# Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

☑ ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934	FOR	THE	FISCAL	YEAR	ENDED May	26,	2019

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

# GENERAL	MILLS,	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

Number	One	General	Mills	Boulevard Minneapolis,	Minnesota (Address	of	principal	executive	offices)

(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<br>on	which	registered |
| :--- | :--- | :--- |
| Common\tStock,\t$.10\tpar\tvalue | GIS | New\tYork\tStock\tExchange |
| Floating\tRate\tNotes\tdue\t2020 | GIS20A | New\tYork\tStock\tExchange |
| 2.100%\tNotes\tdue\t2020 | GIS20 | New\tYork\tStock\tExchange |
| 1.000%\tNotes\tdue\t2023 | GIS23A | New\tYork\tStock\tExchange |
| 1.500%\tNotes\tdue\t2027 | GIS27 | New\tYork\tStock\tExchange |

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

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

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.	Yes	☐	No	☑

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).	Yes	☑	No	☐

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

		Large	accelerated	filer	☑

Accelerated	filer	☐ Non-accelerated	filer	☐ Smaller	reporting	company	☐

Emerging	growth	company	☐

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

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).

Aggregate	market	value	of	Common	Stock	held	by	non-affiliates	of	the	registrant,	based	on	the	closing	price	of	$43.37	per	share	as	reported	on	the	New	York	Stock Exchange	on	November	25,	2018	(the	last	business	day	of	the	registrant's	most	recently	completed	second	fiscal	quarter):	$25,879.8	million.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	Proxy	Statement	for	its	2019	Annual	Meeting	of	Shareholders	are	incorporated	by	reference	into	Part	III.

|  |  | Page |
| :--- | :--- | :--- |
| Part\tI |  |  |
| Item\t1 | Business | 3 |
| Item\t1A | Risk\tFactors | 8 |
| Item\t1B | Unresolved\tStaff\tComments | 15 |
| Item\t2 | Properties | 15 |
| Item\t3 | Legal\tProceedings | 17 |
| Item\t4 | Mine\tSafety\tDisclosures | 17 |
| Part\tII |  |  |
| Item\t5 | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 17 |
| Item\t6 | Selected\tFinancial\tData | 18 |
| Item\t7 | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 19 |
| Item\t7A | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 48 |
| Item\t8 | Financial\tStatements\tand\tSupplementary\tData | 50 |
| Item\t9 | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | \t109 |
| Item\t9A | Controls\tand\tProcedures | \t109 |
| Item\t9B | Other\tInformation | \t110 |
| Part\tIII |  |  |
| Item\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | \t110 |
| Item\t11 | Executive\tCompensation | \t111 |
| Item\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | \t111 |
| Item\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | \t111 |
| Item\t14 | Principal\tAccounting\tFees\tand\tServices | \t111 |
| Part\tIV |  |  |
| Item\t15 | Exhibits,\tFinancial\tStatement\tSchedules | \t112 |
| Item\t16 | Form\t10-K\tSummary | \t116 |
| Signatures |  | \t117 |

# PART	I

# ITEM	1				Business

General	Mills,	Inc.	was	incorporated	in	Delaware	in	1928.	The	terms	"General	Mills,"	"Company,"	"registrant,"	"we,"	"us,"	and	"our"	mean	General	Mills, Inc.	and	all	subsidiaries	included	in	the	Consolidated	Financial	Statements	in	Item	8	of	this	report	unless	the	context	indicates	otherwise.

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

# COMPANY	OVERVIEW

We	are	a	leading	global	manufacturer	and	marketer	of	branded	consumer	foods	sold	through	retail	stores.	We	also	are	a	leading	supplier	of	branded	and unbranded	food	products	to	the	North	American	foodservice	and	commercial	baking	industries.	Following	our	acquisition	of	Blue	Buffalo	Pet	Products,	Inc. (Blue	Buffalo)	in	fiscal	2018,	we	are	also	a	leading	manufacturer	and	marketer	in	the	wholesome	natural	pet	food	category.	We	manufacture	our	products	in 13	countries	and	market	them	in	more	than	100	countries.	In	addition	to	our	consolidated	operations,	we	have	50	percent	interests	in	two	strategic	joint ventures	that	manufacture	and	market	food	products	sold	in	more	than	130	countries	worldwide.

We	continue	to	pursue	our	Consumer	First	strategy	and	execute	against	our	global	growth	framework:	1)	competing	effectively	on	all	brands	and	across	all geographies	through	strong	innovation,	effective	consumer	marketing,	and	excellent	in-store	execution;	2)	accelerating	growth	on	our	four	differential growth	platforms,	which	are	Häagen-Dazs	ice	cream,	snack	bars,	Old	El	Paso	Mexican	food,	and	our	portfolio	of	natural	and	organic	food	brands;	and	3) reshaping	our	portfolio	through	growth-enhancing	acquisitions	and	divestitures.	We	believe	executing	against	this	growth	framework	should	result	in	long- term	value	creation	for	our	shareholders.

As	part	of	our	portfolio	shaping	strategy,	in	fiscal	2018,	we	acquired	Blue	Buffalo	for	an	aggregate	purchase	price	of	$8.0	billion.	We	financed	the transaction	with	a	combination	of	$6.0	billion	in	debt,	$1.0	billion	in	equity,	and	cash	on	hand.	The	consolidated	results	of	Blue	Buffalo	are	reported	as	our Pet	operating	segment	on	a	one-month	lag.	In	fiscal	2018,	our	Consolidated	Statements	of	Earnings	did	not	include	Pet	operating	segment	results.	For further	information	on	the	acquisition	of	Blue	Buffalo,	please	see	Note	3	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

We	manage	and	review	the	financial	results	of	our	business	under	five	operating	segments:	North	America	Retail;	Convenience	Stores	&	Foodservice; Europe	&	Australia;	Asia	&	Latin	America;	and	Pet.	See	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	(MD&A) in	Item	7	of	this	report	for	a	description	of	our	segments.

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

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

•ready-to-eat	cereal;

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

# •yogurt;

•pet	food;

# •super-premium	ice	cream;

•baking	mixes	and	ingredients;	and

# •refrigerated	and	frozen	dough.

Our	Cereal	Partners	Worldwide	(CPW)	joint	venture	with	Nestlé	S.A.	(Nestlé)	competes	in	the	ready-to-eat	cereal	category	in	markets	outside	North America,	and	our	Häagen-Dazs	Japan,	Inc.	(HDJ)	joint	venture	competes	in	the	super-premium	ice	cream	category	in	Japan.	For	net	sales	contributed	by each	class	of	similar	products,	please	see	Note	16	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

Customers.	Our	primary	customers	are	grocery	stores,	mass	merchandisers,	membership	stores,	natural	food	chains,	drug,	dollar	and	discount	chains, e-commerce	retailers,	commercial	and	noncommercial	foodservice	distributors	and	operators,	restaurants,	convenience	stores,	and	pet	specialty	stores.	We generally	sell	to	these	customers	through	our	direct	sales	force.	We	use	broker	and	distribution	arrangements	for	certain	products	and	to	serve	certain	types of	customers.	For	further	information	on	our	customer	credit	and	product	return	practices,	please	refer	to	Note	2	to	the	Consolidated	Financial	Statements	in Item	8	of	this	report.	During	fiscal	2019,	Walmart	Inc.	and	its	affiliates	(Walmart)	accounted	for	20	percent	of	our	consolidated	net	sales	and	31	percent	of net	sales	of	our	North	America	Retail	segment.	No	other	customer	accounted	for	10	percent	or	more	of	our	consolidated	net	sales.	For	further	information on	significant	customers,	please	refer	to	Note	7	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

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

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

us	efficient	access	to,	and	more	informed	knowledge	of,	various	commodity	markets,	principally	wheat	and	oats.	This	operation	holds	physical	inventories that	are	carried	at	net	realizable	value	and	uses	derivatives	to	manage	its	net	inventory	position	and	minimize	its	market	exposures.

# RESEARCH	AND	DEVELOPMENT

Our	research	and	development	resources	are	focused	on	new	product	development,	product	improvement,	process	design	and	improvement,	packaging,	and exploratory	research	in	new	business	and	technology	areas.	Research	and	development	expenditures	were	$222	million	in	fiscal	2019	and	$219	million	in fiscal	2018.

# TRADEMARKS	AND	PATENTS

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

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

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

The	Yoplait	trademark	and	other	related	trademarks	are	owned	by	Yoplait	Marques	SNC,	an	entity	in	which	we	own	a	50	percent	interest.	These	marks	are licensed	exclusively	to	Yoplait	SAS,	an	entity	in	which	we	own	a	51	percent	interest.	Yoplait	SAS	licenses	these	trademarks	to	its	franchisees.	The	Liberté trademark	and	other	related	trademarks	are	owned	by	Liberté	Marques	Sàrl,	an	entity	in	which	we	own	a	50	percent	interest.

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

# SEASONALITY

In	general,	demand	for	our	products	is	evenly	balanced	throughout	the	year.	However,	within	our	North	America	Retail	segment	demand	for	refrigerated dough,	frozen	baked	goods,	and	baking	products	is	stronger	in	the	fourth	calendar	quarter.	Demand	for	Progresso	soup	is	higher	during	the	fall	and	winter months.	Internationally,	within

our	Europe	&	Australia	and	Asia	&	Latin	America	segments,	demand	for	Häagen-Dazs	ice	cream	is	higher	during	the	summer	months	and	demand	for baking	mix	and	dough	products	increases	during	winter	months.	Due	to	the	offsetting	impact	of	these	demand	trends,	as	well	as	the	different	seasons	in	the northern	and	southern	hemispheres,	our	international	segments'	net	sales	are	generally	evenly	balanced	throughout	the	year.

# BACKLOG

Orders	are	generally	filled	within	a	few	days	of	receipt	and	are	subject	to	cancellation	at	any	time	prior	to	shipment.	The	backlog	of	any	unfilled	orders	as	of May	26,	2019,	was	not	material.

# WORKING	CAPITAL

A	description	of	our	working	capital	is	included	in	the	Liquidity	section	of	MD&A	in	Item	7	of	this	report.	Our	product	return	practices	are	described	in Note	2	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

# EMPLOYEES

# QUALITY	AND	SAFETY	REGULATION

The	manufacture	and	sale	of	consumer	and	pet	food	products	is	highly	regulated.	In	the	United	States,	our	activities	are	subject	to	regulation	by	various federal	government	agencies,	including	the	Food	and	Drug	Administration,	Department	of	Agriculture,	Federal	Trade	Commission,	Department	of Commerce,	and	Environmental	Protection	Agency,	as	well	as	various	state	and	local	agencies.	Our	business	is	also	regulated	by	similar	agencies	outside	of the	United	States.

# ENVIRONMENTAL	MATTERS

As	of	May	26,	2019,	we	were	involved	with	two	active	cleanup	sites	associated	with	the	alleged	or	threatened	release	of	hazardous	substances	or	wastes located	in	Minneapolis,	Minnesota	and	Moonachie,	New	Jersey.

Our	operations	are	subject	to	the	Clean	Air	Act,	Clean	Water	Act,	Resource	Conservation	and	Recovery	Act,	Comprehensive	Environmental	Response, Compensation,	and	Liability	Act,	and	the	Federal	Insecticide,	Fungicide,	and	Rodenticide	Act,	and	all	similar	state,	local,	and	foreign	environmental	laws and	regulations	applicable	to	the	jurisdictions	in	which	we	operate.

Based	on	current	facts	and	circumstances,	we	believe	that	neither	the	results	of	our	environmental	proceedings	nor	our	compliance	in	general	with environmental	laws	or	regulations	will	have	a	material	adverse	effect	upon	our	capital	expenditures,	earnings,	or	competitive	position.

# INFORMATION	ABOUT	OUR	EXECUTIVE	OFFICERS

The	section	below	provides	information	regarding	our	executive	officers	as	of	June	27,	2019:

Richard	C.	Allendorf,	age	58,	is	General	Counsel	and	Secretary.	Mr.	Allendorf	joined	General	Mills	in	2001	from	The	Pillsbury	Company.	He	was promoted	to	Vice	President,	Deputy	General	Counsel	in	2010,	first	overseeing	the	legal	affairs	of	the	U.S.	Retail	segment	and	Consumer	Food	Sales	and then,	in	2012,	overseeing	the	legal	affairs	of	the	International	segment	and	Global	Ethics	and	Compliance.	He	was	named	to	his	present	position	in	February 2015.	Prior	to	joining	General	Mills,	he	practiced	law	with	the	Shearman	and	Sterling	and	Mackall,	Crounse	and	Moore	law	firms.	He	was	in	finance	with General	Electric	prior	to	his	legal	career.

Jodi	Benson,	age	54,	is	Chief	Innovation,	Technology	and	Quality	Officer.	Ms.	Benson	joined	General	Mills	in	2001	from	The	Pillsbury	Company.	She held	a	variety	of	positions	before	becoming	the	leader	of	our	One	Global	Dairy	Platform	from	2011	to	March	2016.	She	was	named	Vice	President	for	our International	business	segment	from	April	2016	to	March	2017,	and	Vice	President	of	the	Global	Innovation,	Technology,	and	Quality	Capabilities	Group from	April	2017	to	July	2018.	She	was	named	to	her	current	position	in	August	2018.

William	W.	Bishop,	Jr.,	age	48,	is	Group	President,	Pet.	Mr.	Bishop	joined	General	Mills	from	Blue	Buffalo	in	April	2018.	Prior	to	joining	General	Mills, Mr.	Bishop	served	as	Chief	Executive	Officer	of	Blue	Buffalo	since	January	2017.	From	2003	until	January	2017,	Mr.	Bishop	served	as	Chief	Operating Officer	of	Blue	Buffalo	and	was	named	President	in	2012.	He	co-founded	Blue	Buffalo	in	2002.	He	was	named	to	his	present	position	in	April	2018.

Kofi	A.	Bruce,	age	49,	is	Vice	President,	Controller.	Mr.	Bruce	joined	General	Mills	in	2009	as	Vice	President,	Treasurer	after	serving	in	a	variety	of	senior management	positions	with	Ecolab	and	Ford	Motor	Company.	He	served	as	Treasurer	until	2010	when	he	was	named	Vice	President,	Finance	for	Yoplait. Mr.	Bruce	reassumed	his	role	as	Vice	President,	Treasurer	from	2012	until	July	2014	when	he	was	named	Vice	President,	Finance	for	Convenience	Stores	& Foodservice.	He	served	in	that	role	until	he	was	named	to	his	present	position	in	August	2017.

John	R.	Church,	age	53,	is	Chief	Supply	Chain	Officer	and	Global	Business	Solutions	Officer.	Mr.	Church	joined	General	Mills	in	1988	as	a	Product Developer	in	the	Big	G	cereals	division	and	held	various	positions	before	becoming	Vice	President,	Engineering	in	2003.	In	2005,	his	role	was	expanded	to include	development	of	the	Company's	strategy	for	the	global	sourcing	of	raw	materials	and	manufacturing	capabilities.	He	was	named	Vice	President, Supply	Chain	Operations	in	2007,	Senior	Vice	President,	Supply	Chain	in	2008,	Executive	Vice	President,	Supply	Chain	in	2013,	and	to	his	present	position in	June	2017.

Jeffrey	L.	Harmening,	age	52,	is	Chairman	of	the	Board	and	Chief	Executive	Officer.	Mr.	Harmening	joined	General	Mills	in	1994	and	served	in	various marketing	roles	in	the	Betty	Crocker,	Yoplait,	and	Big	G	cereal	divisions.	He	was	named	Vice	President,	Marketing	for	CPW	in	2003	and	Vice	President	of the	Big	G	cereal	division	in	2007.	In	2011,	he	was	promoted	to	Senior	Vice	President	for	the	Big	G	cereal	division.	Mr.	Harmening	was	appointed	Senior Vice	President,	Chief	Executive	Officer	of	CPW	in	2012.	Mr.	Harmening	returned	from	CPW	in	2014	and	was	named	Executive	Vice	President,	Chief Operating	Officer,	U.S.	Retail.	He	became	President,	Chief	Operating	Officer	in	July	2016.	He	was	named	Chief	Executive	Officer	in	June	2017	and Chairman	of	the	Board	in	January	2018.	Mr.	Harmening	is	a	director	of	The	Toro	Company.

Donal	L.	Mulligan,	age	58,	is	Chief	Financial	Officer.	Mr.	Mulligan	joined	General	Mills	in	2001	from	The	Pillsbury	Company.	He	served	as	Vice President,	Financial	Operations	for	our	International	division	until	2004,	when	he	was	named	Vice	President,	Financial	Operations	for	Operations	and Technology.	Mr.	Mulligan	was	appointed	Treasurer	in	2006	and	Senior	Vice	President,	Financial	Operations	in	2007.	He	was	elected	to	his	present	position in	2007.	From	1987	to	1998,	he	held	several	international	positions	at	PepsiCo,	Inc.	and	YUM!	Brands,	Inc.	Mr.	Mulligan	is	a	director	of	Tennant Company.

Jon	J.	Nudi,	age	49,	is	Group	President,	North	America	Retail.	Mr.	Nudi	joined	General	Mills	in	1993	as	a	Sales	Representative	and	held	a	variety	of	roles in	Consumer	Foods	Sales.	In	2005,	he	moved	into	marketing	roles	in	the	Meals	division	and	was	elected	Vice	President	in	2007.	Mr.	Nudi	was	named	Vice President;	President,	Snacks,	in	2010,	Senior	Vice	President,	President,	Europe/Australasia	in	2014,	and	Senior	Vice	President;	President,	U.S.	Retail	in September	2016.	He	was	named	to	his	present	position	in	January	2017.

