tax benefits from stock-based payments |
$ |
|
$ |
|
$ |
|
$ |
||||
As of February 27, 2022, unrecognized compensation expense related to non-vested stock options, restricted stock units, and performance share units was $
16
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. 27, 2022 |
|
Feb. 28, 2021 | ||
Net cash proceeds |
$ |
|
$ |
||
Intrinsic value of options exercised |
$ |
|
$ |
||
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. 27, 2022 |
Feb. 28, 2021 | ||||
Estimated fair values of stock options granted |
$ |
|
$ |
| ||
Assumptions: |
|
|
|
|
|
|
Risk-free interest rate |
|
% |
|
% | ||
Expected term |
|
years |
|
years | ||
Expected volatility |
|
% |
|
% | ||
Dividend yield |
|
% |
|
% | ||
|
Nine-Month Period Ended | ||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||
Total grant date fair value |
$ |
|
$ |
||
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. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Net earnings attributable to General Mills |
$ |
|
$ |
|
$ |
|
$ |
||||
Average number of common shares - basic EPS |
|
|
|
|
|
|
|
||||
Incremental share effect from: (a) |
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
||||
Restricted stock units and performance share units |
|
|
|
|
|
|
|
||||
Average number of common shares - diluted EPS |
|
|
|
|
|
|
|
||||
Earnings per share – basic |
$ |
|
$ |
|
$ |
|
$ |
||||
Earnings per share – diluted |
$ |
|
$ |
|
$ |
|
$ |
||||
|
|
|
Quarter Ended |
|
|
Nine-Month Period Ended | ||||||
|
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
|
Anti-dilutive stock options, restricted stock units, and performance share units |
|
|
|
|
|
|
|
||||
(12) Share Repurchases
Share repurchases were as follows:
|
Quarter Ended |
|
|
Nine-Month Period Ended | |||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Shares of common stock |
|
|
|
|
|
|
|
||||
Aggregate purchase price |
$ |
|
$ |
|
$ |
|
$ |
||||
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
|
Nine-Month Period Ended | ||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||
Net cash interest payments |
$ |
|
$ |
||
Net income tax payments |
$ |
|
$ |
||
18
(14) Retirement and Postemployment Benefits
Components of net periodic benefit (income) expense are as follows:
|
|
Defined Benefit Pension Plans |
|
|
Other Postretirement Benefit Plans |
|
|
Postemployment Benefit Plans | |||||||||
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended | |||||||||
In Millions |
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
|
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
|
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
Service cost |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
||||||
Expected return on plan assets |
|
( |
|
|
( |
|
|
( |
|
|
( |
|
|
|
|
||
Amortization of losses (gains) |
|
|
|
|
|
( |
|
|
( |
|
|
|
|
||||
Amortization of prior service costs (credits) |
|
|
|
|
|
( |
|
|
( |
|
|
|
|
||||
Other adjustments |
|
|
|
|
|
|
|
|
|
|
|
||||||
Net expense (income) |
$ |
|
$ |
( |
|
$ |
( |
|
$ |
( |
|
$ |
|
$ |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. 27, 2022 |
|
|
Feb. 28, 2021 |
|
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
|
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
Service cost |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
||||||
Expected return on plan assets |
|
( |
|
|
( |
|
|
( |
|
|
( |
|
|
|
|
||
Amortization of losses (gains) |
|
|
|
|
|
( |
|
|
( |
|
|
|
|
||||
Amortization of prior service costs (credits) |
|
|
|
|
|
( |
|
|
( |
|
|
|
|
||||
Other adjustments |
|
|
|
|
|
|
|
|
|
|
|
||||||
Curtailment gain |
|
( |
|
|
|
|
( |
|
|
|
|
|
|
||||
Net (income) expense |
$ |
( |
|
$ |
( |
|
$ |
( |
|
$ |
( |
|
$ |
|
$ |
||
(15) Income Taxes
During the first quarter of fiscal 2022, the Brazilian tax authority, Secretaria da Receita Federal do Brasil (RFB), concluded audits of our 2016 through 2018 tax return years. These audits included a review of our determinations of amortization of certain goodwill arising from the acquisition of Yoki Alimentos S.A. The RFB has proposed adjustments that effectively eliminate the goodwill amortization benefits related to this transaction. The RFB had previously proposed adjustments related to the goodwill amortization associated with our 2012 through 2015 tax return years. We believe we have meritorious defenses and intend to continue to contest the disallowance for all years.
(16) Contingencies
During fiscal 2020, we received notice from the tax authorities of the State of São Paulo, Brazil regarding our compliance with its state sales tax requirements. As a result, we have been assessed additional state sales taxes, interest, and penalties. We believe that we have meritorious defenses against this claim and will vigorously defend our position. As of February 27, 2022, we are unable to estimate any possible loss and have not recorded a loss contingency for this matter.
(17) Business Segment and Geographic Information
We operate in the packaged foods industry. In the third quarter of fiscal 2022, we completed a new organization structure to streamline our global operations. This global reorganization required us to reevaluate our operating segments. Under our new organization structure, our chief operating decision maker assesses performance and makes decisions about resources to be allocated to our operating segments as follows: North America Retail; International; Pet; and North America Foodservice.
We have restated our net sales by segment and segment operating profit to reflect our new operating segments. These segment changes had no effect on previously reported consolidated net sales, operating profit, net earnings attributable to General Mills, or earnings per share.
19
Our North America Retail operating segment includes convenience store businesses from our former Convenience Stores & Foodservice segment. Within our North America Retail operating segment, our former U.S. Cereal operating unit and U.S. Yogurt operating unit have been combined into the U.S. Morning Foods operating unit. Additionally, the U.S. Meals & Baking Solutions operating unit combines the former U.S. Meals & Baking operating unit with certain businesses from the U.S. Snacks operating unit. The Canada operating unit excludes Canada foodservice businesses which are now included in our North America Foodservice operating segment. The resulting North America Foodservice operating segment exclusively includes our foodservice business. Our International operating segment combines our former Europe & Australia and Asia & Latin America operating segments. Our Pet operating segment is unchanged.
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, snack bars, and refrigerated yogurt.
Our International operating segment consists of retail and foodservice businesses outside of the United States and Canada. Our product categories include super-premium ice cream and frozen desserts, meal kits, refrigerated and frozen dough products, salty snacks, snack bars, dessert and baking mixes, and shelf stable vegetables. We also sell super-premium ice cream and frozen desserts directly to consumers through owned retail shops. Our International segment also includes products manufactured in the United States for export, mainly to Caribbean and Latin American markets, as well as products we manufacture for sale to our international joint ventures. Revenues from export activities and franchise fees are reported in the region or country where the end customer or franchisee is located.
Our Pet operating segment includes pet food products sold primarily in the United States and Canada in national pet superstore chains, e-commerce retailers, grocery stores, regional pet store chains, mass merchandisers, and veterinary clinics and hospitals. Our product categories include dog and cat food (dry foods, wet foods, and treats) made with whole meats, fruits, vegetables and other high-quality natural ingredients. Our tailored pet product offerings address specific dietary, lifestyle, and life-stage needs and span different product types, diet types, breed sizes for dogs, lifestages, flavors, product functions, and textures and cuts for wet foods.
Our North America Foodservice segment consists of foodservice businesses in the United States and Canada. Our major product categories in our North America Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, baking mixes, and bakery flour. Many products we sell are branded to the consumer and nearly all are branded to our customers. We sell to distributors and operators in many customer channels including foodservice, vending, and supermarket bakeries.