Shawn	P.	O'Grady,	age	55,	is	Group	President,	Convenience	Stores	&	Foodservice	and	Chief	Revenue	Development	Officer.	Mr.	O'Grady	joined	General Mills	in	1990	and	held	several	marketing	roles	in	the	Snacks,	Meals,	and	Big	G	cereal	divisions.	He	was	promoted	to	Vice	President	in	1998	and	held marketing	positions	in	the	Betty	Crocker	and	Pillsbury	USA	divisions.	In	2004,	he	moved	into	Consumer	Foods	Sales,	becoming	Vice

President,	President,	U.S.	Retail	Sales	in	2007,	Senior	Vice	President,	President,	Consumer	Foods	Sales	Division	in	2010,	and	Senior	Vice	President,

President,	Sales	&	Channel	Development	in	2012.	He	was	named	to	his	current	position	in	January	2017.

Ivan	Pollard,	age	56,	is	Global	Chief	Marketing	Officer.	Mr.	Pollard	assumed	his	current	role	in	July	2017	when	he	joined	General	Mills	from	The	Coca- Cola	Company.	At	Coca-Cola,	from	2011	to	2014,	Mr.	Pollard	served	as	Vice	President,	Global	Connections	until	he	was	promoted	to	Senior	Vice President,	Strategic	Marketing,	a	role	he	held	until	June	2017.	Prior	to	joining	The	Coca-Cola	Company,	Mr.	Pollard	was	a	global	partner	at	Naked Communications,	a	connections	planning	company.	His	prior	communications	planning	experience	included	work	at	the	BMP,	DDP	Needham,	and Wieden+Kennedy	advertising	agencies.

Bethany	Quam,	age	48,	is	Group	President,	Europe	&	Australia.	Ms.	Quam	joined	General	Mills	in	1993	and	held	a	variety	of	positions	before	becoming Vice	President,	Strategic	Planning	in	2007.	She	was	promoted	to	Vice	President,	Field	Sales,	Channels	in	2012,	Vice	President;	President,	Convenience Stores	&	Foodservice	in	2014,	and	Senior	Vice	President;	President,	Europe	&	Australia	in	August	2016.	She	was	named	to	her	current	position	in	January 2017.

Sean	Walker	age	53,	is	Group	President,	Asia	&	Latin	America.	Mr.	Walker	joined	General	Mills	in	1989	and	held	a	variety	of	positions	before	becoming Vice	President,	President	of	Latin	America	in	2009.	He	was	named	Senior	Vice	President,	President	Latin	America	in	2012	and	Senior	Vice	President, Corporate	Strategy	in	September	2016.	He	was	named	to	his	current	position	in	February	2019.

Jacqueline	Williams-Roll,	age	50,	is	Chief	Human	Resources	Officer.	Ms.	Williams-Roll	joined	General	Mills	in	1995.	She	held	human	resources leadership	roles	in	Supply	Chain,	Finance,	Marketing,	and	Organization	Effectiveness,	and	she	also	worked	a	large	part	of	her	career	on	businesses	outside of	the	United	States.	She	was	named	Vice	President,	Human	Resources,	International	in	2010,	and	then	promoted	to	Senior	Vice	President,	Human Resources	Operations	in	2013.	She	was	named	to	her	present	position	in	September	2014.	Prior	to	joining	General	Mills,	she	held	sales	and	management roles	with	Jenny	Craig	International.

# WEBSITE	ACCESS

Our	website	is	www.GeneralMills.com.	We	make	available,	free	of	charge	in	the	"Investors"	portion	of	this	website,	annual	reports	on	Form	10-K,	quarterly reports	on	Form	10-Q,	current	reports	on	Form	8-K,	and	amendments	to	those	reports	filed	or	furnished	pursuant	to	Section	13(a)	or	15(d)	of	the	Securities Exchange	Act	of	1934	(1934	Act)	as	soon	as	reasonably	practicable	after	we	electronically	file	such	material	with,	or	furnish	it	to,	the	Securities	and Exchange	Commission	(SEC).	Reports	of	beneficial	ownership	filed	pursuant	to	Section	16(a)	of	the	1934	Act	are	also	available	on	our	website.

# ITEM	1A				Risk	Factors

Our	business	is	subject	to	various	risks	and	uncertainties.	Any	of	the	risks	described	below	could	materially,	adversely	affect	our	business,	financial condition,	and	results	of	operations.

# The	categories	in	which	we	participate	are	very	competitive,	and	if	we	are	not	able	to	compete	effectively,	our	results	of	operations	could	be adversely	affected.

The	consumer	and	pet	food	categories	in	which	we	participate	are	very	competitive.	Our	principal	competitors	in	these	categories	are	manufacturers,	as	well as	retailers	with	their	own	branded	and	private	label	products.	Competitors	market	and	sell	their	products	through	brick-and-mortar	stores	and	e-commerce. All	of	our	principal	competitors	have	substantial	financial,	marketing,	and	other	resources.	In	most	product	categories,	we	compete	not	only	with	other widely	advertised	branded	products,	but	also	with	regional	brands	and	with	generic	and	private	label	products	that	are	generally	sold	at	lower	prices. Competition	in	our	product	categories	is	based	on

product	innovation,	product	quality,	price,	brand	recognition	and	loyalty,	effectiveness	of	marketing,	promotional	activity,	convenient	ordering	and	delivery to	the	consumer,	and	the	ability	to	identify	and	satisfy	consumer	preferences.	If	our	large	competitors	were	to	seek	an	advantage	through	pricing	or promotional	changes,	we	could	choose	to	do	the	same,	which	could	adversely	affect	our	margins	and	profitability.	If	we	did	not	do	the	same,	our	revenues and	market	share	could	be	adversely	affected.	Our	market	share	and	revenue	growth	could	also	be	adversely	impacted	if	we	are	not	successful	in	introducing innovative	products	in	response	to	changing	consumer	demands	or	by	new	product	introductions	of	our	competitors.	If	we	are	unable	to	build	and	sustain brand	equity	by	offering	recognizably	superior	product	quality,	we	may	be	unable	to	maintain	premium	pricing	over	generic	and	private	label	products.

# We	may	be	unable	to	maintain	our	profit	margins	in	the	face	of	a	consolidating	retail	environment.

There	has	been	significant	consolidation	in	the	grocery	industry,	resulting	in	customers	with	increased	purchasing	power.	In	addition,	large	retail	customers may	seek	to	use	their	position	to	improve	their	profitability	through	improved	efficiency,	lower	pricing,	increased	reliance	on	their	own	brand	name products,	increased	emphasis	on	generic	and	other	economy	brands,	and	increased	promotional	programs.	If	we	are	unable	to	use	our	scale,	marketing expertise,	product	innovation,	knowledge	of	consumers'	needs,	and	category	leadership	positions	to	respond	to	these	demands,	our	profitability	and	volume growth	could	be	negatively	impacted.	In	addition,	the	loss	of	any	large	customer	could	adversely	affect	our	sales	and	profits.	In	fiscal	2019,	Walmart accounted	for	20	percent	of	our	consolidated	net	sales	and	31	percent	of	net	sales	of	our	North	America	Retail	segment.	PetSmart	and	Petco	accounted	for 36	percent	and	14	percent,	respectively,	of	our	Pet	segment's	net	sales	in	fiscal	2019.	National	pet	superstore	chains	have	experienced	reduced	store	traffic. If	national	pet	superstore	chains	continue	to	experience	reduced	store	traffic,	or	experience	any	operational	difficulties,	our	Pet	segment	operating	results may	be	adversely	affected.	For	more	information	on	significant	customers,	please	see	Note	7	to	the	Consolidated	Financial	Statements	in	Item	8	of	this report.

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

The	principal	raw	materials	that	we	use	are	commodities	that	experience	price	volatility	caused	by	external	conditions	such	as	weather,	product	scarcity, limited	sources	of	supply,	commodity	market	fluctuations,	currency	fluctuations,	trade	tariffs,	and	changes	in	governmental	agricultural	and	energy	policies and	regulations.	Commodity	price	changes	may	result	in	unexpected	increases	in	raw	material,	packaging,	and	energy	costs.	If	we	are	unable	to	increase productivity	to	offset	these	increased	costs	or	increase	our	prices,	we	may	experience	reduced	margins	and	profitability.	We	do	not	fully	hedge	against changes	in	commodity	prices,	and	the	risk	management	procedures	that	we	do	use	may	not	always	work	as	we	intend.

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

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

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

Our	future	success	and	earnings	growth	depend	in	part	on	our	ability	to	be	efficient	in	the	production	and	manufacture	of	our	products	in	highly	competitive markets.	Gaining	additional	efficiencies	may	become	more

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

# Disruption	of	our	supply	chain	could	adversely	affect	our	business.

Our	ability	to	make,	move,	and	sell	products	is	critical	to	our	success.	Damage	or	disruption	to	raw	material	supplies	or	our	manufacturing	or	distribution capabilities	due	to	weather,	including	any	potential	effects	of	climate	change,	natural	disaster,	fire,	terrorism,	cyber-attack,	pandemic,	strikes,	import/export restrictions,	or	other	factors	could	impair	our	ability	to	manufacture	or	sell	our	products.	Many	of	our	product	lines	are	manufactured	at	a	single	location. Our	suppliers'	policies	and	practices	can	damage	our	reputation	and	the	quality	and	safety	of	our	products.	Failure	to	take	adequate	steps	to	mitigate	the likelihood	or	potential	impact	of	such	events,	or	to	effectively	manage	such	events	if	they	occur,	particularly	when	a	product	is	sourced	from	a	single supplier	or	location,	could	adversely	affect	our	business	and	results	of	operations,	as	well	as	require	additional	resources	to	restore	our	supply	chain.

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

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

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

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

# We	may	be	unable	to	anticipate	changes	in	consumer	preferences	and	trends,	which	may	result	in	decreased	demand	for	our	products.

Our	success	depends	in	part	on	our	ability	to	anticipate	the	tastes,	eating	habits,	and	purchasing	behaviors	of	consumers	and	to	offer	products	that	appeal	to their	preferences	in	channels	where	they	shop.	Consumer	preferences	and	category-level	consumption	may	change	from	time	to	time	and	can	be	affected	by a	number	of	different	trends	and	other	factors.	If	we	fail	to	anticipate,	identify	or	react	to	these	changes	and	trends,	such	as	adapting	to	emerging	e-commerce channels,	or	to	introduce	new	and	improved	products	on	a	timely	basis,	we	may	experience	reduced	demand	for	our	products,	which	would	in	turn	cause	our revenues	and	profitability	to	suffer.	Similarly,	demand	for	our	products	could	be	affected	by	consumer	concerns	regarding	the	health	effects	of	ingredients such	as	sodium,	trans	fats,	genetically	modified	organisms,	sugar,	processed	wheat,	or	other	product	ingredients	or	attributes.

# We	may	be	unable	to	grow	our	market	share	or	add	products	that	are	in	faster	growing	and	more	profitable	categories.

The	food	industry's	growth	potential	is	constrained	by	population	growth.	Our	success	depends	in	part	on	our	ability	to	grow	our	business	faster	than populations	are	growing	in	the	markets	that	we	serve.	One	way	to	achieve	that	growth	is	to	enhance	our	portfolio	by	adding	innovative	new	products	in faster	growing	and	more	profitable	categories.	Our	future	results	will	also	depend	on	our	ability	to	increase	market	share	in	our	existing	product	categories. If	we	do	not	succeed	in	developing	innovative	products	for	new	and	existing	categories,	our	growth	and	profitability	could	be	adversely	affected.

# Economic	downturns	could	limit	consumer	demand	for	our	products.

The	willingness	of	consumers	to	purchase	our	products	depends	in	part	on	local	economic	conditions.	In	periods	of	economic	uncertainty,	consumers	may purchase	more	generic,	private	label,	and	other	economy	brands	and	may	forego	certain	purchases	altogether.	In	those	circumstances,	we	could	experience	a reduction	in	sales	of	higher	margin	products	or	a	shift	in	our	product	mix	to	lower	margin	offerings.	In	addition,	as	a	result	of	economic	conditions	or competitive	actions,	we	may	be	unable	to	raise	our	prices	sufficiently	to	protect	margins.	Consumers	may	also	reduce	the	amount	of	food	that	they	consume away	from	home	at	customers	that	purchase	products	from	our	Convenience	Stores	&	Foodservice	segment.	Any	of	these	events	could	have	an	adverse effect	on	our	results	of	operations.

# Our	results	may	be	negatively	impacted	if	consumers	do	not	maintain	their	favorable	perception	of	our	brands.

Maintaining	and	continually	enhancing	the	value	of	our	many	iconic	brands	is	critical	to	the	success	of	our	business.	The	value	of	our	brands	is	based	in large	part	on	the	degree	to	which	consumers	react	and	respond	positively	to	these	brands.	Brand	value	could	diminish	significantly	due	to	a	number	of factors,	including	consumer	perception	that	we	have	acted	in	an	irresponsible	manner,	adverse	publicity	about	our	products,	our	failure	to	maintain	the quality	of	our	products,	the	failure	of	our	products	to	deliver	consistently	positive	consumer	experiences,	concerns	about	food	safety,	or	our	products becoming	unavailable	to	consumers.	Consumer	demand	for	our	products	may	also	be	impacted	by	changes	in	the	level	of	advertising	or	promotional support.	The	use	of	social	and	digital	media	by	consumers,	us,	and	third	parties	increases	the	speed	and	extent	that	information	or	misinformation	and opinions	can	be	shared.	Negative	posts	or	comments	about	us,	our	brands,	or	our	products	on	social	or	digital	media	could	seriously	damage	our	brands	and reputation.	If	we	do	not	maintain	the	favorable	perception	of	our	brands,	our	business	results	could	be	negatively	impacted.

# Our	international	operations	are	subject	to	political	and	economic	risks.

In	fiscal	2019,	26	percent	of	our	consolidated	net	sales	were	generated	outside	of	the	United	States.	We	are	accordingly	subject	to	a	number	of	risks	relating to	doing	business	internationally,	any	of	which	could	significantly	harm	our	business.	These	risks	include:

•political	and	economic	instability;

•exchange	controls	and	currency	exchange	rates;

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

•nationalization	of	operations;

•compliance	with	anti-corruption	regulations;

•uncertainty	relating	to	the	United	Kingdom's	planned	exit	from	the	European	Union;

•foreign	tax	treaties	and	policies;	and

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

Our	financial	performance	on	a	U.S.	dollar	denominated	basis	is	subject	to	fluctuations	in	currency	exchange	rates.	These	fluctuations	could	cause	material variations	in	our	results	of	operations.	Our	principal	exposures	are	to	the	Australian	dollar,	Brazilian	real,	British	pound	sterling,	Canadian	dollar,	Chinese renminbi,	euro,	Japanese	yen,	Mexican	peso,	and	Swiss	franc.	From	time	to	time,	we	enter	into	agreements	that	are	intended	to	reduce	the	effects	of	our exposure	to	currency	fluctuations,	but	these	agreements	may	not	be	effective	in	significantly	reducing	our	exposure.

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

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

We	are	subject	to	various	federal,	state,	local,	and	foreign	environmental	laws	and	regulations.	Our	failure	to	comply	with	environmental	laws	and regulations	could	subject	us	to	lawsuits,	administrative	penalties,	and	civil	remedies.	We	are	currently	party	to	a	variety	of	environmental	remediation obligations.	Due	to	regulatory	complexities,	uncertainties	inherent	in	litigation,	and	the	risk	of	unidentified	contaminants	on	current	and	former	properties	of ours,	the	potential	exists	for	remediation,	liability,	indemnification,	and	compliance	costs	to	differ	from	our	estimates.	We	cannot	guarantee	that	our	costs	in relation	to	these	matters,	or	compliance	with	environmental	laws	in	general,	will	not	exceed	our	established	liabilities	or	otherwise	have	an	adverse	effect	on our	business	and	results	of	operations.

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

As	of	May	26,	2019,	we	had	total	debt,	redeemable	interests,	and	noncontrolling	interests	of	$15.4	billion.	The	agreements	under	which	we	have	issued indebtedness	do	not	prevent	us	from	incurring	additional	unsecured	indebtedness	in	the	future.	Our	level	of	indebtedness	may	limit	our:

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

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

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

Our	ability	to	make	scheduled	payments	on	or	to	refinance	our	debt	and	other	obligations	will	depend	on	our	operating	and	financial	performance,	which	in turn	is	subject	to	prevailing	economic	conditions	and	to	financial,	business,	and	other	factors	beyond	our	control.

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

We	depend	on	stable,	liquid,	and	well-functioning	capital	and	credit	markets	to	fund	our	operations.	Although	we	believe	that	our	operating	cash	flows, financial	assets,	access	to	capital	and	credit	markets,	and	revolving	credit	agreements	will	permit	us	to	meet	our	financing	needs	for	the	foreseeable	future, there	can	be	no	assurance	that	future	volatility	or	disruption	in	the	capital	and	credit	markets	will	not	impair	our	liquidity	or	increase	our	costs	of	borrowing. We	also	utilize	interest	rate	derivatives	to	reduce	the	volatility	of	our	financing	costs.	If	we	are	not	effective	in	hedging	this	volatility,	we	may	experience	an increase	in	our	costs	of	borrowing.	Our	business	could	also	be	negatively	impacted	if	our	suppliers	or	customers	experience	disruptions	resulting	from tighter	capital	and	credit	markets	or	a	slowdown	in	the	general	economy.

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

# Volatility	in	the	securities	markets,	interest	rates,	and	other	factors	could	substantially	increase	our	defined	benefit	pension,	other	postretirement benefit,	and	postemployment	benefit	costs.

We	sponsor	a	number	of	defined	benefit	plans	for	employees	in	the	United	States,	Canada,	and	various	foreign	locations,	including	defined	benefit	pension, retiree	health	and	welfare,	severance,	and	other	postemployment	plans.	Our	major	defined	benefit	pension	plans	are	funded	with	trust	assets	invested	in	a globally	diversified	portfolio	of	securities	and	other	investments.	Changes	in	interest	rates,	mortality	rates,	health	care	costs,	early	retirement	rates, investment	returns,	and	the	market	value	of	plan	assets	can	affect	the	funded	status	of	our	defined	benefit	plans	and	cause	volatility	in	the	net	periodic benefit	cost	and	future	funding	requirements	of	the	plans.	A	significant	increase	in	our	obligations	or	future	funding	requirements	could	have	a	negative impact	on	our	results	of	operations	and	cash	flows	from	operations.

# Our	business	operations	could	be	disrupted	if	our	information	technology	systems	fail	to	perform	adequately	or	are	breached.

Information	technology	serves	an	important	role	in	the	efficient	and	effective	operation	of	our	business.	We	rely	on	information	technology	networks	and systems,	including	the	internet,	to	process,	transmit,	and	store	electronic	information	to	manage	a	variety	of	business	processes	and	to	comply	with regulatory,	legal,	and	tax	requirements.	Our	information	technology	systems	and	infrastructure	are	critical	to	effectively	manage	our	key	business	processes including	digital	marketing,	order	entry	and	fulfillment,	supply	chain	management,	finance,	administration,	and	other	business	processes.	These	technologies enable	internal	and	external	communication	among	our	locations,	employees,	suppliers,	customers,	and	others	and	include	the	receipt	and	storage	of personal	information	about	our	employees,	consumers,	and	proprietary	business	information.	Our	information	technology	systems,	some	of	which	are dependent	on	services	provided	by	third	parties,	may	be	vulnerable	to	damage,	interruption,	or	shutdown	due	to	any	number	of	causes	such	as	catastrophic events,	natural	disasters,	fires,	power	outages,	systems	failures,	telecommunications	failures,	security	breaches,	computer	viruses,	hackers,	employee	error	or malfeasance,	and	other	causes.	Increased	cyber-security	threats	pose	a	potential	risk	to	the	security	and	viability	of	our	information	technology	systems,	as well	as	the	confidentiality,	integrity,	and	availability	of	the	data	stored	on	those	systems.	The	failure	of	our	information	technology	systems	to	perform	as	we anticipate	could	disrupt	our	business	and	result	in	transaction	errors,	processing	inefficiencies,	data	loss,	legal	claims	or	proceedings,	regulatory	penalties, and	the	loss	of	sales	and	customers.	Any	interruption	of	our	information	technology	systems	could	have	operational,	reputational,	legal,	and	financial impacts	that	may	have	a	material	adverse	effect	on	our	business.

A	change	in	the	assumptions	regarding	the	future	performance	of	our	businesses	or	a	different	weighted-average	cost	of	capital	used	to	value	our reporting	units	or	our	indefinite-lived	intangible	assets	could	negatively	affect	our	consolidated	results	of	operations	and	net	worth.

As	of	May	26,	2019,	we	had	$20.6	billion	of	goodwill	and	indefinite-lived	intangible	assets.	Goodwill	for	each	of	our	reporting	units	is	tested	for impairment	annually	and	whenever	events	or	changes	in	circumstances	indicate	that	impairment	may	have	occurred.	We	compare	the	carrying	value	of	the reporting	unit,	including	goodwill,	to	the	fair	value	of	the	reporting	unit.	If	the	fair	value	of	the	reporting	unit	is	less	than	the	carrying	value	of	the	reporting unit,	including	goodwill,	impairment	has	occurred.	Our	estimates	of	fair	value	are	determined	based	on	a	discounted	cash	flow	model.	Growth	rates	for	sales and	profits	are	determined	using	inputs	from	our	long-range	planning	process.	We	also	make	estimates	of	discount	rates,	perpetuity	growth	assumptions, market	comparables,	and	other	factors.	Our	Latin	America	and	U.S.	Yogurt	reporting	units	have	experienced	declining	business	performance	and	we continue	to	monitor	these	businesses.	While	we	currently	believe	that	our	goodwill	is	not	impaired,	different	assumptions	regarding	the	future	performance of	our	businesses	could	result	in	significant	impairment	losses.

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

Our	indefinite-lived	intangible	assets	are	also	tested	for	impairment	annually	and	whenever	events	or	changes	in	circumstances	indicate	that	their	carrying value	may	not	be	recoverable.	Our	estimate	of	the	fair	value	of	the	brands	is	based	on	a	discounted	cash	flow	model	using	inputs	including	projected revenues	from	our	long-range	plan,	assumed	royalty	rates	which	could	be	payable	if	we	did	not	own	the	brands,	and	a	discount	rate.	Our	Pillsbury,	Yoki,	and Progresso	brands	have	experienced	declining	business	performance,	and	we	continue	to	monitor	these	businesses.	For	further	information	on	goodwill	and intangible	assets,	please	refer	to	Note	6	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

# We	may	fail	to	realize	all	of	the	anticipated	benefits	of	the	Blue	Buffalo	acquisition	or	those	benefits	may	take	longer	to	realize	than	expected.

Our	ability	to	realize	the	anticipated	benefits	of	the	Blue	Buffalo	acquisition	will	depend,	to	a	large	extent,	on	our	ability	to	integrate	Blue	Buffalo,	which	is	a complex,	costly,	and	time-consuming	process.	We	had	not	operated	in	the	pet	food	sector	prior	to	the	acquisition	of	Blue	Buffalo	and	our	lack	of	experience in	this	sector	may	hinder	our	ability	to	manage	Blue	Buffalo	successfully	following	the	acquisition.

The	integration	process	may	disrupt	our	business	and,	if	implemented	ineffectively,	could	restrict	the	realization	of	the	full	expected	benefits.	The	failure	to meet	the	challenges	involved	in	the	integration	process	and	to	realize	the	anticipated	benefits	of	the	Blue	Buffalo	acquisition	could	cause	an	interruption	of, or	a	loss	of	momentum	in,	our	operations	and	could	adversely	affect	our	business,	financial	condition,	and	results	of	operations.

In	addition,	the	integration	of	Blue	Buffalo	may	result	in	material	unanticipated	problems,	expenses,	liabilities,	competitive	responses,	and	loss	of	customers and	other	business	relationships.	Additional	integration	challenges	include:

•diversion	of	management's	attention	to	integration	matters;

•difficulties	in	achieving	anticipated	cost	savings,	synergies,	business	opportunities,	and	growth	prospects	from	the	acquisition;

•difficulties	in	the	integration	of	operations	and	systems;

•difficulties	in	conforming	standards,	controls,	procedures,	and	accounting	and	other	policies,	business	cultures,	and	compensation	structures;

•difficulties	in	the	assimilation	of	employees;

•challenges	in	keeping	existing	customers	and	obtaining	new	customers;

•difficulties	in	building	and	operating	new	and	existing	manufacturing	facilities;

•challenges	in	attracting	and	retaining	key	personnel;

•the	impact	of	potential	liabilities	we	may	be	inheriting	from	Blue	Buffalo;	and

•coordinating	a	geographically	dispersed	organization.

Many	of	these	factors	will	be	outside	of	our	control	and	any	one	of	them	could	result	in	increased	costs,	decreases	in	the	amount	of	expected	revenues,	and diversion	of	management's	time	and	energy,	which	could	adversely	affect	our	business,	financial	condition,	and	results	of	operations	and	result	in	us becoming	subject	to	litigation.	In	addition,	even	if	Blue	Buffalo	is	integrated	successfully,	the	full	anticipated	benefits	of	the	acquisition	may	not	be	realized, including	the	synergies,	cost	savings	or	sales	or	growth	opportunities	that	are	anticipated.	These	benefits	may	not	be	achieved	within	the	anticipated	time frame,	or	at	all.	Further,	additional	unanticipated	costs	may	be	incurred	in	the	integration	process.	All	of	these	factors	could	cause	reductions	in	our	earnings per	share	and	decrease	or	delay	the	expected	accretive	effect	of	the	acquisition.	As	a	result,	it	cannot	be	assured	that	the	Blue	Buffalo	acquisition	will	result in	the	realization	of	the	full	or	any	anticipated	benefits.

# Blue	Buffalo	may	underperform	relative	to	our	expectations.

The	business,	prospects,	and	financial	performance	of	Blue	Buffalo	are	subject	to	certain	risks	and	uncertainties.	We	may	not	be	able	to	maintain	the	growth rate,	levels	of	revenue,	earnings,	or	operating	efficiency	that	we	and	Blue	Buffalo	have	achieved	or	might	achieve	separately.	Our	failure	to	do	so	could have	a	material	adverse	effect	on	our	financial	condition	and	results	of	operations.	When	we	acquired	Blue	Buffalo	in	fiscal	2018,	we	recorded	significant brand	intangible	and	goodwill	assets	at	fair	value	based	on,	among	other	things,	our	projections	of	Blue	Buffalo's	financial	performance.	Our	failure	to	meet or	exceed	our	projections	could	have	a	material	adverse	effect	on	our	financial	condition	and	results	of	operations,	including	a	material	impairment	to	our intangible	assets.

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

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

# ITEM	1B				Unresolved	Staff	Comments

# None.

# ITEM	2				Properties

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

As	of	May	26,	2019,	we	operated	51	facilities	for	the	production	of	a	wide	variety	of	food	products.	Of	these	facilities,	26	are	located	in	the	United	States	(1 of	which	is	leased),	4	in	the	Greater	China	region,	2	in	the	Asia/Middle	East/Africa	Region	(1	of	which	is	leased),	3	in	Canada	(2	of	which	are	leased),	8	in Europe/Australia,	and	8	in	Latin	America	and	Mexico.	The	following	is	a	list	of	the	locations	of	our	principal	production	facilities,	which	primarily	support the	segment	noted:

# North	America	Retail

•	Carson,	California

•	St.	Hyacinthe,	Canada

•	Covington,	Georgia

•	Belvidere,	Illinois

•	Geneva,	Illinois

•	Cedar	Rapids,	Iowa

# Convenience	Stores	&	Foodservice

•	Chanhassen,	Minnesota

# Europe	&	Australia

•	Arras,	France

•	Labatut,	France

# Asia	&	Latin	America

•	Cambara,	Brazil

•	Campo	Novo	do	Pareceis,	Brazil

•	Nova	Prata,	Brazil

•	Paranavai,	Brazil

•	Pouso	Alegre,	Brazil

•	Irapuato,	Mexico

•	Reed	City,	Michigan

•	Fridley,	Minnesota

•	Hannibal,	Missouri

•	Albuquerque,	New	Mexico

•	Buffalo,	New	York

•	Joplin,	Missouri

•	Le	Mans,	France

•	Moneteau,	France

•	Vienne,	France

•	Recife,	Brazil

•	Ribeirao	Claro,	Brazil

•	Guangzhou,	China

•	Nanjing,	China

•	Sanhe,	China

•	Joplin,	Missouri •	Richmond,	Indiana

•	Cincinnati,	Ohio

•	Wellston,	Ohio

•	Murfreesboro,	Tennessee

•	Milwaukee,	Wisconsin

•	Inofita,	Greece

•	San	Adrian,	Spain

•	Shanghai,	China

•	Nashik,	India

•	Anseong-si,	South	Korea

We	operate	numerous	grain	elevators	in	the	United	States	in	support	of	our	domestic	manufacturing	activities.	We	also	utilize	approximately	13	million square	feet	of	warehouse	and	distribution	space,	nearly	all	of	which	is	leased,	that	primarily	supports	our	North	America	Retail	segment.	We	own	and	lease a	number	of	dedicated	sales	and	administrative	offices	around	the	world,	totaling	approximately	3	million	square	feet.	We	have	additional	warehouse, distribution,	and	office	space	in	our	plant	locations.

As	part	of	our	Häagen-Dazs	business	in	our	Europe	&	Australia	and	Asia	&	Latin	America	segments,	we	operate	525	(all	leased)	and	franchise	365	branded ice	cream	parlors	in	various	countries	around	the	world,	all	outside	of	the	United	States	and	Canada.

# ITEM	3				Legal	Proceedings

We	are	the	subject	of	various	pending	or	threatened	legal	actions	in	the	ordinary	course	of	our	business.	All	such	matters	are	subject	to	many	uncertainties and	outcomes	that	are	not	predictable	with	assurance.	In	our	opinion,	there	were	no	claims	or	litigation	pending	as	of	May	26,	2019,	that	were	reasonably likely	to	have	a	material	adverse	effect	on	our	consolidated	financial	position	or	results	of	operations.	See	the	information	contained	under	the	section entitled	"Environmental	Matters"	in	Item	1	of	this	report	for	a	discussion	of	environmental	matters	in	which	we	are	involved.

# ITEM	4				Mine	Safety	Disclosures

# PART	II

# ITEM	5				Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of		Equity	Securities

Our	common	stock	is	listed	on	the	New	York	Stock	Exchange	under	the	symbol	"GIS."	On	June	10,	2019,	there	were	approximately	29,000	record	holders of	our	common	stock.

The	following	table	sets	forth	information	with	respect	to	shares	of	our	common	stock	that	we	purchased	during	the	fiscal	quarter	ended	May	26,	2019:

|  |  |  | Total	Number	of | Maximum	Number	of |
| :--- | :--- | :--- | :--- | :--- |
|  | Total\tNumber | Average | Shares\tPurchased\tas | Shares\tthat\tmay\tyet\tbe |
|  | of\tShares | Price\tPaid | Part\tof\ta\tPublicly | Purchased\tUnder\tthe |
| Period | Purchased\t(a) | Per\tShare | Announced\tProgram\t(b) | Program\t(b) |
| February\t25,\t2019- |  |  |  |  |
| March\t31,\t2019 | 250 | $\t\t\t\t\t\t\t\t\t47.22 | 250 | 39,498,616 |
| April\t1,\t2019- |  |  |  |  |
| April\t28,\t2019 | 8,032 | 50.99 | 8,032 | 39,490,584 |
| April\t29,\t2109- |  |  |  |  |
| May\t26,\t2019 | - | - | - | 39,490,584 |
| Total | 8,282 | $50.88 | 8,282 | 39,490,584 |

(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.

# ITEM	6				Selected	Financial	Data

The	following	table	sets	forth	selected	financial	data	for	each	of	the	fiscal	years	in	the	five-year	period	ended	May	26,	2019:

| In	Millions,	Except	Per	Share	Data, |  |  | Fiscal	Year |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Percentages\tand\tRatios | 2019\t(a) | 2018 | 2017 | 2016 | 2015\t(b) |
| Operating\tdata: |  |  |  |  |  |
| Net\tsales | \t$16,865.2 | \t$15,740.4 | \t$15,619.8 | \t$16,563.1 | \t$17,630.3 |
| Gross\tmargin\t(c)\t(d) | 5,756.8 | 5,435.6 | 5,567.8 | 5,843.3 | 5,967.8 |
| Selling,\tgeneral,\tand\tadministrative\texpenses\t(d) | 2,935.8 | 2,850.1 | 2,888.8 | 3,141.4 | 3,389.9 |
| Operating\tprofit\t(d) | 2,515.9 | 2,419.9 | 2,492.1 | 2,719.1 | 2,071.8 |
| Net\tearnings\tattributable\tto\tGeneral\tMills | 1,752.7 | 2,131.0 | 1,657.5 | 1,697.4 | 1,221.3 |
| Advertising\tand\tmedia\texpense | 601.6 | 575.9 | 623.8 | 754.4 | 823.1 |
| Research\tand\tdevelopment\texpense | 221.9 | 219.1 | 218.2 | 222.1 | 229.4 |
| Average\tshares\toutstanding: |  |  |  |  |  |
| Diluted | 605.4 | 585.7 | 598.0 | 611.9 | 618.8 |
| Earnings\tper\tshare: |  |  |  |  |  |
| Diluted | \t$2.90 | $3.64 | \t$2.77 | \t$2.77 | \t$1.97 |
| Adjusted\tdiluted\t(c)\t(e) | \t$3.22 | $3.11 | \t$3.08 | \t$2.92 | \t$2.86 |
| Operating\tratios: |  |  |  |  |  |
| Gross\tmargin\tas\ta\tpercentage\tof\tnet\tsales\t(d) | 34.1% | 34.5% | 35.6% | 35.3% | 33.8% |
| Selling,\tgeneral,\tand\tadministrative\texpenses\tas\ta\tpercentage |  |  |  |  |  |
| of\tnet\tsales\t(d) | 17.4% | 18.1% | 18.5% | 19.0% | 19.2% |
| Operating\tprofit\tas\ta\tpercentage\tof\tnet\tsales\t(d) | 14.9% | 15.4% | 16.0% | 16.4% | 11.8% |
| Adjusted\toperating\tprofit\tas\ta\tpercentage\tof\tnet\tsales\t(c)\t(d) |  |  |  |  |  |
| (e) | 16.9% | 16.6% | 17.6% | 16.8% | 15.7% |
| Effective\tincome\ttax\trate | 17.7% | 2.7% | 28.8% | 31.4% | 33.3% |
| Balance\tsheet\tdata: |  |  |  |  |  |
| Land,\tbuildings,\tand\tequipment | \t$3,787.2 | $4,047.2 | \t$3,687.7 | \t$3,743.6 | \t$3,783.3 |
| Total\tassets | \t\t\t\t30,111.2 | \t\t\t\t30,624.0 | \t\t\t\t21,812.6 | \t\t\t\t21,712.3 | \t\t\t\t21,832.0 |
| Long-term\tdebt,\texcluding\tcurrent\tportion | 11,624.8 | 12,668.7 | 7,642.9 | 7,057.7 | 7,575.3 |
| Total\tdebt\t(c) | 14,490.0 | 15,818.6 | 9,481.7 | 8,430.9 | 9,191.5 |
| Cash\tflow\tdata: |  |  |  |  |  |
| Net\tcash\tprovided\tby\toperating\tactivities\t(f) | \t$2,807.0 | $2,841.0 | \t$2,415.2 | \t$2,764.2 | \t$2,648.5 |
| Capital\texpenditures | 537.6 | 622.7 | 684.4 | 729.3 | 712.4 |
| Free\tcash\tflow\t(c) | 2,269.4 | 2,218.3 | 1,730.8 | 2,034.9 | 1,936.1 |
| Share\tdata: |  |  |  |  |  |
| Cash\tdividends\tper\tcommon\tshare | \t$1.96 | $1.96 | \t$1.92 | \t$1.78 | \t$1.67 |

(a) In	fiscal	2018,	we	acquired	Blue	Buffalo.	Please	see	Note	3	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(c) Please	see	"Glossary"	in	Item	8	of	this	report	for	definition.