Operating profit for these segments excludes unallocated corporate items, gain or loss on divestitures, and restructuring, impairment, and other exit costs. Unallocated corporate items include corporate overhead expenses, variances to planned North American employee benefits and incentives, certain charitable contributions, restructuring initiative project-related costs, 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. 27, 2022 |
|
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | |||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
North America Retail |
$ |
|
$ |
|
$ |
|
$ |
||||
International |
|
|
|
|
|
|
|
||||
Pet |
|
|
|
|
|
|
|
||||
North America Foodservice |
|
|
|
|
|
|
|
||||
Total |
$ |
|
$ |
|
$ |
|
$ |
||||
Operating profit: |
|
|
|
|
|
|
|
|
|
|
|
North America Retail |
$ |
|
$ |
|
$ |
|
$ |
||||
International |
|
|
|
|
|
|
|
||||
Pet |
|
|
|
|
|
|
|
||||
North America Foodservice |
|
|
|
|
|
|
|
||||
Total segment operating profit |
$ |
|
$ |
|
$ |
|
$ |
||||
Unallocated corporate items |
|
|
|
( |
|
|
|
|
|||
Divestitures gain |
|
( |
|
|
|
|
( |
|
|
||
Restructuring, impairment, and other exit costs |
|
|
|
|
|
|
|
||||
Operating profit |
$ |
|
$ |
|
$ |
|
$ |
||||
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
U.S. Meals & Baking Solutions |
$ |
|
$ |
|
$ |
|
$ |
||||
U.S. Morning Foods |
|
|
|
|
|
|
|
||||
U.S. Snacks |
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
||||
Total |
$ |
|
$ |
|
$ |
|
$ |
||||
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||
In Millions |
Feb. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||
Snacks |
$ |
|
$ |
|
$ |
|
$ |
||||
Convenient meals |
|
|
|
|
|
|
|
||||
Cereal |
|
|
|
|
|
|
|
||||
Pet |
|
|
|
|
|
|
|
||||
Dough |
|
|
|
|
|
|
|
||||
Baking mixes and ingredients |
|
|
|
|
|
|
|
||||
Yogurt |
|
|
|
|
|
|
|
||||
Super-premium ice cream |
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
||||
Total |
$ |
|
$ |
|
$ |
|
$ |
||||
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 30, 2021 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.
As the COVID-19 pandemic continues, we expect the largest factors impacting our fiscal 2022 performance will be the relative balance of at-home versus away-from-home consumer food demand and the elevated cost environment, including input cost inflation and costs related to supply chain disruption, all of which remain uncertain. We expect at-home food volume will decline year over year across most of our core markets, though will remain above pre-pandemic levels. Conversely, we expect away-from-home food volume to continue to recover, though not fully to pre-pandemic levels. Additionally, we expect increased net price realization across all food channels throughout our core markets, in response to significant input cost inflation. We will continue to evaluate the nature and extent of the impact to our business and consolidated results of operations.
CONSOLIDATED RESULTS OF OPERATIONS
Third Quarter Results
In the third quarter of fiscal 2022, net sales essentially matched the same period last year, and organic net sales increased 4 percent compared to the same period last year. Operating profit decreased 1 percent to $815 million, primarily driven by higher input costs, an unfavorable change to the mark-to-market valuation of certain commodity positions and grain inventories, volume declines, and lower net corporate investment activity, partially offset by favorable net price realization and mix and gains on divestitures. Operating profit margin of 18.0 percent decreased 30 basis points. Adjusted operating profit of $676 million decreased 6 percent on a constant-currency basis, primarily driven by higher input costs and volume declines, partially offset by favorable net price realization and mix, and a decrease in certain selling, general, and administrative (SG&A) expenses. Adjusted operating profit margin decreased 90 basis points to 14.9 percent. Diluted earnings per share of $1.08 increased 13 percent in the third quarter of fiscal 2022. Adjusted diluted earnings per share of $0.84 increased 2 percent on a constant-currency basis compared to the third quarter of fiscal 2021. 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 2022 follows:
Quarter Ended Feb. 27, 2022 |
In millions, except per share |
|
Quarter Ended Feb. 27, 2022 vs. Feb. 28, 2021 |
Percent of Net Sales |
Constant-Currency Growth (a) | ||||
Net sales |
$ |
4,537.7 |
|
Flat |
|
|
|
|
|
Operating profit |
|
815.3 |
|
(1) |
% |
18.0 |
% |
|
|
Net earnings attributable to General Mills |
|
660.3 |
|
11 |
% |
|
|
|
|
Diluted earnings per share |
$ |
1.08 |
|
13 |
% |
|
|
|
|
Organic net sales growth rate (a) |
|
|
|
4 |
% |
|
|
|
|
Adjusted operating profit (a) |
|
676.5 |
|
(5) |
% |
14.9 |
% |
(6) |
% |
Adjusted diluted earnings per share (a) |
$ |
0.84 |
|
2 |
% |
|
|
2 |
% |
(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. 27, 2022 |
|
Feb. 27, 2022 vs. Feb. 28, 2021 |
Feb. 28, 2021 | |||
Net sales (in millions) |
$ |
4,537.7 |
|
Flat |
|
$ |
4,520.0 |
Contributions from volume growth (a) |
|
|
|
(10) |
pts |
|
|
Net price realization and mix |
|
|
|
11 |
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. |
|
|
| ||||
22
Net sales in the third quarter of fiscal 2022 matched the same period in fiscal 2021, driven by favorable net price realization and mix, offset by a decrease in contributions from volume growth.
Components of organic net sales growth are shown in the following table:
Quarter Ended Feb. 27, 2022 vs. |
|
|
|
Quarter Ended Feb. 28, 2021 |
|
|
|
Contributions from organic volume growth (a) |
|
(4) |
pts |
Organic net price realization and mix |
|
7 |
pts |
Organic net sales growth |
|
4 |
pts |
Foreign currency exchange |
|
Flat |
|
Acquisition and divestitures |
|
(3) |
pts |
Net sales growth |
|
Flat |
|
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 4 percent in the third quarter of fiscal 2022 as favorable organic net price realization and mix was partially offset by a decrease in contributions from organic volume growth.
Cost of sales increased $168 million to $3,134 million in the third quarter of fiscal 2022 compared to the same period in fiscal 2021. The increase was primarily driven by a $406 million increase attributable to product rate and mix partially offset by a $315 million decrease attributable to lower volume. We recorded a $20 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 2022 compared to a $56 million net decrease in the third quarter of fiscal 2021. In addition, we recorded $2 million of restructuring charges in cost of sales in the third quarter of fiscal 2022 compared to $1 million in the third quarter of fiscal 2021 (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A expenses increased $35 million to $751 million in the third quarter of fiscal 2022, compared to the same period in fiscal 2021, primarily driven by lower net corporate investment activity. SG&A expenses as a percent of net sales in the third quarter of fiscal 2022 increased 70 basis points compared to the third quarter of fiscal 2021.
During the third quarter of fiscal 2022, we recorded a $170 million divestitures gain related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl, and a European dough business (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Restructuring, impairment, and other exit costs totaled $7 million in the third quarter of fiscal 2022, compared to $11 million in the same period last year (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Benefit plan non-service income totaled $27 million in the third quarter of fiscal 2022, compared to $33 million in the same period last year, primarily reflecting higher amortization of losses.
Interest, net for the third quarter of fiscal 2022 totaled $86 million, down $20 million from the third quarter of fiscal 2021, primarily driven by lower average long-term debt levels.
The effective tax rate for the third quarter of fiscal 2022 was 16.3 percent compared to 21.5 percent in the same period last year. The 5.2 percentage point decrease was primarily due to certain non-taxable components of the divestitures gains and favorable changes in earnings mix by jurisdiction, partially offset by certain discrete tax benefits recorded in the third quarter of fiscal 2021. Our effective tax rate excluding certain items affecting comparability was 21.0 percent in the third quarter of fiscal 2022, 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 0.6 percentage point decrease was primarily due to favorable changes in earnings mix by jurisdiction, partially offset by certain discrete tax benefits recorded in the third quarter of fiscal 2021.