(d) In	the	first	quarter	of	fiscal	2019,	we	retrospectively	adopted	new	accounting	requirements	related	to	the	presentation	of	net	periodic	defined	benefit	pension	expense,	net	periodic postretirement	benefit	expense,	and	net	periodic	postemployment	benefit	expense.	Please	see	Note	2	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(e) Please	see	"Non-GAAP	Measures"	in	Item	7	of	this	report	for	our	discussion	of	this	measure	not	defined	by	generally	accepted	accounting	principles.

(f) In	fiscal	2018,	we	retrospectively	adopted	new	requirements	for	the	accounting	and	presentation	of	stock-based	payments.	Please	see	Note	2	to	the	Consolidated	Financial Statements	in	Item	8	of	this	report.

# ITEM	7				Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

# EXECUTIVE	OVERVIEW

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

Our	fundamental	financial	goal	is	to	generate	superior	returns	for	our	shareholders	over	the	long	term.	We	believe	that	increases	in	organic	net	sales, adjusted	operating	profit,	adjusted	earnings	per	share	(EPS),	free	cash	flow,	and	cash	return	to	shareholders	are	key	drivers	of	financial	performance	for	our business.

Our	long-term	growth	objectives	are	to	consistently	deliver:

•low	single-digit	annual	growth	in	organic	net	sales;

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

•high	single-digit	annual	growth	in	adjusted	diluted	EPS;

•free	cash	flow	conversion	averaging	above	95	percent	of	adjusted	net	earnings	after	tax;	and

•cash	return	to	shareholders	averaging	above	90	percent	of	free	cash	flow,	including	an	attractive	dividend	yield.

We	continue	to	pursue	our	Consumer	First	strategy	and	execute	against	our	global	growth	framework:	1)	competing	effectively	on	all	brands	and	across	all geographies	through	strong	innovation,	effective	consumer	marketing,	and	excellent	in-store	execution;	2)	accelerating	growth	on	our	four	differential growth	platforms,	which	are	Häagen-Dazs	ice	cream,	snack	bars,	Old	El	Paso	Mexican	food,	and	our	portfolio	of	natural	and	organic	food	brands;	and	3) reshaping	our	portfolio	through	growth-enhancing	acquisitions	and	divestitures,	including	the	acquisition	of	Blue	Buffalo.	By	focusing	on	this	growth framework,	we	expect	to	generate	financial	performance	consistent	with	the	long-term	growth	objectives	listed	above,	which	we	believe	should	result	in long-term	value	creation	for	our	shareholders.

In	fiscal	2019	we	executed	well	and	met	or	exceeded	each	of	our	key	full-year	financial	targets,	including	organic	net	sales	growth	and	constant-currency growth	in	net	sales,	adjusted	operating	profit,	and	adjusted	diluted	EPS.	Relative	to	fiscal	2018,	we	improved	our	net	sales	performance	in	U.S.	Yogurt	and our	emerging	market	businesses,	we	increased	our	contributions	from	innovation,	we	stabilized	our	distribution	trends	in	the	U.S.,	and	we	generated	greater benefits	from	net	price	realization	and	mix	through	our	Strategic	Revenue	Management	capability.	These	results	were	partially	offset	by	challenging performance	for	U.S.	snack	bars,	leaving	our	organic	net	sales	growth	at	the	low	end	of	the	range	outlined	in	our	initial	annual	targets.

We	successfully	transitioned	Blue	Buffalo	into	the	General	Mills	portfolio	in	fiscal	2019,	achieving	our	goals	of	double-digit	pro	forma	growth	in	net	sales and	segment	operating	profit	excluding	the	impact	of	purchase	accounting.	The	combination	of	record-level	Holistic	Margin	Management	(HMM)	savings, increased	benefits	from	net	price	realization	and	mix,	and	strong	cost	management	drove	growth	in	constant-currency	adjusted	operating	profit	and	adjusted diluted	EPS	ahead	of	our	initial	targets.	Finally,	we	continued	to	maintain	a	disciplined	focus	on	cash,	resulting	in	another	year	of	strong	free	cash	flow conversion.

Our	consolidated	net	sales	for	fiscal	2019	rose	7	percent	to	$16.9	billion.	On	an	organic	basis,	net	sales	essentially	matched	year-ago	levels.	Operating	profit of	$2.5	billion	increased	4	percent.	Adjusted	operating	profit	of	$2.8	billion	increased	9	percent	and	increased	10	percent	on	a	constant-currency basis.	Diluted	EPS	of	$2.90	was	down	20	percent	compared	to	fiscal	2018	results.	Adjusted	diluted	EPS	was	up	4	percent	to	$3.22	per	share	and	increased 4	percent	on	a	constant-currency	basis	(See	the	"Non-GAAP	Measures"	section	below	for	a	description	of	our	use	of	measures	not	defined	by	generally accepted	accounting	principles	(GAAP)).

Net	cash	provided	by	operations	totaled	$2.8	billion	in	fiscal	2019	representing	a	conversion	rate	of	157	percent	of	net	earnings,	including	earnings attributable	to	redeemable	and	noncontrolling	interests.	This	cash	generation	supported	capital	investments	totaling	$538	million,	and	our	resulting	free	cash flow	was	$2.3	billion	at	a	conversion	rate	of	115	percent	of	adjusted	net	earnings,	including	earnings	attributable	to	redeemable	and	noncontrolling interests.	We	also	returned	cash	to	shareholders	through	dividends	totaling	$1.2	billion	and	reduced	total	debt	outstanding	by	$1.3	billion.

A	detailed	review	of	our	fiscal	2019	performance	compared	to	fiscal	2018	appears	below	in	the	section	titled	"Fiscal	2019	Consolidated	Results	of Operations."	A	detailed	review	of	our	fiscal	2018	performance	compared	to	our	fiscal	2017	performance	is	set	forth	in	Part	II,	Item	7	of	our	Form	10-K	for the	fiscal	year	ended	May	27,	2018	under	the	caption	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	Fiscal 2018	Results	of	Consolidated	Operations."

In	fiscal	2020,	our	plans	include	continued	strong	innovation	and	investments	in	capabilities	and	brand	building	to	accelerate	our	topline	growth,	efficiency initiatives	to	maintain	our	strong	margins,	and	a	disciplined	focus	on	cash	to	further	reduce	our	leverage.	We	remain	confident	that	executing	our	Consumer First	strategy	and	our	Compete,	Accelerate,	and	Reshape	growth	framework	will	drive	sustainable,	profitable	growth	and	attractive	long-term	returns	for	our shareholders.

Our	key	full-year	fiscal	2020	targets	are	summarized	below:

•	 Organic	net	sales	are	expected	to	increase	1	to	2	percent.

•	 Constant-currency	adjusted	operating	profit	is	expected	to	increase	2	to	4	percent	from	the	base	of	$2.8	billion	reported	in	fiscal	2019.	Benefit	of	the 53rd	week	in	fiscal	2020	will	be	reinvested	in	capabilities	and	brand-building	initiatives	to	drive	improvement	in	our	organic	net	sales	growth	rate	in 2020	and	beyond.

•	 Constant-currency	adjusted	diluted	EPS	are	expected	to	increase	3	to	5	percent	from	the	base	of	$3.22	earned	in	fiscal	2019.

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

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

# FISCAL	2019	CONSOLIDATED	RESULTS	OF	OPERATIONS

In	fiscal	2018,	we	acquired	Blue	Buffalo,	which	became	our	Pet	operating	segment.	We	are	reporting	the	Pet	operating	segment	results	on	a	one-month	lag and,	accordingly,	our	fiscal	2018	results	did	not	include	Pet	segment	operating	results.

In	fiscal	2019,	net	sales	increased	7	percent	compared	to	last	year,	primarily	reflecting	the	addition	of	Blue	Buffalo.	Organic	net	sales	were	flat	in	the	fiscal year	ended	May	26,	2019.	Operating	profit	margin	of	14.9	percent	was	down	50	basis	points	from	year-ago	levels	primarily	driven	by	impairment	charges recorded	for	certain	intangible	and	manufacturing	assets	and	unfavorable	mark-to-market	valuation	of	certain	commodity	positions.	Adjusted	operating profit	margin	increased	30	basis	points	to	16.9	percent,	primarily	driven	by	lower	selling,	general,	and	administrative	expenses	in	our	North	America	Retail segment	and	the	addition	of	Blue	Buffalo,	partially	offset	by	higher	input	costs.	Diluted	earnings	per	share	of	$2.90	decreased	20	percent	primarily	driven	by a	one-time	benefit	recorded	in	fiscal	2018	related	to	the	Tax	Cuts	and	Jobs	Act	(TCJA).	Adjusted	diluted	earnings	per	share	of	$3.22	increased	4	percent	on	a constant-currency	basis	(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	fiscal	2019	follows:

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

The	7	percent	increase	in	net	sales	in	fiscal	2019	reflects	the	addition	of	Blue	Buffalo,	favorable	net	price	realization	and	mix	across	all	other	segments,	and higher	contributions	from	volume	growth	in	the	Asia	&	Latin	America	segment,	partially	offset	by	lower	contributions	from	volume	growth	in	the	North America	Retail,	Europe	&	Australia,	and	Convenience	Stores	&	Foodservice	segments.

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

Organic	net	sales	in	fiscal	2019	were	flat	compared	to	fiscal	2018,	as	favorable	organic	net	price	realization	and	mix	was	offset	by	declining	contributions from	organic	volume	growth.

Cost	of	sales	increased	$804	million	in	fiscal	2019	to	$11,108	million.	The	increase	was	driven	by	a	$503	million	increase	due	to	higher	volume	and	a $194	million	increase	attributable	to	product	rate	and	mix,	including	the	impact	of	the	Blue	Buffalo	acquisition.	In	fiscal	2019,	we	recorded	a	$53	million charge	related	to	the	fair	value	adjustment	of	inventory	acquired	in	the	Blue	Buffalo	acquisition.	We	recorded	a	$36	million	net	increase	in	cost	of	sales related	to	mark-to-market	valuation	of	certain	commodity	positions	and	grain	inventories	compared	to	a	net	decrease	of	$32	million	in	fiscal	2018	(please	see Note	7	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report).	In	fiscal	2019,	we	recorded	$10	million	of	restructuring	charges	in	cost	of

sales	compared	to	$14	million	in	fiscal	2018.	We	also	recorded	$1	million	of	restructuring	initiative	project-related	costs	in	cost	of	sales	in	fiscal	2019 compared	to	$11	million	in	fiscal	2018	(please	see	Note	4	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report	for	additional	information).

Gross	margin	increased	6	percent	in	fiscal	2019	versus	fiscal	2018.	Gross	margin	as	a	percent	of	net	sales	of	34.1	percent	decreased	40	basis	points compared	to	fiscal	2018.

Selling,	general	and	administrative	(SG&A)	expenses	increased	$86	million	to	$2,936	million	in	fiscal	2019	compared	to	fiscal	2018.	The	increase	in SG&A	expenses	primarily	reflects	the	addition	of	Blue	Buffalo,	partially	offset	by	a	decrease	in	media	and	advertising	expense.	SG&A	expenses	as	a percent	of	net	sales	in	fiscal	2019	decreased	70	basis	points	compared	to	fiscal	2018.

Divestitures	loss	totaled	$30	million	in	fiscal	2019.	In	fiscal	2019,	we	sold	our	La	Salteña	fresh	pasta	and	refrigerated	dough	business	in	Argentina,	and recorded	a	pre-tax	loss	of	$35	million.	We	also	sold	our	yogurt	business	in	China	and	simultaneously	entered	into	a	new	Yoplait	license	agreement	with	the purchaser	for	their	use	of	the	Yoplait	brand.	We	recorded	a	pre-tax	gain	of	$5	million.

Restructuring,	impairment,	and	other	exit	costs	totaled	$275	million	in	fiscal	2019	compared	to	$166	million	in	fiscal	2018.

In	fiscal	2019,	as	a	result	of	lower	sales	projections	in	our	long	range	plans	for	the	businesses	supporting	our	Progresso,	Food	Should	Taste	Good,	and Mountain	High	brand	intangible	assets,	we	recorded	$193	million	of	impairment	charges	related	to	these	brand	intangible	assets	(please	see	Note	6	to	the Consolidated	Financial	Statements	in	Item	8	of	this	report	for	additional	information).

In	addition,	in	fiscal	2019,	we	recorded	a	$15	million	charge	related	to	the	impairment	of	certain	manufacturing	assets	in	our	North	America	Retail	and Asia	&	Latin	America	segments.

Charges	associated	with	our	restructuring	initiatives	recognized	in	fiscal	2019	consisted	of	the	following:

(a)Includes	restructuring	charges	recorded	in	cost	of	sales	of	$9.9	million.

In	fiscal	2019,	we	approved	restructuring	actions	to	drive	efficiencies	in	targeted	areas	of	our	global	supply	chain.	In	connection	with	these	actions	we recorded	$80	million	of	restructuring	charges,	consisting	of	$23	million	of	severance	expense	and	$57	million	of	other	costs,	primarily	asset	write-offs.	Four of	our	operating	segments	were	affected	by	these	actions	including	$54	million	related	to	our	North	America	Retail	segment,	$13	million	related	to	our Asia	&	Latin	America	segment,	$12	million	related	to	our	Europe	&	Australia	segment,	and	$1	million	related	to	our	Pet	segment.	We	expect	these	actions to	be	completed	by	the	end	of	fiscal	2022.

We	spent	$49	million	of	cash	related	to	restructuring	initiatives	in	fiscal	2019.

Please	see	Note	4	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report	for	additional	information.

Benefit	plan	non-service	income	totaled	$88	million	in	fiscal	2019	compared	to	$89	million	in	fiscal	2018	(please	see	to	Note	2	to	the	Consolidated Financial	Statements	in	Item	8	of	this	report	for	additional	information).

Interest,	net	for	fiscal	2019	totaled	$522	million,	$148	million	higher	than	fiscal	2018,	primarily	driven	by	higher	debt	levels	due	to	financing	for	the	Blue Buffalo	acquisition.

Our	effective	tax	rate	for	fiscal	2019	was	17.7	percent	compared	to	2.7	percent	in	fiscal	2018.	The	15.0	percentage	point	increase	reflects	the	lower	statutory rate	in	fiscal	2019	being	more	than	offset	by	the	impact	of	the	one-time,	provisional	net	benefit	of	$524	million	recorded	in	fiscal	2018	related	to	the	TCJA. Our	adjusted	effective	tax	rate	was	21.8	percent	in	fiscal	2019	compared	to	25.7	percent	in	fiscal	2018	(see	the	"Non-GAAP	Measures"	section	below	for	a description	of	our	use	of	measures	not	defined	by	GAAP).	The	3.9	percentage	point	decrease	in	the	adjusted	effective	tax	rate	was	primarily	due	to	the	net benefits	associated	with	the	TCJA,	partially	offset	by	the	change	in	earnings	mix	by	jurisdiction.

The	TCJA	includes	provisions	affecting	our	fiscal	2019	effective	tax	rate,	including	but	not	limited	to:	a	reduction	in	the	U.S.	corporate	tax	rate	on	domestic operations	to	21	percent;	a	provision	that	taxes	U.S.	allocated	expenses	and	certain	income	from	foreign	operations	(GILTI);	a	limitation	on	deductible interest	expense;	the	repeal	of	the	domestic	manufacturing	deduction;	and	a	limitation	on	the	deductibility	of	certain	executive	compensation.	In	fiscal	2019, we	completed	our	accounting	for	the	tax	effects	of	the	TCJA	and	recorded	a	benefit	of	$7	million	which	included	adjustments	to	the	transition	tax	and	the measurement	of	our	net	U.S.	deferred	tax	liability.

After-tax	earnings	from	joint	ventures	decreased	$13	million	to	$72	million	in	fiscal	2019	compared	to	fiscal	2018,	primarily	driven	by	our	$11	million after-tax	share	of	restructuring	charges	at	CPW,	and	lower	net	sales	and	higher	input	costs	for	HDJ.	On	a	constant-currency	basis,	after-tax	earnings	from joint	ventures	decreased	14	percent,	including	the	CPW	restructuring	charge	(see	the	"Non-GAAP	Measures"	section	below	for	a	description	of	our	use	of measures	not	defined	by	GAAP).	The	components	of	our	joint	ventures'	net	sales	growth	are	shown	in	the	following	table:

| Fiscal	2019	vs.	Fiscal	2018 | CPW | HDJ | Total |
| :--- | :--- | :--- | :--- |
| Contributions\tfrom\tvolume\tgrowth\t(a) | (1)\t\tpt | (3)\tpts |  |
| Net\tprice\trealization\tand\tmix | 2\t\tpts | (4)\tpts |  |
| Net\tsales\tgrowth\tin\tconstant\tcurrency | 1\t\t\tpt | (7)\tpts | (1)\t\t\tpt |
| Foreign\tcurrency\texchange | (6)\tpts | (1)\t\t\tpt | (5)\tpts |
| Net\tsales\tgrowth | (5)\tpts | (8)\tpts | (6)\tpts |

Average	diluted	shares	outstanding	increased	by	20	million	in	fiscal	2019	from	fiscal	2018	due	to	the	impact	of	the	fiscal	2018	share	issuance	to	partially fund	the	acquisition	of	Blue	Buffalo	and	option	exercises.

# RESULTS	OF	SEGMENT	OPERATIONS

Our	businesses	are	organized	into	five	operating	segments:	North	America	Retail;	Convenience	Stores	&	Foodservice;	Europe	&	Australia;	Asia	&	Latin America;	and	Pet.	We	are	reporting	the	Pet	operating	segment	results	on	a	one-month	lag	and,	accordingly,	our	fiscal	2018	results	did	not	include	Pet segment	operating	results.

The	following	tables	provide	the	dollar	amount	and	percentage	of	net	sales	and	operating	profit	from	each	segment	for	fiscal	2019	and	2018:

|  | 2019 |  | 2018 |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Percent\tof |  | Percent\tof |
| In\tMillions | Dollars | Total | Dollars | Total |
| Net\tSales |  |  |  |  |
| North\tAmerica\tRetail | $9,925.2 | 59% | $10,115.4 | 64% |
| Convenience\tStores\t&amp;\tFoodservice | 1,969.1 | 12 | 1,930.2 | 12 |
| Europe\t&amp;\tAustralia | 1,886.7 | 11 | 1,984.6 | 13 |
| Asia\t&amp;\tLatin\tAmerica | 1,653.3 | 10 | 1,710.2 | 11 |
| Pet | 1,430.9 | 8 | - | - |
| Total | $\t\t\t\t16,865.2 | 100% | $\t\t\t\t15,740.4 | 100% |
| Segment\tOperating\tProfit |  |  |  |  |
| North\tAmerica\tRetail | $2,277.2 | 72% | $2,217.4 | 80% |
| Convenience\tStores\t&amp;\tFoodservice | 419.5 | 13 | 392.6 | 14 |
| Europe\t&amp;\tAustralia | 123.3 | 4 | 142.1 | 5 |
| Asia\t&amp;\tLatin\tAmerica | 72.4 | 2 | 39.6 | 1 |
| Pet | 268.4 | 9 | - | - |
| Total | $3,160.8 | 100% | $2,791.7 | 100% |

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

# NORTH	AMERICA	RETAIL	SEGMENT

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

North	America	Retail	net	sales	were	as	follows:

|  |  | Fiscal |  |
| :--- | :--- | :--- | :--- |
|  | Fiscal | 2019\tvs.\t2018 | Fiscal |
|  | 2019 | Percentage\tChange | 2018 |
| Net\tsales\t(in\tmillions) | $\t\t\t\t9,925.2 | (2)\t% | $\t\t\t\t10,115.4 |
| Contributions\tfrom\tvolume\tgrowth\t(a) |  | (3)pts |  |
| Net\tprice\trealization\tand\tmix |  | 2\tpts |  |
| Foreign\tcurrency\texchange |  | (1)pt |  |
| (a) |  |  |  |

The	2	percent	decrease	in	North	America	Retail	net	sales	for	fiscal	2019	was	driven	by	a	decrease	in	contributions	from	volume	growth	and	unfavorable foreign	currency	exchange,	partially	offset	by	an	increase	in	net	price	realization	and	mix.

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

(b)Related	to	the	divestiture	of	North	American	Green	Giant	product	lines.

North	America	Retail	organic	net	sales	decreased	1	percent	in	fiscal	2019	compared	to	fiscal	2018,	driven	by	a	decrease	in	contributions	from	organic volume	growth	partially	offset	by	favorable	organic	net	price	realization	and	mix.

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

|  | Fiscal | 2019	vs.	2018 | Fiscal |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | Percentage\tChange | 2018 |
| U.S.\tMeals\t&amp;\tBaking | \t$\t\t\t\t3,839.8 | (1)% | $\t\t\t\t3,865.7 |
| U.S.\tCereal | 2,255.4 | Flat | 2,251.8 |
| U.S.\tSnacks | 2,060.9 | (4)% | 2,140.5 |
| U.S.\tYogurt\tand\tOther | 906.7 | (2)% | 927.4 |
| Canada\t(a) | 862.4 | (7)% | 930.0 |
| Total | \t$\t\t\t\t9,925.2 | (2)% | \t$\t\t\t\t10,115.4 |

(a)On	a	constant	currency	basis,	Canada	operating	unit	net	sales	decreased	4	percent	in	fiscal	2019.	See	the	"Non-GAAP	Measures"	section	below	for	our use	of	this	measure	not	defined	by	GAAP.

Segment	operating	profit	increased	3	percent	to	$2,277	million	in	fiscal	2019,	compared	to	$2,217	million	in	fiscal	2018,	primarily	driven	by	lower	SG&A expenses,	partially	offset	by	lower	contributions	from	volume	growth.	Segment	operating	profit	increased	3	percent	on	a	constant-currency	basis	in	fiscal 2019	compared	to	fiscal	2018	(see	the	"Non-GAAP	Measures"	section	below	for	our	use	of	this	measure	not	defined	by	GAAP).

# CONVENIENCE	STORES	&	FOODSERVICE	SEGMENT

Our	major	product	categories	in	our	Convenience	Stores	&	Foodservice	operating	segment	are	ready-to-eat	cereals,	snacks,	refrigerated	yogurt,	frozen meals,	unbaked	and	fully	baked	frozen	dough	products,	and	baking	mixes.	Many	products	we	sell	are	branded	to	the	consumer	and	nearly	all	are	branded	to our	customers.	We	sell	to	distributors	and	operators	in	many	customer	channels	including	foodservice,	convenience	stores,	vending,	and	supermarket bakeries	in	the	United	States.

Convenience	Stores	&	Foodservice	net	sales	were	as	follows:

|  |  | Fiscal |  |
| :--- | :--- | :--- | :--- |
|  | Fiscal | 2019\tvs.\t2018 | Fiscal |
|  | 2019 | Percentage\tChange | 2018 |
| Net\tsales\t(in\tmillions) | \t$\t\t1,969.1 | 2\t% | $\t\t1,930.2 |
| Contributions\tfrom\tvolume\tgrowth\t(a) |  | (2)pts |  |
| Net\tprice\trealization\tand\tmix |  | 4\tpts |  |

Convenience	Stores	&	Foodservice	net	sales	increased	2	percent	in	fiscal	2019,	driven	by	favorable	net	price	realization	and	mix	partially	offset	by	a decrease	in	contributions	from	volume	growth.

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

|  | Fiscal |
| :--- | :--- |
|  | 2019\tvs.\t2018 |
|  | Percentage\tChange |
| Contributions\tfrom\torganic\tvolume\tgrowth\t(a) | (2)pts |
| Organic\tnet\tprice\trealization\tand\tmix | 4\tpts |
| Organic\tnet\tsales\tgrowth | 2\tpts |
| Net\tsales\tgrowth | 2\tpts |

Segment	operating	profit	increased	7	percent	to	$420	million	in	fiscal	2019,	compared	to	$393	million	in	fiscal	2018,	primarily	driven	by	favorable	net	price realization	and	mix,	partially	offset	by	higher	input	costs.

# EUROPE	&	AUSTRALIA	SEGMENT

Our	Europe	&	Australia	operating	segment	reflects	retail	and	foodservice	businesses	in	the	greater	Europe	and	Australia	regions.	Our	product	categories include	refrigerated	yogurt,	meal	kits,	super-premium	ice	cream,	refrigerated	and	frozen	dough	products,	shelf	stable	vegetables,	grain	snacks,	and	dessert and	baking	mixes.	We	also	sell	super-premium	ice	cream	directly	to	consumers	through	owned	retail	shops.	Revenues	from	franchise	fees	are	reported	in the	region	or	country	where	the	franchisee	is	located.

Europe	&	Australia	net	sales	were	as	follows:

|  |  | Fiscal |  |
| :--- | :--- | :--- | :--- |
|  | Fiscal | 2019\tvs.\t2018 | Fiscal |
|  | 2019 | Percentage\tChange | 2018 |
| Net\tsales\t(in\tmillions) | \t$\t\t1,886.7 | (5)\t% | $\t\t1,984.6 |
| Contributions\tfrom\tvolume\tgrowth\t(a) |  | (3)pts |  |
| Net\tprice\trealization\tand\tmix |  | 2\tpts |  |
| Foreign\tcurrency\texchange |  | (4)pts |  |

The	5	percent	decrease	in	Europe	&	Australia	net	sales	in	fiscal	2019	was	driven	by	unfavorable	foreign	currency	exchange	and	lower	contributions	from volume	growth,	partially	offset	by	favorable	net	price	realization	and	mix.

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

The	1	percent	decrease	in	Europe	&	Australia	organic	net	sales	growth	in	fiscal	2019	was	driven	by	a	decrease	in	contributions	from	organic	volume	growth partially	offset	by	favorable	organic	net	price	realization	and	mix.

Segment	operating	profit	decreased	13	percent	to	$123	million	in	fiscal	2019,	compared	to	$142	million	in	the	same	period	of	fiscal	2018	primarily	driven	by lower	contributions	from	volume	growth	and	higher	input	costs,	including	currency-driven	inflation	on	imported	products	in	certain	markets,	partially	offset by	lower	SG&A	expenses.	Segment	operating	profit	decreased	8	percent	on	a	constant-currency	basis	in	fiscal	2019	compared	to	fiscal	2018	(see	the "Non-GAAP	Measures"	section	below	for	our	use	of	this	measure	not	defined	by	GAAP).

# ASIA	&	LATIN	AMERICA	SEGMENT

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

Asia	&	Latin	America	net	sales	were	as	follows:

|  |  | Fiscal |  |
| :--- | :--- | :--- | :--- |
|  | Fiscal | 2019\tvs.\t2018 | Fiscal |
|  | 2019 | Percentage\tChange | 2018 |
| Net\tsales\t(in\tmillions) | $\t\t\t\t1,653.3 | (3)% | $\t\t\t\t1,710.2 |
| Contributions\tfrom\tvolume\tgrowth\t(a) |  | 1\tpt |  |
| Net\tprice\trealization\tand\tmix |  | 3\tpts |  |
| Foreign\tcurrency\texchange |  | (7)pts |  |

Asia	&	Latin	America	net	sales	decreased	3	percent	in	fiscal	2019	compared	to	fiscal	2018,	driven	by	unfavorable	foreign	currency	exchange,	partially	offset by	favorable	net	price	realization	and	mix	and	an	increase	in	contributions	from	volume	growth.

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

Divestitures	(b) (2)pts

Net	sales	growth (3)pts

(b)Impact	of	the	divestiture	of	our	La	Salteña	business	in	Argentina	and	our	Yoplait	business	in	China.

The	6	percent	increase	in	Asia	&	Latin	America	organic	net	sales	in	fiscal	2019	was	driven	by	favorable	organic	net	price	realization	and	mix	and	an	increase in	contributions	from	organic	volume	growth.

Segment	operating	profit	increased	83	percent	to	$72	million	in	fiscal	2019,	compared	to	$40	million	in	fiscal	2018,	primarily	driven	by	higher	contributions from	volume	growth,	higher	net	price	realization	and	mix	and	lower	SG&A	expenses,	partially	offset	by	higher	input	costs,	including	currency-driven inflation	on	imported

products	in	certain	markets.	Segment	operating	profit	increased	71	percent	on	a	constant-currency	basis	in	fiscal	2019	compared	to	fiscal	2018	(see	the "Non-GAAP	Measures"	section	below	for	our	use	of	this	measure	not	defined	by	GAAP).

# PET	SEGMENT

Our	Pet	operating	segment	includes	pet	food	products	sold	primarily	in	the	United	States	in	national	pet	superstore	chains,	e-commerce	retailers,	grocery stores,	regional	pet	store	chains,	mass	merchandisers,	and	veterinary	clinics	and	hospitals.	Our	product	categories	include	dog	and	cat	food	(dry	foods,	wet foods,	and	treats)	made	with	whole	meats,	fruits,	and	vegetables	and	other	high-quality	natural	ingredients.	Our	tailored	pet	product	offerings	address specific	dietary,	lifestyle,	and	life-stage	needs	and	span	different	product	types,	diet	types,	breed	sizes	for	dogs,	lifestages,	flavors,	product	functions	and textures,	and	cuts	for	wet	foods.	We	are	reporting	the	Pet	operating	segment	results	on	a	one-month	lag	and	accordingly,	our	fiscal	2018	results	did	not include	Pet	segment	operating	results.

Pet	net	sales	were	as	follows:

Pet	net	sales	and	segment	operating	profit	in	fiscal	2019	totaled	$1,431	million	and	$268	million,	respectively.	Pet	operating	profit	includes	a	$53	million purchase	accounting	adjustment	related	to	inventory	acquired	and	$13	million	of	amortization	of	the	customer	list	intangible	asset.

# UNALLOCATED	CORPORATE	ITEMS

Unallocated	corporate	items	include	corporate	overhead	expenses,	variances	to	planned	domestic	employee	benefits	and	incentives,	contributions	to	the General	Mills	Foundation,	asset	and	liability	remeasurement	impact	of	hyperinflationary	economies,	restructuring	initiative	project-related	costs,	and	other items	that	are	not	part	of	our	measurement	of	segment	operating	performance.	This	includes	gains	and	losses	from	the	mark-to-market	valuation	of	certain commodity	positions	until	passed	back	to	our	operating	segments	in	accordance	with	our	policy	as	discussed	in	Note	7	to	the	Consolidated	Financial Statements	in	Item	8	of	this	report.

In	fiscal	2019,	unallocated	corporate	expense	increased	$134	million	to	$340	million	compared	to	$206	million	last	year,	primarily	driven	by	compensation and	benefits	expenses.	In	fiscal	2019,	we	recorded	a	$36	million	net	increase	in	expense	related	to	mark-to-market	valuation	of	certain	commodity	positions and	grain	inventories	compared	to	a	$32	million	net	decrease	in	expense	in	the	prior	year.	In	addition,	we	recorded	$10	million	of	restructuring	charges,	and $1	million	of	restructuring	initiative	project-related	costs	in	cost	of	sales	in	fiscal	2019,	compared	to	$14	million	of	restructuring	charges	and	$11	million	of restructuring	initiative	project-related	costs	in	cost	of	sales	in	fiscal	2018.	In	fiscal	2019,	we	recorded	a	$16	million	gain	from	a	legal	recovery	related	to	our Yoplait	SAS	subsidiary	and	$23	million	of	gains	related	to	certain	investment	valuation	adjustments.	We	also	recorded	$26	million	of	integration	costs	in fiscal	2019	related	to	our	acquisition	of	Blue	Buffalo	compared	to	$34	million	of	transaction	and	integration	costs	in	fiscal	2018.	In	addition,	we	recorded	a $3	million	loss	related	to	the	impact	of	hyperinflationary	accounting	for	our	Argentina	subsidiary	in	fiscal	2019.

# IMPACT	OF	INFLATION

We	experienced	input	cost	inflation	of	4	percent	in	fiscal	2019	and	4	percent	in	fiscal	2018,	primarily	on	commodity	inputs.	We	expect	input	cost	inflation	of approximately	4	percent	in	fiscal	2020.	We	attempt	to	minimize	the	effects	of	inflation	through	HMM,	planning,	and	operating	practices.	Our	risk management	practices	are	discussed	in	Item	7A	of	this	report.

# LIQUIDITY

The	primary	source	of	our	liquidity	is	cash	flow	from	operations.	Over	the	most	recent	two-year	period,	our	operations	have	generated	$5.6	billion	in	cash. A	substantial	portion	of	this	operating	cash	flow	has	been	returned	to	shareholders	through	share	repurchases	and	dividends.	We	also	use	cash	from operations	to	fund	our	capital	expenditures	and	acquisitions.	We	typically	use	a	combination	of	cash,	notes	payable,	and	long-term	debt,	and	occasionally issue	shares	of	stock,	to	finance	significant	acquisitions.

As	of	May	26,	2019,	we	had	$399	million	of	cash	and	cash	equivalents	held	in	foreign	jurisdictions.	As	a	result	of	the	TCJA,	the	historic	undistributed earnings	of	our	foreign	subsidiaries	were	taxed	in	the	U.S.	via	the	one-time	repatriation	tax	in	fiscal	2018.	We	have	re-evaluated	our	assertion	and	have concluded	that	although	earnings	prior	to	fiscal	2018	will	remain	permanently	reinvested,	we	will	no	longer	make	a	permanent	reinvestment	assertion beginning	with	our	fiscal	2018	earnings.	As	part	of	the	accounting	for	the	TCJA,	we	recorded	local	country	withholding	taxes	related	to	certain	entities	from which	we	began	repatriating	undistributed	earnings	and	will	continue	to	record	local	country	withholding	taxes	on	all	future	earnings.	As	a	result	of	the transition	tax,	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	(please	see	Note	14	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report	for	additional	information).

# Cash	Flows	from	Operations

| In	Millions | 2019 | 2018 |
| :--- | :--- | :--- |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\tand\tnoncontrolling\tinterests | $\t\t\t\t1,786.2 | $ \t\t\t\t2,163.0 |
| Depreciation\tand\tamortization | 620.1 | 618.8 |
| After-tax\tearnings\tfrom\tjoint\tventures | (72.0) | (84.7) |
| Distributions\tof\tearnings\tfrom\tjoint\tventures | 86.7 | 113.2 |
| Stock-based\tcompensation | 84.9 | 77.0 |
| Deferred\tincome\ttaxes | 93.5 | (504.3) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tcontributions | (28.8) | (31.8) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tcosts | 6.1 | 4.6 |
| Divestitures\tloss | 30.0 | - |
| Restructuring,\timpairment,\tand\tother\texit\tcosts | 235.7 | 126.0 |
| Changes\tin\tcurrent\tassets\tand\tliabilities,\texcluding\tthe\teffects\tof\tacquisitions\tand\tdivestitures | (7.5) | 542.1 |
| Other,\tnet | (27.9) | (182.9) |
| Net\tcash\tprovided\tby\toperating\tactivities | $2,807.0 | $2,841.0 |

During	fiscal	2019,	cash	provided	by	operations	was	$2,807	million	compared	to	$2,841	million	in	the	same	period	last	year.	The	$34	million	decrease	was primarily	driven	by	a	$377	million	decrease	in	net	earnings	and	a	$550	million	change	in	current	assets	and	liabilities,	partially	offset	by	a	$598	million change	in	deferred	income	taxes.	The	$550	million	change	in	current	assets	and	liabilities	was	primarily	driven	by	a	$413	million	change	in	the	timing	of accounts	payable,	including	the	impact	of	longer	payment	terms	implemented	in	prior	fiscal	years.	The	change	in	deferred	income	taxes	was	primarily related	to	the	$638	million	provisional	benefit	from	revaluing	our	net	U.S.	deferred	tax	liabilities	to	reflect	the	new	U.S.	corporate	tax	rate	as	a	result	of	the TCJA	in	fiscal	2018.