After-tax earnings from joint ventures for the third quarter of fiscal 2022 increased to $30 million compared to $12 million in the same period in fiscal 2021, primarily driven by lower SG&A expenses at Cereal Partners Worldwide (CPW). On a constant-currency basis, after-tax earnings from joint ventures increased 167 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:
23
Quarter Ended Feb. 27, 2022 vs. |
|
|
|
|
|
|
|
Quarter Ended Feb. 28, 2021 |
|
CPW |
HDJ (a) |
Total | |||
Contributions from volume growth (b) |
|
Flat |
|
9 |
pts |
|
|
Net price realization and mix |
|
2 |
pts |
Flat |
|
|
|
Net sales growth in constant currency |
|
1 |
pt |
9 |
pts |
3 |
pts |
Foreign currency exchange |
|
(5) |
pts |
(10) |
pts |
(6) |
pts |
Net sales growth |
|
(4) |
pts |
(1) |
pt |
(3) |
pts |
Note: Table may not foot due to rounding. | |||||||
(a) Häagen-Dazs Japan, Inc. (HDJ) | |||||||
(b) Measured in tons based on the stated weight of our product shipments. | |||||||
Average diluted shares outstanding decreased by 7 million in the third quarter of fiscal 2022 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 27, 2022, net sales and organic net sales increased 4 percent compared to the same period last year. Operating profit decreased 5 percent to $2,460 million, primarily driven by higher input costs, an unfavorable change to the mark-to-market valuation of certain commodity positions and grain inventories, lower net corporate investment activity, and higher transaction and integration costs, partially offset by favorable net price realization and mix and gains on divestitures. Operating profit margin of 17.4 percent decreased 170 basis points. Adjusted operating profit of $2,317 million decreased 5 percent on a constant-currency basis, primarily driven by higher input costs and volume declines, partially offset by favorable net price realization and mix and a decrease in certain SG&A expenses. Adjusted operating profit margin decreased 130 basis points to 16.4 percent. Diluted earnings per share of $3.07 decreased 1 percent in the nine-month period ended February 27, 2022, and adjusted diluted earnings per share of $2.82 decreased 2 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 27, 2022, follows:
Nine-Month Period Ended Feb. 27, 2022 |
In millions, except per share |
|
Nine-Month Period Ended Feb. 27, 2022 vs. Feb. 28, 2021 |
Percent of Net Sales |
Constant-Currency Growth (a) | ||||
Net sales |
$ |
14,101.6 |
|
4 |
% |
|
|
|
|
Operating profit |
|
2,459.7 |
|
(5) |
% |
17.4 |
% |
|
|
Net earnings attributable to General Mills |
|
1,884.5 |
|
(2) |
% |
|
|
|
|
Diluted earnings per share |
$ |
3.07 |
|
(1) |
% |
|
|
|
|
Organic net sales growth rate (a) |
|
|
|
4 |
% |
|
|
|
|
Adjusted operating profit (a) |
|
2,317.0 |
|
(4) |
% |
16.4 |
% |
(5) |
% |
Adjusted diluted earnings per share (a) |
$ |
2.82 |
|
(2) |
% |
|
|
(2) |
% |
(a) See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP. |
| ||||||||
Consolidated net sales were as follows:
|
Nine-Month Period Ended | ||||||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs. Feb. 28, 2021 |
Feb. 28, 2021 | |||
Net sales (in millions) |
$ |
14,101.6 |
|
4 |
% |
$ |
13,603.4 |
Contributions from volume growth (a) |
|
|
|
(4) |
pts |
|
|
Net price realization and mix |
|
|
|
7 |
pts |
|
|
Foreign currency exchange |
|
|
|
1 |
pt |
|
|
Note: Table may not foot due to rounding. | |||||||
(a) Measured in tons based on the stated weight of our product shipments. |
|
|
| ||||
The 4 percent increase in net sales for the nine-month period ended February 27, 2022, was driven by favorable net price realization and mix and favorable foreign currency exchange, partially offset by a decrease in contributions from volume growth.
24
Components of organic net sales growth are shown in the following table:
Nine-Month Period Ended Feb. 27, 2022 vs. |
|
|
|
Nine-Month Period Ended Feb. 28, 2021 |
|
|
|
Contributions from organic volume growth (a) |
|
(1) |
pt |
Organic net price realization and mix |
|
5 |
pts |
Organic net sales growth |
|
4 |
pts |
Foreign currency exchange |
|
1 |
pt |
Acquisition and divestitures |
|
(1) |
pt |
Net sales growth |
|
4 |
pts |
Note: Table may not foot due to rounding |
|
|
|
(a)Measured in tons based on the stated weight of our product shipments.
Organic net sales increased 4 percent in the nine-month period ended February 27, 2022, driven by favorable organic net price realization and mix, partially offset by a decrease in contributions from organic volume growth.
Cost of sales increased $731 million to $9,469 million in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021. The increase was driven by a $964 million increase attributable to product rate and mix, partially offset by a $336 million decrease due to lower volume. We recorded a $16 million net decrease 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 27, 2022, compared to a $118 million net decrease in the nine-month period ended February 28, 2021. In addition, we recorded $3 million of restructuring charges in cost of sales in the nine-month period ended February 27, 2022, 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 increased $81 million to $2,338 million in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, primarily driven by lower net corporate investment activity, higher transaction costs and acquisition integration costs, partially offset by a non-income tax recovery recorded in the nine-month period ended February 27, 2022. SG&A expenses as a percent of net sales were unchanged in the nine-month period ended February 27, 2022, compared to the same period of fiscal 2021.
During the nine-month period ended February 27, 2022, we recorded a $170 million divestitures gain related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl, and a European dough business (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Restructuring, impairment, and other exit costs totaled $5 million in the nine-month period ended February 27, 2022, compared to $12 million in the same period last year (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Benefit plan non-service income totaled $84 million in the nine-month period ended February 27, 2022, compared to $100 million in the same period last year, primarily reflecting higher amortization of losses.
Interest, net for the nine-month period ended February 27, 2022, decreased $43 million to $275 million compared to the same period of fiscal 2021, primarily driven by lower average long-term debt balances.
The effective tax rate for the nine-month period ended February 27, 2022, was 19.9 percent compared to 22.0 percent in the same period last year. The 2.1 percentage point decrease was primarily due to certain non-taxable components of the divestitures gains and favorable changes in earnings mix by jurisdiction in fiscal 2022, partially offset by certain discrete benefits in the nine-month period ended February 28, 2021. Our effective tax rate excluding certain items affecting comparability was 21.7 percent in the nine-month period ended February 27, 2022, compared to 21.9 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 0.2 percentage point decrease is primarily due to favorable changes in earnings mix by jurisdiction in fiscal 2022, partially offset by certain discrete benefits in the nine-month period ended February 28, 2021.
25
After-tax earnings from joint ventures increased to $92 million for the nine-month period ended February 27, 2022 compared to $90 million in the same period in fiscal 2021, primarily driven by lower SG&A expenses at CPW and higher net sales at HDJ, partially offset by higher input costs and lower net sales at CPW. On a constant-currency basis, after-tax earnings from joint ventures increased 5 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. 27, 2022 vs. |
|
|
|
|
| ||
Nine-Month Period Ended Feb. 28, 2021 |
|
CPW |
HDJ |
Total | |||
Contributions from volume growth (a) |
|
(2) |
pts |
9 |
pts |
|
|
Net price realization and mix |
|
1 |
pt |
1 |
pt |
|
|
Net sales growth in constant currency |
|
(2) |
pts |
10 |
pts |
1 |
pt |
Foreign currency exchange |
|
(1) |
pt |
(7) |
pts |
(2) |
pts |
Net sales growth |
|
(2) |
pts |
3 |
pts |
(1) |
pt |
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 6 million in the nine-month period ended February 27, 2022, from the same period a year ago primarily due to share repurchases, partially offset by option exercises.