We	strive	to	grow	core	working	capital	at	or	below	the	rate	of	growth	in	our	net	sales.	For	fiscal	2019,	core	working	capital	decreased	34	percent,	compared to	a	net	sales	increase	of	7	percent.	As	of	May	26,	2019,	our	core	working	capital	balance	totaled	$385	million,	down	34	percent	versus	last	year,	this	is primarily	driven	by	continued	benefits	from	our	payment	terms	extension	program	and	lower	inventory	balances.	In	fiscal	2018,	core	working	capital decreased	27	percent,	compared	to	a	net	sales	increase	of	1	percent.

# Cash	Flows	from	Investing	Activities

|  | Fiscal	Year | Fiscal	Year |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Purchases\tof\tland,\tbuildings,\tand\tequipment | $\t\t\t\t(537.6) | $(622.7) |
| Acquisitions,\tnet\tof\tcash\tacquired | - | \t\t\t\t(8,035.8) |
| Investments\tin\taffiliates,\tnet | 0.1 | (17.3) |
| Proceeds\tfrom\tdisposal\tof\tland,\tbuildings,\tand\tequipment | 14.3 | 1.4 |
| Proceeds\tfrom\tdivestitures | 26.4 | - |
| Other,\tnet | (59.7) | (11.0) |
| Net\tcash\tused\tby\tinvesting\tactivities | $(556.5) | $(8,685.4) |

In	fiscal	2019,	we	used	$556	million	of	cash	through	investing	activities	compared	to	$8.7	billion	in	fiscal	2018.	This	decrease	was	primarily	driven	by	the acquisition	of	Blue	Buffalo	for	an	aggregate	purchase	price	of	$8.0	billion,	including	$103	million	of	consideration	for	net	debt	repaid,	in	fiscal	2018.	We invested	$538	million	in	land,	buildings,	and	equipment	in	fiscal	2019,	$85	million	less	than	fiscal	2018.

We	expect	capital	expenditures	to	be	approximately	3.5	percent	of	reported	net	sales	in	fiscal	2020.	These	expenditures	will	fund	initiatives	that	are	expected to	fuel	growth,	support	innovative	products,	and	continue	HMM	initiatives	throughout	the	supply	chain.

# Cash	Flows	from	Financing	Activities

|  | Fiscal	Year |  |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Change\tin\tnotes\tpayable | $(66.3) | $327.5 |
| Issuance\tof\tlong-term\tdebt | 339.1 | 6,550.0 |
| Payment\tof\tlong-term\tdebt | (1,493.8) | (600.1) |
| Proceeds\tfrom\tcommon\tstock\tissued\ton\texercised\toptions | 241.4 | 99.3 |
| Proceeds\tfrom\tcommon\tstock\tissued | - | 969.9 |
| Purchases\tof\tcommon\tstock\tfor\ttreasury | (1.1) | (601.6) |
| Dividends\tpaid | (1,181.7) | \t\t\t\t(1,139.7) |
| Investments\tin\tredeemable\tinterest | 55.7 | - |
| Distributions\tto\tnoncontrolling\tand\tredeemable\tinterest\tholders | (38.5) | (51.8) |
| Other,\tnet | (31.2) | (108.0) |
| Net\tcash\t(used)\tprovided\tby\tfinancing\tactivities | $\t\t\t\t(2,176.4) | $5,445.5 |

Financing	activities	used	$2.2	billion	of	cash	in	fiscal	2019	compared	to	providing	$5.4	billion	in	fiscal	2018.	We	had	$1.2	billion	of	net	debt	repayments	in fiscal	2019	compared	to	$6.3	billion	of	net	debt	issuances	in	fiscal	2018,	which	partially	funded	the	acquisition	of	Blue	Buffalo.	For	more	information	on	our debt	issuances	and	payments,	please	refer	to	Note	8	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

During	fiscal	2019,	we	received	$241	million	of	net	proceeds	from	common	stock	issued	on	exercised	options	compared	to	$99	million	in	fiscal	2018. During	fiscal	2018,	we	received	$970	million	of	net	proceeds	from	common	stock	issued	to	fund	a	portion	of	the	Blue	Buffalo	acquisition.

Share	repurchases	in	fiscal	2019	were	insignificant.	During	fiscal	2018,	we	repurchased	11	million	shares	of	our	common	stock	for	$602	million.

# Selected	Cash	Flows	from	Joint	Ventures

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

|  | Fiscal	Year | Fiscal	Year |
| :--- | :--- | :--- |
| Inflow\t(Outflow),\tin\tMillions | 2019 | 2018 |
| Investments\tin\taffiliates,\tnet | $\t\t\t\t(0.1) | \t$\t\t\t\t(17.3) |
| Dividends\treceived | 86.7 | 113.2 |

# CAPITAL	RESOURCES

Total	capital	consisted	of	the	following:

| In	Millions | May	26,<br>2019 | May	27,<br>2018 |
| :--- | :--- | :--- |
| Notes\tpayable | $1,468.7 | $1,549.8 |
| Current\tportion\tof\tlong-term\tdebt | 1,396.5 | 1,600.1 |
| Long-term\tdebt | 11,624.8 | 12,668.7 |
| Total\tdebt | 14,490.0 | 15,818.6 |
| Redeemable\tinterest | 551.7 | 776.2 |
| Noncontrolling\tinterests | 313.2 | 351.3 |
| Stockholders'\tequity | 7,054.5 | 6,141.1 |
| Total\tcapital | $\t\t\t\t22,409.4 | $\t\t\t\t23,087.2 |

The	following	table	details	the	fee-paid	committed	and	uncommitted	credit	lines	we	had	available	as	of	May	26,	2019:

| In	Billions | Facility<br>Amount | Borrowed<br>Amount |
| :--- | :--- | :--- |
| Credit\tfacility\texpiring: |  |  |
| \tMay\t2022 | $2.7 | $- |
| \tJune\t2019 | 0.2 | - |
| Total\tcommitted\tcredit\tfacilities | 2.9 | - |
| Uncommitted\tcredit\tfacilities | 0.7 | 0.2 |
| Total\tcommitted\tand\tuncommitted\tcredit\tfacilities | $\t\t\t\t\t\t\t\t\t\t3.6 | $\t\t\t\t\t\t\t\t\t\t0.2 |

To	ensure	availability	of	funds,	we	maintain	bank	credit	lines	sufficient	to	cover	our	outstanding	notes	payable.	Commercial	paper	is	a	continuing	source	of short-term	financing.	We	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	May	26,	2019,	we	were in	compliance	with	all	of	these	covenants.

We	have	$1,396	million	of	long-term	debt	maturing	in	the	next	12	months	that	is	classified	as	current,	including	$500	million	of	2.2	percent	notes	due October	2019,	€300.0	euro-denominated	0.0	percent	notes	due	January	2020,	and	€500.0	million	euro-denominated	floating-rate	notes	due	January	2020. We	believe	that	cash	flows	from	operations,	together	with	available	short-	and	long-term	debt	financing,	will	be	adequate	to	meet	our	liquidity	and	capital needs	for	at	least	the	next	12	months.

As	of	May	26,	2019,	our	total	debt,	including	the	impact	of	derivative	instruments	designated	as	hedges,	was	74	percent	in	fixed-rate	and	26	percent	in floating-rate	instruments,	compared	to	73	percent	in	fixed-rate	and	27	percent	in	floating-rate	instruments	on	May	27,	2018.

Our	net	debt	to	operating	cash	flow	ratio	declined	to	5.0	in	fiscal	2019	from	5.4	in	fiscal	2018,	primarily	driven	by	a	decrease	in	long-term	debt.	Our	net debt-to-adjusted	earnings	before	net	interest,	income	taxes,	depreciation	and	amortization	ratio	declined	to	3.9	in	fiscal	2019	from	4.2	on	a	pro	forma	basis	in fiscal	2018,	consistent	with	our	plans	to	reduce	our	leverage	following	our	acquisition	of	Blue	Buffalo	(see	the	"Non-GAAP	Measures"	section	below	for our	use	of	this	measure	not	defined	by	GAAP).

We	have	a	51	percent	controlling	interest	in	Yoplait	SAS	and	a	50	percent	interest	in	Yoplait	Marques	SNC	and	Liberté	Marques	Sàrl.	Sodiaal	International (Sodiaal)	holds	the	remaining	interests	in	each	of	these	entities.	We	consolidate	these	entities	into	our	consolidated	financial	statements.	We	record	Sodiaal's 50	percent	interest	in	Yoplait	Marques	SNC	and	Liberté	Marques	Sàrl	as	noncontrolling	interests,	and	its	49	percent	interest	in	Yoplait	SAS	as	a	redeemable interest	on	our	Consolidated	Balance	Sheets.	These	euro-	and	Canadian	dollar-denominated	interests	are	reported	in	U.S.	dollars	on	our	Consolidated Balance	Sheets.	Sodiaal	has	the	ability	to	put	all	or	a	portion	of	its	redeemable	interest	to	us	at	fair	value	once	per	year,	up	to	three	times	before	December 2024.	As	of	May	26,	2019,	the	redemption	value	of	the	redeemable	interest	was	$552	million	which	approximates	its	fair	value.

During	the	second	quarter	of	fiscal	2019,	Sodiaal	invested	$56	million	in	Yoplait	SAS.

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,	2018,	the	floating	preferred	return	rate	on	GMC's	Class	A	Interests	was	reset	to	the	sum	of	three-month	LIBOR	plus 142.5	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.

# OFF-BALANCE	SHEET	ARRANGEMENTS	AND	CONTRACTUAL	OBLIGATIONS

As	of	May	26,	2019,	we	have	issued	guarantees	and	comfort	letters	of	$682	million	for	the	debt	and	other	obligations	of	consolidated	subsidiaries,	and guarantees	and	comfort	letters	of	$134	million	for	the	debt	and	other	obligations	of	non-consolidated	affiliates,	mainly	CPW.	In	addition,	off-balance	sheet arrangements	are	generally	limited	to	the	future	payments	under	non-cancelable	operating	leases,	which	totaled	$483	million	as	of	May	26,	2019.

As	of	May	26,	2019,	we	invested	in	four	variable	interest	entities	(VIEs).	None	of	our	VIEs	are	material	to	our	results	of	operations,	financial	condition,	or liquidity	as	of	and	for	the	fiscal	year	ended	May	26,	2019.

Our	defined	benefit	plans	in	the	United	States	are	subject	to	the	requirements	of	the	Pension	Protection	Act	(PPA).	In	the	future,	the	PPA	may	require	us	to make	additional	contributions	to	our	domestic	plans.	We	do	not	expect	to	be	required	to	make	any	contributions	in	fiscal	2020.

The	following	table	summarizes	our	future	estimated	cash	payments	under	existing	contractual	obligations,	including	payments	due	by	period:

| In	Millions | Total | 2020 | 2021	-22 | 2023	-24 | 2025	and<br>Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Long-term\tdebt\t(a) | $\t\t\t\t13,093.0 | $ \t\t\t\t1,396.3 | $\t\t\t\t3,338.4 | $\t\t\t\t2,810.2 | $\t\t\t\t5,548.1 |
| Accrued\tinterest | 92.6 | 92.6 | - | - | - |
| Operating\tleases\t(b) | 482.6 | 120.0 | 186.7 | 112.9 | 63.0 |
| Capital\tleases | 0.3 | 0.2 | 0.1 | - | - |
| Purchase\tobligations\t(c) | 2,961.8 | 2,605.1 | 321.9 | 27.6 | 7.2 |
| Total\tcontractual\tobligations | 16,630.3 | 4,214.2 | 3,847.1 | 2,950.7 | 5,618.3 |
| Other\tlong-term\tobligations\t(d) | 1,302.4 | - | - | - | - |
| Total\tlong-term\tobligations | $17,932.7 | $4,214.2 | $3,847.1 | $2,950.7 | $5,618.3 |

(a) Amounts	represent	the	expected	cash	payments	of	our	long-term	debt	and	do	not	include	$0.3	million	for	capital	leases	or	$72.0	million	for	net	unamortized	debt issuance	costs,	premiums	and	discounts,	and	fair	value	adjustments.

(b)Operating	leases	represents	the	minimum	rental	commitments	under	non-cancelable	operating	leases.

(c) The	majority	of	the	purchase	obligations	represent	commitments	for	raw	material	and	packaging	to	be	utilized	in	the	normal	course	of	business	and	for	consumer marketing	spending	commitments	that	support	our	brands.	For	purposes	of	this	table,	arrangements	are	considered	purchase	obligations	if	a	contract	specifies	all significant	terms,	including	fixed	or	minimum	quantities	to	be	purchased,	a	pricing	structure,	and	approximate	timing	of	the	transaction.	Most	arrangements	are cancelable	without	a	significant	penalty	and	with	short	notice	(usually	30	days).	Any	amounts	reflected	on	the	Consolidated	Balance	Sheets	as	accounts	payable	and accrued	liabilities	are	excluded	from	the	table	above.

(d)The	fair	value	of	our	foreign	exchange,	equity,	commodity,	and	grain	derivative	contracts	with	a	payable	position	to	the	counterparty	was	$17.3	million	as	of	May	26, 2019,	based	on	fair	market	values	as	of	that	date.	Future	changes	in	market	values	will	impact	the	amount	of	cash	ultimately	paid	or	received	to	settle	those instruments	in	the	future.	Other	long-term	obligations	mainly	consist	of	liabilities	for	accrued	compensation	and	benefits,	including	the	underfunded	status	of	certain of	our	defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit	plans,	and	miscellaneous	liabilities.	We	expect	to	pay	approximately $20	million	of	benefits	from	our	unfunded	postemployment	benefit	plans	and	approximately	$18	million	of	deferred	compensation	in	fiscal	2020.	We	are	unable	to reliably	estimate	the	amount	of	these	payments	beyond	fiscal	2020.	As	of	May	26,	2019,	our	total	liability	for	uncertain	tax	positions	and	accrued	interest	and penalties	was	$165.1	million.

# SIGNIFICANT	ACCOUNTING	ESTIMATES

For	a	complete	description	of	our	significant	accounting	policies,	please	see	Note	2	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.	Our significant	accounting	estimates	are	those	that	have	a	meaningful	impact	on	the	reporting	of	our	financial	condition	and	results	of	operations.	These estimates	include	our	accounting	for	promotional	expenditures,	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.

# Revenue	Recognition

Our	revenues	are	reported	net	of	variable	consideration	and	consideration	payable	to	our	customers,	including	trade	promotion,	consumer	coupon redemption	and	other	costs,	including	estimated	allowances	for	returns,	unsalable	product,	and	prompt	pay	discounts.	Trade	promotions	are	recorded	using significant	judgment	of	estimated	participation	and	performance	levels	for	offered	programs	at	the	time	of	sale.	Differences	between	estimated	expenses	and actual	costs	are	recognized	as	a	change	in	management	estimate	in	a	subsequent	period.	Our	accrued	trade	liabilities	were	$484	million	as	of	May	26,	2019, and	$500	million	as	of	May	27,	2018.	Because	these	amounts	are	significant,	if	our	estimates	are	inaccurate	we	would	have	to	make	adjustments	in subsequent	periods	that	could	have	a	significant	effect	on	our	results	of	operations.

# Valuation	of	Long-Lived	Assets

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

# Intangible	Assets

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

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

Intangible	assets	that	are	deemed	to	have	definite	lives	are	amortized	on	a	straight-line	basis,	over	their	useful	lives,	generally	ranging	from	4	to	30	years. Our	estimate	of	the	fair	value	of	our	brand	assets	is	based	on	a	discounted	cash	flow	model	using	inputs	which	include	projected	revenues	from	our	long- range	plan,	assumed	royalty	rates	that	could	be	payable	if	we	did	not	own	the	brands,	and	a	discount	rate.

As	of	May	26,	2019,	we	had	$20.6	billion	of	goodwill	and	indefinite-lived	intangible	assets.	While	we	currently	believe	that	the	fair	value	of	each	intangible exceeds	its	carrying	value	and	that	those	intangibles	so	classified	will	contribute	indefinitely	to	our	cash	flows,	materially	different	assumptions	regarding future	performance	of	our	businesses	or	a	different	weighted-average	cost	of	capital	could	result	in	material	impairment	losses	and	amortization	expense.	We performed	our	fiscal	2019	assessment	of	our	intangible	assets	as	of	the	first	day	of	the	second	quarter	of	fiscal	2019.	As	a	result	of	lower	sales	projections	in our	long-range	plans	for	the	businesses	supporting	the	Progresso,	Food	Should	Taste	Good,	and	Mountain	High	brand	intangible	assets,	we	recorded	the following	impairment	charges:

|  | Impairment | as	of |
| :--- | :--- | :--- |
| In\tMillions | Charge | Nov.\t25,\t2018 |
| Progresso | $132.1 | $330.0 |
| Food\tShould\tTaste\tGood | 45.1 | - |
| Mountain\tHigh | 15.4 | - |
| Total | $\t\t\t\t\t\t\t\t192.6 | $\t\t\t\t\t\t\t\t330.0 |

Significant	assumptions	used	in	that	assessment	included	our	long-range	cash	flow	projections	for	the	businesses,	royalty	rates,	weighted-average	cost	of capital	rates,	and	tax	rates.

Our	Latin	America	reporting	unit	and	the	Yoki	brand	intangible	asset	had	fair	values	that	were	not	substantially	in	excess	of	the	carry	value.	The	excess	fair value	as	of	the	fiscal	2019	test	date	of	the	Latin	America	reporting	unit	and	the	Yoki	brand	intangible	asset	were	as	follows:

|  | Carrying	Value | Excess	Fair	Value |
| :--- | :--- | :--- |
|  | of\tIntangible | as\tof\tFiscal\t2019 |
| In\tMillions | Asset | Test\tDate |
| Latin\tAmerica | $209.0 | 7% |
| Yoki | $49.1 | 10% |

While	having	significant	coverage	as	of	our	fiscal	2019	assessment	date,	the	Pillsbury	brand	intangible	asset	and	U.S.	Yogurt	reporting	unit	had	risk	of decreasing	coverage.	We	will	continue	to	monitor	these	businesses	for	potential	impairment.

# Redeemable	Interest

In	fiscal	2019,	we	adjusted	the	redemption	value	of	Sodiaal's	redeemable	interest	in	Yoplait	SAS	based	on	a	discounted	cash	flow	model.	The	significant assumptions	used	to	estimate	the	redemption	value	include	projected	revenue	growth	and	profitability	from	our	long-range	plan,	capital	spending, depreciation	and	taxes,	foreign	currency	exchange	rates,	and	a	discount	rate.	As	of	May	26,	2019,	the	redemption	value	of	the	redeemable	interest	was $552	million.

# Stock-based	Compensation

The	valuation	of	stock	options	is	a	significant	accounting	estimate	that	requires	us	to	use	judgments	and	assumptions	that	are	likely	to	have	a	material impact	on	our	financial	statements.	Annually,	we	make	predictive	assumptions	regarding	future	stock	price	volatility,	employee	exercise	behavior,	dividend yield,	and	the	forfeiture	rate.	For	more	information	on	these	assumptions,	please	see	Note	11	to	the	Consolidated	Financial	Statements	in	Item	8	of	this report.

The	estimated	fair	values	of	stock	options	granted	and	the	assumptions	used	for	the	Black-Scholes	option-pricing	model	were	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
|  | 2019 | 2018 | 2017 |
| Estimated\tfair\tvalues\tof\tstock\toptions\tgranted | $5.35 | $6.18 | $8.80 |
| Assumptions: |  |  |  |
| Risk-free\tinterest\trate | 2.9\t% | 2.2\t% | 1.7\t% |
| Expected\tterm | \t 8.5\tyears | \t 8.2\tyears | \t 8.5\tyears |
| Expected\tvolatility | 16.3\t% | 15.8\t% | 17.8\t% |
| Dividend\tyield | 4.3\t% | 3.6\t% | 2.9\t% |

The	risk-free	interest	rate	for	periods	during	the	expected	term	of	the	options	is	based	on	the	U.S.	Treasury	zero-coupon	yield	curve	in	effect	at	the	time	of grant.	An	increase	in	the	expected	term	by	1	year,	leaving	all	other	assumptions	constant,	would	increase	the	grant	date	fair	value	by	9	percent.	If	all	other assumptions	are	held	constant,	a	one	percentage	point	increase	in	our	fiscal	2019	volatility	assumption	would	increase	the	grant	date	fair	value	of	our	fiscal 2019	option	awards	by	8	percent.

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

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

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

# Income	Taxes

We	apply	a	more-likely-than-not	threshold	to	the	recognition	and	derecognition	of	uncertain	tax	positions.	Accordingly,	we	recognize	the	amount	of	tax benefit	that	has	a	greater	than	50	percent	likelihood	of	being	ultimately	realized	upon	settlement.	Future	changes	in	judgment	related	to	the	expected	ultimate resolution	of	uncertain	tax	positions	will	affect	earnings	in	the	quarter	of	such	change.	For	more	information	on	income	taxes,	please	see	Note	14	to	the Consolidated	Financial	Statements	in	Item	8	of	this	report.

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

We	have	defined	benefit	pension	plans	covering	many	employees	in	the	United	States,	Canada,	Switzerland,	France,	and	the	United	Kingdom.	We	also sponsor	plans	that	provide	health	care	benefits	to	many	of	our	retirees	in	the	United	States,	Canada,	and	Brazil.	Under	certain	circumstances,	we	also	provide accruable	benefits,	primarily	severance,	to	former	and	inactive	employees	in	the	United	States,	Canada,	and	Mexico.	Please	see	Note	13	to	the	Consolidated Financial	Statements	in	Item	8	of	this	report	for	a	description	of	our	defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit	plans.

We	recognize	benefits	provided	during	retirement	or	following	employment	over	the	plan	participants'	active	working	lives.	Accordingly,	we	make	various assumptions	to	predict	and	measure	costs	and	obligations	many	years	prior	to	the	settlement	of	our	obligations.	Assumptions	that	require	significant management	judgment	and	have	a	material	impact	on	the	measurement	of	our	net	periodic	benefit	expense	or	income	and	accumulated	benefit	obligations include	the	long-term	rates	of	return	on	plan	assets,	the	interest	rates	used	to	discount	the	obligations	for	our	benefit	plans,	and	health	care	cost	trend	rates.

# Expected	Rate	of	Return	on	Plan	Assets

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

Our	historical	investment	returns	(compound	annual	growth	rates)	for	our	United	States	defined	benefit	pension	and	other	postretirement	benefit	plan	assets were	6.6	percent,	6.6	percent,	10.3	percent,	8.4	percent,	and	7.9	percent	for	the	1,	5,	10,	15,	and	20	year	periods	ended	May	26,	2019.

On	a	weighted-average	basis,	the	expected	rate	of	return	for	all	defined	benefit	plans	was	7.25	percent	for	fiscal	2019,	7.88	percent	for	fiscal	2018,	and 8.17	percent	for	fiscal	2017.	For	fiscal	2020,	we	lowered	our	weighted-average	expected	rate	of	return	on	plan	assets	for	our	principal	defined	benefit pension	and	other	postretirement	plans	in	the	United	States	to	7.0	percent	due	to	asset	allocation	changes	and	expected	asset	returns.

Lowering	the	expected	long-term	rate	of	return	on	assets	by	100	basis	points	would	increase	our	net	pension	and	postretirement	expense	by	$70	million	for fiscal	2020.	A	market-related	valuation	basis	is	used	to	reduce

year-to-year	expense	volatility.	The	market-related	valuation	recognizes	certain	investment	gains	or	losses	over	a	five-year	period	from	the	year	in	which they	occur.	Investment	gains	or	losses	for	this	purpose	are	the	difference	between	the	expected	return	calculated	using	the	market-related	value	of	assets	and the	actual	return	based	on	the	market-related	value	of	assets.	Our	outside	actuaries	perform	these	calculations	as	part	of	our	determination	of	annual	expense or	income.

# Discount	Rates

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

Our	weighted-average	discount	rates	were	as	follows:

|  | Defined	Benefit<br>Pension	Plans | Postretirement<br>Benefit	Plans | Postemployment<br>Benefit	Plans |
| :--- | :--- | :--- | :--- |
| Effective\trate\tfor\tfiscal\t2020\tservice\tcosts | 4.17% | 4.04% | 3.51% |
| Effective\trate\tfor\tfiscal\t2020\tinterest\tcosts | 3.45% | 3.28% | 2.84% |
| Obligations\tas\tof\tMay\t31,\t2019 | 3.91% | 3.79% | 3.10% |
| Effective\trate\tfor\tfiscal\t2019\tservice\tcosts | 4.34% | 4.27% | 3.99% |
| Effective\trate\tfor\tfiscal\t2019\tinterest\tcosts | 3.92% | 3.80% | 3.37% |
| Obligations\tas\tof\tMay\t31,\t2018 | 4.20% | 4.17% | 3.60% |
| Effective\trate\tfor\tfiscal\t2018\tservice\tcosts | 4.37% | 4.27% | 3.54% |
| Effective\trate\tfor\tfiscal\t2018\tinterest\tcosts | 3.45% | 3.24% | 2.67% |

Lowering	the	discount	rates	by	100	basis	points	would	increase	our	net	defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit plan	expense	for	fiscal	2020	by	approximately	$55	million.	All	obligation-related	experience	gains	and	losses	are	amortized	using	a	straight-line	method	over the	average	remaining	service	period	of	active	plan	participants	or	over	the	average	remaining	lifetime	of	the	remaining	plan	participants	if	the	plan	is viewed	as	"all	or	almost	all"	inactive	participants.

# Health	Care	Cost	Trend	Rates

We	review	our	health	care	cost	trend	rates	annually.	Our	review	is	based	on	data	we	collect	about	our	health	care	claims	experience	and	information provided	by	our	actuaries.	This	information	includes	recent	plan	experience,	plan	design,	overall	industry	experience	and	projections,	and	assumptions	used by	other	similar	organizations.	Our	initial	health	care	cost	trend	rate	is	adjusted	as	necessary	to	remain	consistent	with	this	review,	recent	experiences,	and short-term	expectations.	Our	initial	health	care	cost	trend	rate	assumption	is	6.7	percent	for	retirees	age	65	and	over	and	6.4	percent	for	retirees	under	age	65 at	the	end	of	fiscal	2019.	Rates	are	graded	down	annually	until	the	ultimate	trend	rate	of	4.5	percent	is	reached	in	2029	for	all	retirees.	The	trend	rates	are applicable	for	calculations	only	if	the	retirees'	benefits	increase	as	a	result	of	health	care	inflation.	The	ultimate	trend	rate	is	adjusted	annually,	as	necessary, to	approximate	the	current	economic	view	on	the	rate	of	long-term	inflation	plus	an	appropriate	health	care	cost	premium.	Assumed	trend	rates	for	health care	costs	have	an	important	effect	on	the	amounts	reported	for	the	other	postretirement	benefit	plans.

A	one	percentage	point	change	in	the	health	care	cost	trend	rate	would	have	the	following	effects:

|  | One | One |
| :--- | :--- | :--- |
|  | Percentage | Percentage |
|  | Point | Point |
| In\tMillions | Increase | Decrease |
| Effect\ton\tthe\taggregate\tof\tthe\tservice\tand\tinterest\tcost\tcomponents\tin\tfiscal\t2020 | $1.4 | $(1.3) |
| Effect\ton\tthe\tother\tpost\tretirement\taccumulated\tbenefit\tobligation\tas\tof\tMay\t26,\t2019 | \t\t\t\t\t\t\t\t43.5 | \t\t\t\t\t\t\t\t(40.3) |

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

# Financial	Statement	Impact

In	fiscal	2019,	we	recorded	net	defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit	plan	expense	of	$24	million	compared	to $23	million	of	expense	in	fiscal	2018	and	$56	million	of	expense	in	fiscal	2017.	As	of	May	26,	2019,	we	had	cumulative	unrecognized	actuarial	net	losses	of $2.0	billion	on	our	defined	benefit	pension	plans	and	cumulative	unrecognized	actuarial	net	gains	of	$81	million	on	our	postretirement	and	postemployment benefit	plans,	mainly	as	the	result	of	liability	increases	from	lower	interest	rates,	partially	offset	by	recent	increases	in	the	values	of	plan	assets.	These unrecognized	actuarial	net	losses	will	result	in	increases	in	our	future	pension	and	postretirement	benefit	expenses	because	they	currently	exceed	the corridors	defined	by	GAAP.

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

# RECENTLY	ISSUED	ACCOUNTING	PRONOUNCEMENTS

In	August	2017,	the	Financial	Accounting	Standards	Board	(FASB)	issued	new	hedge	accounting	requirements.	The	new	standard	amends	the	hedge accounting	recognition	and	presentation	requirements	to	better	align	an	entity's	risk	management	activities	and	financial	reporting.	The	new	standard	also simplifies	the	application	of	hedge	accounting	guidance.	The	requirements	of	the	new	standard	are	effective	for	annual	reporting	periods	beginning	after December	15,	2018,	and	interim	periods	within	those	annual	periods,	which	for	us	is	the	first	quarter	of	fiscal	2020.	We	do	not	expect	this	guidance	to	have a	material	impact	on	our	results	of	operations	or	financial	position.

In	February	2016,	the	FASB	issued	new	accounting	requirements	for	accounting,	presentation	and	classification	of	leases.	This	will	result	in	certain	leases being	capitalized	as	a	right	of	use	asset	with	a	related	liability	on	our	Consolidated	Balance	Sheets.	The	requirements	of	the	new	standard	and	subsequent amendments	are	effective	for	annual	reporting	periods	beginning	after	December	15,	2018,	and	interim	periods	within	those	annual	periods,	which	for	us	is the	first	quarter	of	fiscal	2020.	The	requirements	of	the	new	standard	and	subsequent	amendments	allow	for	either	the	modified	retrospective	transition approach,	which	requires	application	of	the	guidance	in	all	comparative	periods	presented,	or	the	cumulative	effect	adjustment	approach,	which	requires application	of	the	guidance	at	the	adoption	date.

We	are	in	the	process	of	implementing	lease	accounting	software,	developing	a	centralized	business	process,	and	implementing	corresponding	controls.	We have	substantially	completed	our	analysis	of	the	impact	of	this	standard	on	our	lease	portfolio.	We	will	adopt	this	guidance	in	the	first	quarter	of	fiscal	2020 using	the	cumulative	effect	adjustment	approach	and	electing	certain	practical	expedients	permitted	under	the	transition	guidance,	including	not	reassessing whether	existing	contracts	contain	leases	and	carrying	forward	the	historical

classification	of	those	leases.	In	addition,	we	will	also	elect	to	not	recognize	leases	with	an	initial	term	of	12	months	or	less	on	our	Consolidated	Balance Sheets.	We	do	not	expect	the	effects	to	the	Consolidated	Financial	Statements	to	be	pervasive.	We	estimate	that	we	will	record	right	of	use	assets	and	related liabilities	of	approximately	$400	to	$500	million,	subject	to	the	completion	of	our	assessment	and	the	fluctuation	of	our	lease	portfolio	and	discount	rates. We	do	not	expect	this	guidance	to	have	a	material	impact	on	our	Consolidated	Statements	of	Earnings	or	our	Consolidated	Statements	of	Cash	Flows.	See Note	15	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report	for	noncancelable	future	lease	commitments.

# 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.

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

# Organic	Net	Sales	Growth	Rates

We	provide	organic	net	sales	growth	rates	for	our	consolidated	net	sales	and	segment	net	sales.	This	measure	is	used	in	reporting	to	our	Board	of	Directors and	executive	management	and	as	a	component	of	the	measurement	of	our	performance	for	incentive	compensation	purposes.	We	believe	that	organic	net sales	growth	rates	provide	useful	information	to	investors	because	they	provide	transparency	to	underlying	performance	in	our	net	sales	by	excluding	the effect	that	foreign	currency	exchange	rate	fluctuations,	as	well	as	acquisitions,	divestitures,	and	a	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.

# Net	Sales	Growth	Rate	on	a	Constant-currency	Basis

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

Net	sales	growth	rate	on	a	constant-currency	basis	is	calculated	as	follows:

|  | Fiscal |
| :--- | :--- |
|  | 2019 |
| Percentage\tchange\tin\tnet\tsales\tas\treported | 7\t% |
| Impact\tof\tforeign\tcurrency\texchange | (2)\tpts |
| Percentage\tchange\tin\tnet\tsales\ton\ta\tconstant-currency\tbasis | 9\t% |

# Adjusted	Diluted	EPS	and	Related	Constant-currency	Growth	Rate

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	profitability	measure	we	use	to evaluate	earnings	performance	on	a	comparable	year-to-year	basis.

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

|  |  |  | 2019	vs.	2018 |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Per\tShare\tData | 2019 | 2018 | Change | 2017 | 2016 | 2015 |
| Diluted\tearnings\tper\tshare,\tas\treported | $2.90 | $3.64 | (20)\t\t% | \t\t$2.77 | $2.77 | $\t\t1.97 |
| Net\ttax\tbenefit\t(a) | (0.01) | (0.89) |  | - | - | - |
| Tax\titems\t(a) | (0.12) | 0.07 |  | - | - | 0.13 |
| Mark-to-market\teffects\t(b) | 0.05 | (0.04) |  | \t\t(0.01) | (0.07) | 0.09 |
| Divestitures\tloss\t(gain)\t(c) | 0.03 | - |  | 0.01 | (0.10) | - |
| Acquisition\ttransaction\tand\tintegration\tcosts\t(c) | 0.03 | 0.10 |  | - | - | 0.02 |
| Restructuring\tcharges\t(d) | 0.10 | 0.11 |  | 0.26 | 0.26 | 0.35 |
| Project-related\tcosts\t(d) | - | 0.01 |  | 0.05 | 0.06 | 0.01 |
| Asset\timpairments\t(d) | 0.26 | 0.11 |  | - | - | 0.28 |
| Investment\tvaluation\tadjustments\t(e) | (0.03) | - |  | - | - | - |
| CPW\trestructuring\tcharges\t(f) | 0.02 | - |  | - | - | - |
| Legal\trecovery\t(g) | (0.01) | - |  | - | - | - |
| Venezuela\tcurrency\tdevaluation | - | - |  | - | - | 0.01 |
| Adjusted\tdiluted\tearnings\tper\tshare | $\t\t\t\t3.22 | $\t\t\t\t3.11 | 4\t\t% | \t\t$3.08 | $\t\t2.92 | $2.86 |
| Foreign\tcurrency\texchange\timpact |  |  | Flat |  |  |  |
| Adjusted\tdiluted\tearnings\tper\tshare\tgrowth,\ton\ta\tconstant-currency\tbasis |  |  | 4\t\t% |  |  |  |

(a) See	Note	14	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(b)See	Note	7	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(c) See	Note	3	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(d)See	Note	4	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(e) Valuation	gains	on	certain	corporate	investments.

(f) The	CPW	restructuring	charges	are	related	to	initiatives	designed	to	improve	profitability	and	growth	that	were	approved	in	fiscal	2018	and	2019.

(g)Legal	recovery	related	to	our	Yoplait	SAS	subsidiary.

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.