SEGMENT OPERATING RESULTS
In the third quarter of fiscal 2022, we announced a new organization structure to streamline our global operations. As a result of this global reorganization, beginning in the third quarter of fiscal 2022, we are reporting results for our four operating segments as follows: North America Retail, International, Pet, and North America Foodservice. We have restated our net sales by segment and segment operating profit amounts to reflect our new operating segments. These segment changes had no effect on previously reported consolidated net sales, operating profit, net earnings attributable to General Mills, or earnings per share. 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.
Our North America Retail operating segment includes convenience store businesses from our former Convenience Stores & Foodservice segment. Within our North America Retail operating segment, our former U.S. Cereal operating unit and U.S. Yogurt operating unit have been combined into the U.S. Morning Foods operating unit. Additionally, the U.S. Meals & Baking Solutions operating unit combines the former U.S. Meals & Baking operating unit with certain businesses from the U.S. Snacks operating unit. The Canada operating unit excludes Canada foodservice businesses which are now included in our North America Foodservice operating segment. The resulting North America Foodservice operating segment exclusively includes our foodservice businesses. Our International operating segment combines our former Europe & Australia and Asia & Latin America operating segments. Our Pet operating segment is unchanged.
North America Retail Segment Results
North America Retail net sales were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||||||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 | ||||||
Net sales (in millions) |
$ |
2,811.9 |
|
1 |
% |
$ |
2,786.0 |
|
$ |
8,567.1 |
|
Flat |
|
$ |
8,539.3 |
Contributions from volume growth (a) |
|
|
|
(8) |
pts |
|
|
|
|
|
|
(7) |
pts |
|
|
Net price realization and mix |
|
|
|
9 |
pts |
|
|
|
|
|
|
7 |
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 increased 1 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable net price realization and mix, partially offset by a decrease in contributions from volume growth.
North America Retail net sales for the nine-month period ended February 27, 2022, essentially matched the same period in fiscal 2021, as favorable net price realization and mix was offset by a decrease in contributions from volume growth.
26
The components of North America Retail organic net sales growth are shown in the following table:
|
Quarter Ended |
|
Nine-Month Period Ended | ||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 | ||
Contributions from organic volume growth (a) |
(8) |
pts |
|
(7) |
pts |
Organic net price realization and mix |
9 |
pts |
|
7 |
pts |
Organic net sales growth |
1 |
pt |
|
Flat |
|
Foreign currency exchange |
Flat |
|
|
Flat |
|
Net sales growth |
1 |
pt |
|
Flat |
|
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Retail organic net sales increased 1 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix, partially offset by a decrease in contributions from organic volume growth.
North America Retail organic net sales for the nine-month period ended February 27, 2022, essentially matched the same period in fiscal 2021, as favorable organic net price realization and mix was 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. 27, 2022 |
|
Feb. 27, 2022 | ||
U.S. Meals & Baking Solutions |
(2) |
% |
|
(4) |
% |
U.S. Morning Foods |
4 |
% |
|
1 |
% |
U.S. Snacks |
3 |
% |
|
5 |
% |
Canada (a) |
(2) |
% |
|
5 |
% |
Total |
1 |
% |
|
Flat |
|
(a)On a constant-currency basis, Canada net sales decreased 2 percent in the third quarter of fiscal 2022, compared to the same period in fiscal 2021. On a constant-currency basis, Canada net sales increased 1 percent for the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021. See the "Non-GAAP Measures" section below for our use of this measure not defined by GAAP.
Segment operating profit decreased 3 percent to $612 million in the third quarter of fiscal 2022 compared to $629 million in the same period in fiscal 2021, primarily driven by higher input costs and a decrease in contributions from volume growth, partially offset by favorable net price realization and mix and a decrease in SG&A expenses. Segment operating profit decreased 3 percent on a constant-currency basis in the third quarter of fiscal 2022 compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 7 percent to $1,936 million in the nine-month period ended February 27, 2022, compared to $2,077 million in the same period in fiscal 2021, primarily driven by higher input costs and a decrease in contributions from volume growth, partially offset by favorable net price realization and mix and a decrease in SG&A expenses. Segment operating profit decreased 7 percent on a constant-currency basis in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
International Segment Results
International net sales were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||||||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 | ||||||
Net sales (in millions) |
$ |
721.0 |
|
(23) |
% |
$ |
939.8 |
|
$ |
2,566.0 |
|
(5) |
% |
$ |
2,710.9 |
Contributions from volume growth (a) |
|
|
|
(34) |
pts |
|
|
|
|
|
|
(14) |
pts |
|
|
Net price realization and mix |
|
|
|
12 |
pts |
|
|
|
|
|
|
7 |
pts |
|
|
Foreign currency exchange |
|
|
|
(2) |
pts |
|
|
|
|
|
|
1 |
pt |
|
|
Note: Table may not foot due to rounding. |
|
|
|
|
|
|
|
| |||||||
(a) Measured in tons based on the stated weight of our product shipments. | |||||||||||||||
27
International net sales decreased 23 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by a decrease in contributions from volume growth, including the impact of volume declines from divestitures, and unfavorable foreign currency exchange, partially offset by favorable net price realization and mix.
International net sales decreased 5 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by a decrease in contributions from volume growth, including the impact of volume declines from divestitures, partially offset by favorable net price realization and mix and favorable foreign currency exchange.
The components of International organic net sales growth are shown in the following table:
|
|
Quarter Ended |
Nine-Month Period Ended | |||
|
|
Feb. 27, 2022 |
|
Feb. 27, 2022 | ||
Contributions from organic volume growth (a) |
(3) |
pts |
|
Flat |
| |
Organic net price realization and mix |
2 |
pts |
|
1 |
pt | |
Organic net sales growth |
(1) |
pt |
|
1 |
pt | |
Foreign currency exchange |
(2) |
pts |
|
1 |
pt | |
Divestitures (b) |
(20) |
pts |
|
(8) |
pts | |
Net sales growth |
(23) |
pts |
|
(5) |
pts | |
Note: Table may not foot due to rounding. | ||||||
(a) |
Measured in tons based on the stated weight of our product shipments. | |||||
(b) |
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report. Divestitures also includes the impact of our sale of the Laticínios Carolina business in Brazil in fiscal 2021. | |||||
International organic net sales decreased 1 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by a decrease in contributions from organic volume growth, partially offset by favorable organic net price realization and mix.
International organic net sales increased 1 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix.
Segment operating profit decreased 13 percent to $36 million in the third quarter of fiscal 2022 from $41 million in the same period in fiscal 2021, primarily driven by higher input costs and a decrease in contributions from volume growth, including the impact of volume declines from divestitures, partially offset by favorable net price realization and mix and a decrease in SG&A expenses. Segment operating profit decreased 16 percent on a constant-currency basis in the third quarter of fiscal 2022 compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 14 percent to $156 million in the nine-month period ended February 27, 2022, compared to $181 million in the same period in fiscal 2021, primarily driven by higher input costs and a decrease in contributions from volume growth, including the impact of volume declines from divestitures, partially offset by favorable net price realization and mix, a decrease in SG&A expenses, and favorable foreign currency exchange. Segment operating profit decreased 18 percent on a constant-currency basis in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Pet Segment Results
Pet net sales were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||||||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 | ||||||
Net sales (in millions) |
$ |
567.7 |
|
30 |
% |
$ |
436.3 |
|
$ |
1,649.1 |
|
28 |
% |
$ |
1,288.0 |
Contributions from volume growth (a) |
|
|
|
7 |
pts |
|
|
|
|
|
|
11 |
pts |
|
|
Net price realization and mix |
|
|
|
23 |
pts |
|
|
|
|
|
|
17 |
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. | |||||||||||||||
28
Pet net sales increased 30 percent during the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable net price realization and mix and an increase in contributions from volume growth, including incremental volume from the acquisition of the Tyson Foods’ pet treats business.
Pet net sales increased 28 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by favorable net price realization and mix and an increase in contributions from volume growth, including incremental volume from the acquisition of the Tyson Foods’ pet treats business.
The components of Pet organic net sales growth are shown in the following table:
|
Quarter Ended |
|
Nine-Month Period Ended | ||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 | ||
Contributions from organic volume growth (a) |
3 |
pts |
|
8 |
pts |
Organic net price realization and mix |
13 |
pts |
|
9 |
pts |
Organic net sales growth |
16 |
pts |
|
16 |
pts |
Acquisition (b) |
14 |
pts |
|
12 |
pts |
Foreign currency exchange |
Flat |
|
|
Flat |
|
Net sales growth |
30 |
pts |
|
28 |
pts |
Note: Table may not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Pet organic net sales increased 16 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix and an increase in contributions from organic volume growth.
Pet organic net sales increased 16 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix and an increase in contributions from organic volume growth.
Segment operating profit increased 8 percent to $111 million in the third quarter of fiscal 2022 compared to $102 million in the same period in fiscal 2021, primarily driven by favorable net price realization and mix and an increase in contributions from volume growth, including incremental volume from the acquisition of the Tyson Foods’ pet treats business, partially offset by higher input costs and an increase in SG&A expenses. Segment operating profit increased 8 percent on a constant-currency basis in the third quarter of fiscal 2022 compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit increased 15 percent to $357 million in the nine-month period ended February 27, 2022, compared to $312 million in the same period in fiscal 2021, primarily driven by favorable net price realization and mix and an increase in contributions from volume growth, including incremental volume from the acquisition of the Tyson Foods’ pet treats business, partially offset by higher input costs, an increase in SG&A expenses, and a one-time inventory adjustment and other acquisition-related expenses of $12 million related to the acquired pet treat business. Segment operating profit increased 15 percent on a constant-currency basis in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
|
Quarter Ended |
|
Nine-Month Period Ended | ||||||||||||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 27, 2022 vs Feb. 28, 2021 |
Feb. 28, 2021 | ||||||
Net sales (in millions) |
$ |
437.1 |
|
22 |
% |
$ |
357.9 |
|
$ |
1,319.4 |
|
24 |
% |
$ |
1,065.2 |
Contributions from volume growth (a) |
|
|
|
4 |
pts |
|
|
|
|
|
|
8 |
pts |
|
|
Net price realization and mix |
|
|
|
18 |
pts |
|
|
|
|
|
|
16 |
pts |
|
|
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 22 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable net price realization and mix and an increase in contributions from volume growth.
29
North America Foodservice net sales increased 24 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by favorable net price realization and mix and an increase in contributions from volume growth.
The components of North America Foodservice organic net sales growth are shown in the following table:
|
Quarter Ended |
|
Nine-Month Period Ended | ||
|
Feb. 27, 2022 |
|
Feb. 27, 2022 | ||
Contributions from organic volume growth (a) |
4 |
pts |
|
8 |
pts |
Organic net price realization and mix |
18 |
pts |
|
16 |
pts |
Organic net sales growth |
22 |
pts |
|
24 |
pts |
Net sales growth |
22 |
pts |
|
24 |
pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Foodservice organic net sales increased 22 percent in the third quarter of fiscal 2022 compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix and an increase in contributions from organic volume growth.
North America Foodservice organic net sales increased 24 percent in the nine-month period ended February 27, 2022, compared to the same period in fiscal 2021, driven by favorable organic net price realization and mix and an increase in contributions from organic volume growth.
Segment operating profit decreased 13 percent to $35 million in the third quarter of fiscal 2022 compared to $41 million in the same period in fiscal 2021, primarily driven by higher input costs, partially offset by favorable net price realization and mix.
Segment operating profit increased 27 percent to $175 million in the nine-month period ended February 27, 2022, compared to $138 million in the same period in fiscal 2021, primarily driven by favorable net price realization and mix and an increase in contributions from volume growth, partially offset by higher input costs.
UNALLOCATED CORPORATE ITEMS
Unallocated corporate expense totaled $141 million in the third quarter of fiscal 2022 compared to $24 million of income in the same period in fiscal 2021. We recorded a $20 million net increase in expense related to the mark-to-market valuation of certain commodity positions and grain inventories in the third quarter of fiscal 2022 compared to a $56 million net decrease in expense in the same period last year. We recorded $11 million of net gains related to the sale of certain corporate investments and valuation adjustments in the third quarter of fiscal 2022 compared to $59 million in the third quarter of fiscal 2021. In the third quarter of fiscal 2022, we recorded $4 million of integration costs related to our acquisition of Tyson Foods’ pet treats business and $9 million of transaction costs related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl and a European dough business. We recorded $2 million of restructuring charges in cost of sales in the third quarter of fiscal 2022 compared to $1 million in the same period last year. We also recorded an $8 million favorable adjustment related to a product recall in our international Green Giant business in the third quarter of fiscal 2021.
Unallocated corporate expense totaled $329 million in the nine-month period ended February 27, 2022, compared to $98 million in the same period last year. We recorded a $16 million net decrease in expense related to the mark-to-market valuation of certain commodity positions and grain inventories in the nine-month period ended February 27, 2022, compared to a $118 million net decrease in expense in the same period last year. We recorded $21 million of net gains related to the sale of corporate investments and valuation adjustments in the nine-month period ended February 27, 2022, compared to $78 million in the same period last year. In the nine-month period ended February 27, 2022, we recorded $20 million of integration costs related to our acquisition of Tyson Foods’ pet treats business and $57 million of transaction costs related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl and a European dough business. In addition, we recorded a $20 million recovery related to a Brazil indirect tax item and a $13 million insurance recovery in the nine-month period ended February 27, 2022. We also recorded $3 million of restructuring charges in costs of sales, compared to $2 million in the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
During the nine-month period ended February 27, 2022, cash provided by operations was $2,228 million compared to $2,208 million in the same period last year. The $20 million increase was primarily driven by a $237 million change in current assets and liabilities, partially offset by $170 million in divestitures gain, and a $37 million decrease in net earnings. The $237 million change in current assets and liabilities is primarily driven by a $405 million change in inventories, partially offset by a $169 million change in accounts payable.
30
Cash used by investing activities during the nine-month period ended February 27, 2022, was $1,462 million compared to $332 million for the same period in fiscal 2021. In the first quarter of fiscal 2022, we acquired the Tyson Foods’ pet treats business for an aggregate purchase price of $1.2 billion. During the third quarter of fiscal 2022, we sold our interests in Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl for cash proceeds of $17 million, net of cash divested as part of the sale. We also completed the sale of a European dough business in the third quarter of fiscal 2022 for cash proceeds of $29 million. In addition, we spent $351 million on purchases of land, buildings, and equipment in the first nine months of fiscal 2022 compared to $346 million in the same period last year.
Cash used by financing activities during the nine-month period ended February 27, 2022, was $1,398 million compared to $853 million used in the same period in fiscal 2021. We had $128 million of net debt issuances in the nine-month period ended February 27, 2022, compared to $321 million of net debt issuances in the same period a year ago. We paid $934 million of dividends in the nine-month period ended February 27, 2022, compared to $932 million in the same period last year. We also purchased $550 million of shares of common stock in the nine-month period ended February 27, 2022.