# Free	Cash	Flow	Conversion	Rate

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

| In	Millions | Fiscal	2019 |
| :--- | :--- |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\nand\tnoncontrolling\tinterests,\tas\treported | $1,786.2 |
| Net\ttax\tbenefit\t(a) | $(7.2) |
| Tax\titem\t(a) | (72.9) |
| Mark-to-market\teffects,\tnet\tof\ttax\t(b) | 27.7 |
| Acquisition\tintegration\tcosts,\tnet\tof\ttax\t(c) | 19.7 |
| Divestitures\tloss,\tnet\tof\ttax\t(c) | 16.4 |
| Restructuring\tcharges,\tnet\tof\ttax\t(d) | 63.0 |
| Project-related\tcosts,\tnet\tof\ttax\t(d) | 1.1 |
| Asset\timpairments,\tnet\tof\ttax\t(d) | 159.7 |
| Hyperinflationary\taccounting,\tnet\tof\ttax\t(e) | 3.2 |
| Investment\tvaluation\tadjustments,\tnet\tof\ttax\t(f) | (17.6) |
| Legal\trecovery,\tnet\tof\ttax\t(g) | (10.8) |
| CPW\trestructuring\tcosts,\tnet\tof\ttax\t(h) | 11.1 |
| Adjusted\tnet\tearnings,\tincluding\tearnings\tattributable\tto\nredeemable\tand\tnoncontrolling\tinterests | $1,979.6 |
| Net\tcash\tprovided\tby\toperating\tactivities | $2,807.0 |
| Purchases\tof\tland,\tbuildings,\tand\tequipment | (537.6) |
| Free\tcash\tflow | $2,269.4 |
| Net\tcash\tprovided\tby\toperating\tactivities\tconversion\trate | 157% |
| Free\tcash\tflow\tconversion\trate | 115% |

(e)Impact	of	hyperinflationary	accounting	for	our	Argentina	subsidiary,	which	was	sold	in	the	third	quarter	of	fiscal	2019.

(f) Valuation	gains	on	certain	corporate	investments.

(h)The	CPW	restructuring	charges	are	related	to	initiatives	designed	to	improve	profitability	and	growth	that	were	approved	in	fiscal	2018	and	2019.

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

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

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

# Net	Sales	Growth	Rate	for	Canada	Operating	Unit	on	a	Constant-currency	Basis

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

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

# Constant-currency	Segment	Operating	Profit	Growth	Rates

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

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

|  | as	Reported | Currency	Exchange | Basis |  |
| :--- | :--- | :--- | :--- | :--- |
| North\tAmerica\tRetail | 3\t\t% | Flat |  | 3\t\t% |
| Europe\t&amp;\tAustralia | (13) | (5)\t\tpts |  | (8) |
| Asia\t&amp;\tLatin\tAmerica | 83\t\t% | 12\t\tpts |  | 71\t\t% |

# 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:

|  | May	26,	2019 | May	26,	2019 | May	27,	2018 | May	27,	2018 | May	28,	2017 | May	28,	2017 | May	29,	2016 | May	29,	2016 | May	31,	2015 | May	31,	2015 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tMillions | Pretax\nEarnings\n(a) | Income\nTaxes | Pretax\nEarnings\n(a) | Income\nTaxes | Pretax\nEarnings\n(a) | Income\nTaxes | Pretax\nEarnings\n(a) | Income\nTaxes | Pretax\nEarnings\n(a) | Income\nTaxes |
| As\treported | $2,082.0 | $367.8 | $2,135.6 | $57.3 | $2,271.3 | $655.2 | $2,403.6 | $755.2 | $1,761.9 | $586.8 |
| Net\ttax\tbenefit\t(b) | - | 7.2 | - | \t 523.5 | - | - | - | - | - | - |
| Tax\titems\t(b) | - | 72.9 | - | (40.9) | - | - | - | - | - | (78.6) |
| Mark-to-market\teffects\t(c) | 36.0 | 8.3 | (32.1) | (10.0) | (13.9) | (5.1) | (62.8) | (23.2) | 89.7 | 33.2 |
| Divestitures\tloss\t(gain)\t(d) | 30.0 | 13.6 | - | - | 13.5 | 4.3 | (148.2) | (82.2) | - | - |
| Acquisition\ttransaction\tand\tintegration\tcosts\t(d) | 25.6 | 5.9 | 83.9 | 25.4 | - | - | - | - | 16.0 | 5.6 |
| Restructuring\tcharges\t(e) | 77.6 | 14.6 | 82.7 | 21.4 | 224.1 | 70.2 | 229.8 | 69.0 | 343.5 | \t 125.8 |
| Project-related\tcosts\t(e) | 1.3 | 0.2 | 11.3 | 3.3 | 43.9 | 15.7 | 57.5 | 20.7 | 13.2 | 4.9 |
| Asset\timpairments\t(e) | 207.4 | 47.7 | 96.9 | 32.0 | - | - | - | - | 260.0 | 83.1 |
| Hyperinflationary\taccounting\t(f) | 3.2 | - | - | - | - | - | - | - | - | - |
| Investment\tvaluation\tadjustments\t(g) | (22.8) | (5.2) | - | - | - | - | - | - | - | - |
| Legal\trecovery\t(h) | (16.2) | (5.4) | - | - | - | - | - | - | - | - |
| Venezuela\tcurrency\tdevaluation | - | - | - | - | - | - | - | - | 8.0 | - |
| As\tadjusted | $2,424.1 | $527.6 | $2,378.3 | $612.0 | $2,538.9 | $740.3 | $2,479.9 | $739.5 | $2,492.3 | $760.8 |
| Effective\ttax\trate: |  |  |  |  |  |  |  |  |  |  |
| As\treported |  | 17.7% |  | 2.7% |  | 28.8% |  | 31.4% |  | 33.3% |
| As\tadjusted |  | 21.8% |  | 25.7% |  | 29.2% |  | 29.8% |  | 30.5% |
| Sum\tof\tadjustments\tto\tincome\ttaxes |  | $159.8 |  | $554.7 |  | $85.1 |  | $(15.7) |  | $174.0 |
| Average\tnumber\tof\tcommon\tshares\t-\tdiluted\tEPS |  | \t 605.4 |  | \t 585.7 |  | \t 598.0 |  | 611.9 |  | \t 618.8 |
| Impact\tof\tincome\ttax\tadjustments\ton\tAdjusted\tdiluted\tEPS |  | $(0.26) |  | $(0.95) |  | $(0.14) |  | $0.03 |  | $(0.28) |

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

(e) See	Note	4	to	the	Consolidated	Financial	Statements	in	Item	8	of	this	report.

(f) Impact	of	hyperinflationary	accounting	for	our	Argentina	subsidiary,	which	was	sold	in	the	third	quarter	of	fiscal	2019.

(g) Valuation	gains	on	certain	corporate	investments.

(h) Legal	recovery	related	to	our	Yoplait	SAS	subsidiary.

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

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

Our	adjusted	operating	profit	margins	are	calculated	as	follows:

| Percent	of	Net	Sales | 2019 |  | 2018 |  | 2017 |  | 2016 |  | 2015 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tprofit\tas\treported | $2,515.9 | \t14.9\t% | $2,419.9 | \t15.4\t% | $2,492.1 | \t16.0\t% | $2,719.1 | \t16.4\t% | $2,071.8 | \t11.8\t% |
| Mark-to-market\teffects\t(a) | 36.0 | 0.2\t% | (32.1) | \t(0.2)% | (13.9) | \t(0.1)% | (62.8) | \t(0.4)% | 89.7 | 0.5\t% |
| Divestitures\tloss\t(gain)\t(b) | 30.0 | 0.2\t% | - | -\t\t% | 6.5 | -\t\t% | (148.2) | \t(0.9)% | - | -\t\t% |
| Acquisition\ttransaction\tand\tintegration\tcosts\t(b) | 25.6 | 0.1\t% | 34.0 | 0.2\t% | - | -\t\t% | - | -\t\t% | 16.0 | 0.1\t% |
| Restructuring\tcharges\t(c) | 77.6 | 0.5\t% | 82.7 | 0.5\t% | 221.9 | 1.4\t% | 209.3 | 1.3% | 305.7 | 1.7\t% |
| Project-related\tcosts\t(c) | 1.3 | -\t\t% | 11.3 | 0.1\t% | 43.9 | 0.3\t% | 57.5 | 0.4% | 13.2 | 0.1\t% |
| Asset\timpairments\t(c) | 207.4 | 1.2\t% | 96.9 | 0.6\t% | - | -\t\t% | - | -\t\t% | 260.0 | 1.5\t% |
| Hyperinflationary\taccounting\t(d) | 3.2 | -\t\t% | - | -\t\t% | - | -\t\t% | - | -\t\t% | - | -\t\t% |
| Investment\tvaluation\tadjustments\t(e) | (22.8) | \t(0.1)% | - | -\t\t% | - | -\t\t% | - | -\t\t% | - | -\t\t% |
| Legal\trecovery\t(f) | (16.2) | \t(0.1)% | - | -\t\t% | - | -\t\t% | - | -\t\t% | - | -\t\t% |
| Venezuela\tcurrency\tdevaluation | - | -\t\t% | - | -\t\t% | - | -\t\t% | - | -\t\t% | 8.0 | -\t\t% |
| Adjusted\toperating\tprofit | $2,858.0 | \t16.9\t% | $2,612.7 | \t16.6\t% | $2,750.5 | \t17.6\t% | $2,774.9 | \t16.8\t% | $2,764.4 | \t15.7\t% |

(d) Impact	of	hyperinflationary	accounting	for	our	Argentina	subsidiary,	which	was	sold	in	the	third	quarter	of	fiscal	2019.

(f) Legal	recovery	related	to	our	Yoplait	SAS	subsidiary.

# Adjusted	Operating	Profit	Growth	on	a	Constant-currency	Basis

We	believe	that	this	measure	provides	useful	information	to	investors	because	it	is	the	operating	profit	measure	we	use	to	evaluate	operating	profit performance	on	a	comparable	year-to-year	basis.	Additionally,	the	measure	is	evaluated	on	a	constant-currency	basis	by	excluding	the	effect	that	foreign currency	exchange	rate	fluctuations	have	on	year-to-year	comparability	given	the	volatility	in	foreign	currency	exchange	rates.

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

|  | 2019 | 2018 | Change |
| :--- | :--- | :--- | :--- |
| Operating\tprofit\tas\treported | $\t\t\t\t2,515.9 | $\t\t\t\t2,419.9 | 4\t\t% |
| Mark-to-market\teffects\t(a) | 36.0 | (32.1) |  |
| Divestitures\tloss\t(b) | 30.0 | - |  |
| Acquisition\ttransaction\tand\tintegration\tcosts\t(b) | 25.6 | 34.0 |  |
| Restructuring\tcharges\t(c) | 77.6 | 82.7 |  |
| Project-related\tcosts\t(c) | 1.3 | 11.3 |  |
| Asset\timpairments\t(c) | 207.4 | 96.9 |  |
| Hyperinflationary\taccounting\t(d) | 3.2 | - |  |
| Investment\tvaluation\tadjustments\t(e) | (22.8) | - |  |
| Legal\trecovery\t(f) | (16.2) | - |  |
| Adjusted\toperating\tprofit | $\t\t\t\t2,858.0 | $\t\t\t\t2,612.7 | 9\t\t% |
| Foreign\tcurrency\texchange\timpact |  |  | (1)\tpt |
| Adjusted\toperating\tprofit\tgrowth,\ton\ta\tconstant-currency\tbasis |  |  | 10\t\t% |

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

We	believe	that	this	measure	provides	useful	information	to	investors	because	it	is	an	indicator	of	our	ability	to	incur	additional	debt	and	to	service	our existing	debt.	The	reconciliation	of	adjusted	EBITDA	to	net	earnings	attributable	to	General	Mills	on	a	pro	forma	basis,	its	GAAP	equivalent,	as	well	as	the calculation	of	the	net	debt-to-adjusted	EBITDA	ratio	are	as	follows:

| In	Millions | 2019 | 2018 |
| :--- | :--- | :--- |
| Total\tdebt\t(a) | $\t\t\t\t\t\t14,490.0 | $\t\t\t\t\t\t15,818.6 |
| Cash | 450.0 | 399.0 |
| Net\tdebt | $14,040.0 | $15,419.6 |
| Net\tearnings\tattributable\tto\tGeneral\tMills,\tas\treported\t(b) | $1,752.7 | $2,252.4 |
| Net\tearnings\tattributable\tto\tredeemable\tand\tnoncontrolling\tinterests | 33.5 | 32.0 |
| After-tax\tearnings\tfrom\tjoint\tventures | (72.0) | (84.7) |
| Income\ttaxes | 367.8 | 104.3 |
| Earnings\tbefore\tincome\ttaxes\tand\tafter-tax\tearnings\tfrom\tjoint\tventures | 2,082.0 | 2,304.0 |
| Interest,\tnet | 521.8 | 527.8 |
| Depreciation\tand\tamortization | 620.1 | 642.6 |
| EBITDA | 3,223.9 | 3,474.4 |
| Asset\timpairments\t(c) | 207.4 | 96.9 |
| Restructuring\tcharges\t(c) | 77.6 | 82.7 |
| Project-related\tcosts\t(c) | 1.3 | 11.3 |
| Mark-to-market\teffects\t(d) | 36.0 | (32.1) |
| Divestitures\tloss\t(e) | 30.0 | - |
| Acquisition\tintegration\tcosts\t(e) | 25.6 | - |
| Investment\tvaluation\tadjustments\t(f) | (22.8) | - |
| Legal\trecovery\t(g) | (16.2) | - |
| Hyperinflationary\taccounting\t(h) | 3.2 | - |
| Adjusted\tEBITDA | $3,566.0 | $3,633.2 |
| Net\tdebt-to-adjusted\tEBITDA\tratio | 3.9 | 4.2 |

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

(b)Fiscal	2018	net	earnings	attributable	to	General	Mills	is	a	pro	forma	figure	presented	in	Note	3	to	the	Consolidated	Financial	Statements	in	Item	8	of	this report.

(h)Impact	of	hyperinflationary	accounting	for	our	Argentina	subsidiary,	which	was	sold	in	the	third	quarter	of	fiscal	2019.

# Forward-Looking	Financial	Measures

Our	fiscal	2020	outlook	for	organic	net	sales	growth	and	adjusted	operating	profit	and	adjusted	diluted	EPS	are	non-GAAP	financial	measures	that	exclude, or	have	otherwise	been	adjusted	for,	items	impacting	comparability,	including	the	effect	of	foreign	currency	exchange	rate	fluctuations,	restructuring charges	and	project-related	costs,	acquisition	integration	costs,	and	commodity	mark-to-market	effects.	Our	fiscal	2020	outlook	for	organic	net	sales	growth also	excludes	the	effect	of	a	53rd	week,	acquisitions,	and	divestitures.	We	are	not	able	to	reconcile	these	forward-looking	non-GAAP	financial	measures	to their	most	directly	comparable	forward-looking	GAAP	financial	measures	without	unreasonable	efforts	because	we	are	unable	to	predict	with	a	reasonable degree	of	certainty	the	actual	impact	of	changes	in	foreign	currency	exchange	rates	and	commodity	prices	or	the	timing	of	acquisitions,	divestitures	and restructuring	actions	throughout	fiscal	2020.	The	unavailable	information	could	have	a	significant	impact	on	our	fiscal	2020	GAAP	financial	results.

For	fiscal	2020,	we	currently	expect:	foreign	currency	exchange	rates	(based	on	a	blend	of	forward	and	forecasted	rates	and	hedge	positions),	acquisitions, divestitures,	and	a	53rd	week	to	increase	net	sales	growth	by	approximately	1	to	2	percentage	points;	foreign	currency	exchange	rates	to	have	an	immaterial impact	on	adjusted	operating	profit	and	adjusted	diluted	EPS	growth;	and	restructuring	charges	and	project-related	costs	related	to	actions	previously announced	to	total	approximately	$49	million.

# 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	SEC	and	in	our	reports	to	shareholders.

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:	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, including	our	acquisition	of	Blue	Buffalo	and	issues	in	the	integration	of	Blue	Buffalo	and	retention	of	key	management	and	employees;	unfavorable reaction	to	our	acquisition	of	Blue	Buffalo	by	customers,	competitors,	suppliers,	and	employees;	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,	and	energy;	disruptions	or	inefficiencies	in the	supply	chain;	effectiveness	of	restructuring	and	cost	saving	initiatives;	volatility	in	the	market	value	of	derivatives	used	to	manage	price	risk	for	certain commodities;	benefit	plan	expenses	due	to	changes	in	plan	asset	values	and	discount	rates	used	to	determine	plan	liabilities;	failure	or	breach	of	our information	technology	systems;	foreign	economic	conditions,	including	currency	rate	fluctuations;	and	political	unrest	in	foreign	markets	and	economic uncertainty	due	to	terrorism	or	war.

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

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

# Item	7A				Quantitative	and	Qualitative	Disclosures	About	Market	Risk

We	are	exposed	to	market	risk	stemming	from	changes	in	interest	and	foreign	exchange	rates	and	commodity	and	equity	prices.	Changes	in	these	factors could	cause	fluctuations	in	our	earnings	and	cash	flows.	In	the	normal	course	of	business,	we	actively	manage	our	exposure	to	these	market	risks	by	entering into	various	hedging	transactions,	authorized	under	established	policies	that	place	clear	controls	on	these	activities.	The	counterparties	in	these	transactions are	generally	highly	rated	institutions.	We	establish	credit	limits	for	each	counterparty.	Our	hedging	transactions	include	but	are	not	limited	to	a	variety	of derivative	financial	instruments.	For	information	on	interest	rate,	foreign	exchange,	commodity	price,	and	equity	instrument	risk,	please	see	Note	7	to	the Consolidated	Financial	Statements	in	Item	8	of	this	report.

# VALUE	AT	RISK

The	estimates	in	the	table	below	are	intended	to	measure	the	maximum	potential	fair	value	we	could	lose	in	one	day	from	adverse	changes	in	market	interest rates,	foreign	exchange	rates,	commodity	prices,	and	equity	prices	under	normal	market	conditions.	A	Monte	Carlo	value-at-risk	(VAR)	methodology	was used	to	quantify	the	market	risk	for	our	exposures.	The	models	assumed	normal	market	conditions	and	used	a	95	percent	confidence	