Our sources of liquidity were not materially impacted by the COVID-19 pandemic. As the COVID-19 pandemic evolves, we will continue to evaluate its impact to our sources of liquidity.
As of February 27, 2022, we had $802 million of cash and cash equivalents in foreign jurisdictions. In anticipation of repatriating funds from foreign jurisdictions, we record local country withholding taxes on our international earnings, as applicable. Furthermore, we may repatriate our cash and cash equivalents held by our foreign subsidiaries without such funds being subject to further U.S. income tax liability. Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in those jurisdictions.
The following table details the fee-paid committed and uncommitted credit lines we had available as of February 27, 2022:
In Billions |
Facility Amount |
|
Borrowed Amount | ||
Credit facility expiring: |
|
|
|
|
|
April 2026 |
$ |
2.7 |
|
$ |
- |
Total committed credit facilities |
|
2.7 |
|
|
- |
Uncommitted credit facilities |
|
0.6 |
|
|
0.1 |
Total committed and uncommitted credit facilities |
$ |
3.3 |
|
$ |
0.1 |
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). On June 1, 2021, the floating preferred return rate on GMC’s Class A Interests was reset to the sum of three-month LIBOR plus 160 basis points. The preferred return rate is adjusted every three years through a negotiated agreement with the Class A Interest holder or through a remarketing auction.
We have an option to purchase the Class A Interests for consideration equal to the then current capital account value, plus any unpaid preferred return and the prescribed make-whole amount. If we purchase these interests, any change in the third-party holder’s capital account from its original value will be charged directly to retained earnings and will increase or decrease the net earnings used to calculate EPS in that period.
To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States and Europe. We also have uncommitted and asset-backed credit lines that support our foreign operations.
Certain of our long-term debt agreements, our credit facilities, and our noncontrolling interests contain restrictive covenants. As of February 27, 2022, we were in compliance with all of these covenants.
We have $601 million of long-term debt maturing in the next 12 months that is classified as current, including $500 million of 2.60 percent notes to be redeemed on October 12, 2022, and $100 million of 7.47 percent fixed-rate notes due October 15, 2022. 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.
SIGNIFICANT 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 30, 2021. The accounting policies used in preparing our interim fiscal 2022 Consolidated Financial Statements are the same as those described in our Form 10-K.
31
Our significant 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, redeemable interest, 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 27, 2022, are the same as those described in our Annual Report on Form 10-K for the fiscal year ended May 30, 2021.
During the third quarter of fiscal 2022, we changed our organizational and management structure to streamline our global operations. As a result of these changes, we reassessed our operating segments as well as our reporting units. Under our new organizational structure, our chief operating decision maker assesses performance and makes decisions about resources to be allocated to our segments at the North America Retail, International, Pet, and North America Foodservice operating segment level. See Note 17 for additional information on our operating segments.
With the organizational change, we also reassessed our reporting units one level below the segment level. We considered the new organization structure to be a triggering event that required a subsequent goodwill impairment test of certain reporting units during the third quarter of fiscal 2022. We determined there was no impairment of the goodwill of the impacted reporting units as their related fair values were substantially in excess of the carrying values.
Our annual goodwill and indefinite-lived intangible assets impairment test was performed on the first day of the second quarter of fiscal 2022, and we determined there was no impairment of our intangible assets as their related fair values were substantially in excess of the carrying values, except for the Uncle Toby’s brand intangible asset.
The excess fair value as of the fiscal 2022 test date of the Uncle Toby’s brand intangible asset is as follows:
In Millions |
|
Carrying Value of Intangible Asset |
|
|
Excess Fair Value as of Fiscal 2022 Test Date |
Uncle Toby's |
$ |
55.0 |
|
|
7% |
In addition, while having significant coverage as of our fiscal 2022 assessment date, the Progresso, Green Giant, and EPIC brand intangible assets had risk of decreasing coverage. We will continue to monitor these businesses for potential impairment.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 2020, the Financial Accounting Standards Board (FASB) issued optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The new standard provides expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as LIBOR, to alternative reference rates, if certain criteria are met. The new accounting requirements can be applied as of the beginning of the interim period including March 12, 2020, or any date thereafter, through December 31, 2022. We are in the process of reviewing our contracts and arrangements that will be affected by a discontinued reference rate and are analyzing the impact of this guidance on our results of operations and financial position.
NON-GAAP MEASURES
We have included in this report measures of financial performance that are not defined by GAAP. We believe that these measures provide useful information to investors, and include these measures in other communications to investors.
For each of these non-GAAP financial measures, we are providing below a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure, an explanation of why we believe the non-GAAP measure provides useful information to investors, and any additional material purposes for which our management or Board of Directors uses the non-GAAP measure. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several measures below are presented on an adjusted basis. The adjustments are either items resulting from infrequently occurring events or items that, in management’s judgment, significantly affect the year-to-year assessment of operating results.
The following are descriptions of significant items impacting comparability of our results.
Divestitures gain
Divestitures gain related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl and the sale of a European dough business in fiscal 2022. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
32
Transaction costs
Transaction costs related to the sale of our interests in Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl and the definitive agreements and sale of our European dough businesses in fiscal 2022. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Non-income tax recovery
Recovery related to a Brazil indirect tax item recorded in fiscal 2022.
Acquisition integration costs
Integration costs resulting from the acquisition of Tyson Foods’ pet treats business. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Investment activity, net
Valuation adjustments and the gain on sale of certain corporate investments in fiscal 2022 and fiscal 2021.
Mark-to-market effects
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 6 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Restructuring charges
Restructuring charges for International supply chain optimization actions and previously announced restructuring actions in fiscal 2022. Restructuring charges for previously announced restructuring actions in fiscal 2021. Please see Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Product recall
Product recall adjustment recorded in fiscal 2021 related to our international Green Giant business.
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 53rd week, when applicable, have on year-to-year comparability. A reconciliation of these measures to reported net sales growth rates, the relevant GAAP measures, are included in our Consolidated Results of Operations and Results of Segment Operations discussions in the MD&A above.
33
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. 27, 2022 |
|
|
Feb. 28, 2021 |
| |||||
In Millions |
|
Value |
|
Percent of Net Sales |
|
|
Value |
|
Percent of Net Sales | ||
Operating profit as reported |
$ |
815.3 |
|
18.0 |
% |
|
$ |
826.6 |
|
18.3 |
% |
Divestitures gain |
|
(170.1) |
|
(3.7) |
% |
|
|
- |
|
- |
% |
Transaction costs |
|
8.6 |
|
0.2 |
% |
|
|
- |
|
- |
% |
Non-income tax recovery |
|
0.2 |
|
- |
|
|
|
- |
|
- |
% |
Acquisition integration costs |
|
4.3 |
|
0.1 |
% |
|
|
- |
|
- |
% |
Investment activity, net |
|
(11.1) |
|
(0.2) |
% |
|
|
(59.3) |
|
(1.3) |
% |
Mark-to-market effects |
|
20.0 |
|
0.4 |
% |
|
|
(55.7) |
|
(1.2) |
% |
Restructuring charges |
|
9.3 |
|
0.2 |
% |
|
|
11.7 |
|
0.3 |
% |
Product recall |
|
- |
|
- |
% |
|
|
(7.8) |
|
(0.2) |
% |
Adjusted operating profit |
$ |
676.5 |
|
14.9 |
% |
|
$ |
715.6 |
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-Month Period Ended | ||||||||||
|
|
Feb. 27, 2022 |
|
|
Feb. 28, 2021 |
| |||||
In Millions |
|
Value |
|
Percent of Net Sales |
|
|
Value |
|
Percent of Net Sales | ||
Operating profit as reported |
$ |
2,459.7 |
|
17.4 |
% |
|
$ |
2,596.9 |
|
19.1 |
% |
Divestitures gain |
|
(170.1) |
|
(1.2) |
% |
|
|
- |
|
- |
% |
Transaction costs |
|
56.8 |
|
0.4 |
% |
|
|
- |
|
- |
% |
Non-income tax recovery |
|
(20.4) |
|
(0.1) |
% |
|
|
- |
|
- |
% |
Acquisition integration costs |
|
20.2 |
|
0.1 |
% |
|
|
- |
|
- |
% |
Investment activity, net |
|
(20.9) |
|
(0.1) |
% |
|
|
(78.3) |
|
(0.6) |
% |
Mark-to-market effects |
|
(16.2) |
|
(0.1) |
% |
|
|
(118.0) |
|
(0.9) |
% |
Restructuring charges |
|
7.9 |
|
0.1 |
% |
|
|
13.6 |
|
0.1 |
% |
Product recall |
|
- |
|
- |
% |
|
|
(0.7) |
|
- |
% |
Adjusted operating profit |
$ |
2,317.0 |
|
16.4 |
% |
|
$ |
2,413.6 |
|
17.7 |
% |
Note: Tables may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
34
Adjusted Operating Profit Growth on a Constant-currency Basis
This measure is used in reporting to our Board of Directors and executive management and as a component of the measurement of our performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is the operating profit measure we use to evaluate operating profit performance on a comparable year-to-year basis. The measure is evaluated on a constant-currency basis by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility in foreign currency exchange rates.
Our adjusted operating profit growth on a constant-currency basis is calculated as follows:
|
|
Quarter Ended |
|
|
Nine-Month Period Ended | ||||||||||
|
Feb. 27, 2022 |
|
Feb. 28, 2021 |
Change |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 |
Change | ||||||
Operating profit as reported |
$ |
815.3 |
|
$ |
826.6 |
(1) |
% |
|
$ |
2,459.7 |
|
$ |
2,596.9 |
(5) |
% |
Divestitures gain |
|
(170.1) |
|
|
- |
|
|
|
|
(170.1) |
|
|
- |
|
|
Transaction costs |
|
8.6 |
|
|
- |
|
|
|
|
56.8 |
|
|
- |
|
|
Investment activity, net |
|
(11.1) |
|
|
(59.3) |
|
|
|
|
(20.9) |
|
|
(78.3) |
|
|
Non-income tax recovery |
|
0.2 |
|
|
- |
|
|
|
|
(20.4) |
|
|
- |
|
|
Acquisition integration costs |
|
4.3 |
|
|
- |
|
|
|
|
20.2 |
|
|
- |
|
|
Mark-to-market effects |
|
20.0 |
|
|
(55.7) |
|
|
|
|
(16.2) |
|
|
(118.0) |
|
|
Restructuring charges |
|
9.3 |
|
|
11.7 |
|
|
|
|
7.9 |
|
|
13.6 |
|
|
Product recall |
|
- |
|
|
(7.8) |
|
|
|
|
- |
|
|
(0.7) |
|
|
Adjusted operating profit |
$ |
676.5 |
|
$ |
715.6 |
(5) |
% |
|
$ |
2,317.0 |
|
$ |
2,413.6 |
(4) |
% |
Foreign currency exchange impact |
|
|
|
|
|
Flat |
|
|
|
|
|
|
Flat |
| |
Adjusted operating profit growth, on a constant-currency basis |
|
|
|
|
|
(6) |
% |
|
|
|
|
|
|
(5) |
% |
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. 27, 2022 |
|
Feb. 28, 2021 |
Change |
|
|
Feb. 27, 2022 |
|
Feb. 28, 2021 |
Change |
| ||||
Diluted earnings per share, as reported |
$ |
1.08 |
|
$ |
0.96 |
13 |
% |
|
$ |
3.07 |
|
$ |
3.10 |
(1) |
% |
Divestitures gain |
|
(0.28) |
|
|
- |
|
|
|
|
(0.28) |
|
|
- |
|
|
Transaction costs |
|
0.01 |
|
|
- |
|
|
|
|
0.07 |
|
|
- |
|
|
Non-income tax recovery |
|
- |
|
|
- |
|
|
|
|
(0.02) |
|
|
- |
|
|
Acquisition integration costs |
|
0.01 |
|
|
- |
|
|
|
|
0.03 |
|
|
- |
|
|
Investment activity, net |
|
(0.01) |
|
|
(0.08) |
|
|
|
|
(0.03) |
|
|
(0.10) |
|
|
Mark-to-market effects |
|
0.03 |
|
|
(0.07) |
|
|
|
|
(0.02) |
|
|
(0.15) |
|
|
Restructuring charges |
|
0.02 |
|
|
0.02 |
|
|
|
|
0.01 |
|
|
0.02 |
|
|
Product recall |
|
- |
|
|
(0.01) |
|
|
|
|
- |
|
|
- |
|
|
Adjusted diluted earnings per share |
$ |
0.84 |
|
$ |
0.82 |
2 |
% |
|
$ |
2.82 |
|
$ |
2.88 |
(2) |
% |
Foreign currency exchange impact |
|
|
|
|
|
Flat |
|
|
|
|
|
|
Flat |
| |
Adjusted diluted earnings per share growth, on a constant-currency basis |
|
|
|
|
|
2 |
% |
|
|
|
|
|
|
(2) |
% |
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.
35
Constant-currency After-tax Earnings from Joint Ventures Growth Rates
We believe that this measure provides useful information to investors because it provides transparency to underlying performance of our joint ventures by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.
After-tax earnings from joint ventures growth rates on a constant-currency basis are calculated as follows:
|
Percentage Change in After-Tax Earnings from Joint Ventures as Reported |
Impact of Foreign Currency Exchange |
Percentage Change in After-Tax Earnings from Joint Ventures on Constant-Currency Basis | ||||
Quarter Ended Feb. 27, 2022 |
|
154 |
% |
(12) |
pts |
167 |
% |
Nine-Month Period Ended Feb. 27, 2022 |
|
3 |
% |
(2) |
pts |
5 |
% |
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. 27, 2022 |
|
(2) |
% |
Flat |
|
(2) |
% |
Nine-Month Period Ended Feb. 27, 2022 |
|
5 |
% |
4 |
pts |
1 |
% |
Note: Table may not foot due to rounding. |
|
|
|
|
|
|
|
Constant-currency Segment Operating Profit Growth Rates
We believe that this measure provides useful information to investors because it provides transparency to underlying performance of our segments by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency exchange markets.
36
Our segments’ operating profit growth rates on a constant-currency basis are calculated as follows:
|
|
Quarter Ended Feb. 27, 2022 | |||||
|
|
Percentage Change in Operating Profit as Reported |
Impact of Foreign Currency Exchange |
Percentage Change in Operating Profit on Constant-Currency Basis | |||
North America Retail |
|
(3) |
% |
Flat |
|
(3) |
% |
International |
|
(13) |
% |
2 |
pts |
(16) |
% |
Pet |
|
8 |
% |
Flat |
|
8 |
% |
North America Foodservice |
|
(13) |
% |
Flat |
|
(13) |
% |
|
|
|
|
|
|
|
|
|
|
Nine-Month Period Ended Feb. 27, 2022 | |||||
|
|
Percentage Change in Operating Profit as Reported |
Impact of Foreign Currency Exchange |
Percentage Change in Operating Profit on Constant-Currency Basis | |||
North America Retail |
|
(7) |
% |
Flat |
|
(7) |
% |
International |
|
(14) |
% |
4 |
pts |
(18) |
% |
Pet |
|
15 |
% |
Flat |
|
15 |
% |
North America Foodservice |
|
27 |
% |
Flat |
|
27 |
% |
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. 27, 2022 |
|
Feb. 28, 2021 |
|
Feb. 27, 2022 |
|
Feb. 28, 2021 | ||||||||||||
In Millions (Except Per Share Data) |
Pretax Earnings (a) |
Income Taxes |
|
Pretax Earnings (a) |
Income Taxes |
|
Pretax Earnings (a) |
Income Taxes |
|
Pretax Earnings (a) |
Income Taxes | ||||||||
As reported |
$ |
755.9 |
$ |
123.2 |
|
$ |
754.0 |
$ |
162.0 |
|
$ |
2,269.0 |
$ |
451.8 |
|
$ |
2,378.8 |
$ |
522.2 |
Divestitures gain |
|
(170.1) |
|
0.4 |
|
|
- |
|
- |
|
|
(170.1) |
|
0.4 |
|
|
- |
|
- |
Transaction costs |
|
8.6 |
|
(1.2) |
|
|
- |
|
- |
|
|
56.8 |
|
11.2 |
|
|
- |
|
- |
Investment activity, net |
|
(11.1) |
|
(0.2) |
|
|
(59.3) |
|
(11.7) |
|
|
(20.9) |
|
0.3 |
|
|
(78.3) |
|
(16.1) |
Non-income tax recovery |
|
0.2 |
|
0.1 |
|
|
- |
|
- |
|
|
(20.4) |
|
(6.9) |
|
|
- |
|
- |
Acquisition integration costs |
|
4.3 |
|
1.0 |
|
|
- |
|
- |
|
|
20.2 |
|
4.6 |
|
|
- |
|
- |
Mark-to-market effects |
|
20.0 |
|
4.6 |
|
|
(55.7) |
|
(12.8) |
|
|
(16.2) |
|
(3.7) |
|
|
(118.0) |
|
(27.1) |
Restructuring charges |
|
9.3 |
|
1.7 |
|
|
11.7 |
|
2.0 |
|
|
7.9 |
|
3.6 |
|
|
13.6 |
|
2.5 |
Product recall |
|
- |
|
- |
|
|
(7.8) |
|
(0.9) |
|
|
- |
|
- |
|
|
(0.7) |
|
(0.1) |
As adjusted |
$ |
617.1 |
$ |
129.5 |
|
$ |
643.1 |
$ |
138.6 |
|
$ |
2,126.3 |
$ |
461.3 |
|
$ |
2,195.5 |
$ |
481.4 |
Effective tax rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
|
|
16.3% |
|
|
|
|
21.5% |
|
|
|
|
19.9% |
|
|
|
|
22.0% |
As adjusted |
|
|
|
21.0% |
|
|
|
|
21.6% |
|
|
|
|
21.7% |
|
|
|
|
21.9% |
Sum of adjustment to income taxes |
|
|
$ |
6.4 |
|
|
|
$ |
(23.4) |
|
|
|
$ |
9.5 |
|
|
|
$ |
(40.8) |
Average number of common shares - diluted EPS |
|
|
|
612.4 |
|
|
|
|
619.4 |
|
|
|
|
613.5 |
|
|
|
|
619.6 |
Impact of income tax adjustments on adjusted diluted EPS |
|
|
$ |
(0.01) |
|
|
|
$ |
0.03 |
|
|
|
$ |
(0.02) |
|
|
|
$ |
0.06 |
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.
37
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.
COVID-19. Coronavirus disease (COVID-19) is an infectious disease caused by a novel coronavirus. In March 2020, the World Health Organization declared COVID-19 a global pandemic.
Derivatives. Financial instruments such as futures, swaps, options, and forward contracts that we use to manage our risk arising from changes in commodity prices, interest rates, foreign exchange rates, and 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.
LIBOR. London Interbank Offered Rate.
38
Mark-to-market. The act of determining a value for financial instruments, commodity contracts, and related assets or liabilities based on the current market price for that item.
Net 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 53rd fiscal week, when applicable.
Project-related costs. Costs incurred related to our restructuring initiatives not included in restructuring charges.
Redeemable interest. Interest of subsidiaries held by a third party that can be redeemed outside of our control and therefore cannot be classified as a noncontrolling interest in equity.
Reporting unit. An operating segment or a business one level below an operating segment.
Strategic Revenue Management (SRM). A company-wide capability focused on generating sustainable benefits from net price realization and mix by identifying and executing against specific opportunities to apply tools including pricing, sizing, mix management, and promotion optimization across each of our businesses.
Supply chain input costs. Costs incurred to produce and deliver product, including costs for ingredients and conversion, inventory management, logistics, and warehousing.
Translation adjustments. The impact of the conversion of our foreign affiliates’ financial statements to United States dollars for the purpose of consolidating our financial statements.
Variable interest entities (VIEs). A legal structure that is used for business purposes that either (1) does not have equity investors that have voting rights and share in all the entity’s profits and losses or (2) has equity investors that do not provide sufficient financial resources to support the entity’s activities.
Working capital. Current assets and current liabilities, all as of the last day of our fiscal year.
39
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations and assumptions. We also may make written or oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and in our reports to stockholders.
The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “plan,” “project,” or similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those currently anticipated or projected. We wish to caution you not to place undue reliance on any such forward-looking statements.
In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important factors that could affect our financial performance and could cause our actual results in future periods to differ materially from any current opinions or statements.
Our future results could be affected by a variety of factors, such as: the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the supply chain, including any impact of the COVID-19 pandemic; 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 significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, energy, and transportation; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war.
You should also consider the risk factors that we identify in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended May 30, 2021 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 27, 2022, was as follows:
In Millions |
|
One-day Loss in Fair Value |
|
|
Change During Nine-Month Period Ended Feb. 27, 2022 |
|
Analysis of Change |
Interest rate instruments |
$ |
37 |
|
$ |
- |
|
Immaterial |
Foreign currency instruments |
|
21 |
|
|
(5) |
|
Lower Exchange Rate Volatility |
Commodity instruments |
|
10 |
|
|
6 |
|
Larger Portfolio & Higher Market Volatility |
Equity instruments |
|
3 |
|
|
- |
|
Immaterial |
For additional information, see Item 7A of Part II of our Annual Report on Form 10-K for the fiscal year ended May 30, 2021.
40
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 27, 2022, 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 27, 2022 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 27, 2022:
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 29, 2021 - January 2, 2022 |
1,123,376 |
$ |
65.37 |
|
1,123,376 |
|
27,146,154 |
January 3, 2022 - January 30, 2022 |
858,678 |
|
68.32 |
|
858,678 |
|
26,287,476 |
January 31, 2022 - February 27, 2022 |
636,699 |
|
67.83 |
|
636,699 |
|
25,650,777 |
Total |
2,618,753 |
$ |
66.93 |
|
2,618,753 |
|
25,650,777 |
(a)The total number of shares purchased includes shares of common stock withheld for the payment of withholding taxes upon the distribution of deferred option units.
(b)On May 6, 2014, our Board of Directors approved an authorization for the repurchase of up to 100,000,000 shares of our common stock. 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.
41
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 27, 2022, formatted in Inline Extensible Business Reporting Language: (i) Consolidated Statements of Earnings; (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Total Equity and Redeemable Interest; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. |
104 |
Cover Page, formatted in Inline Extensible Business Reporting Language and contained in Exhibit 101. |
42
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 23, 2022 |
/s/ Mark A. Pallot |
|
Mark A. Pallot |
|
Vice President, Chief Accounting Officer |
|
(Principal Accounting Officer and Duly Authorized Officer) |
43
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 23, 2022
/s/ Jeffrey L. Harmening
Jeffrey L. Harmening
Chief Executive Officer
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 23, 2022
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer
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 27, 2022 (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 23, 2022
/s/ Jeffrey L. Harmening
Jeffrey L. Harmening
Chief Executive Officer
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 27, 2022 (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 23, 2022
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer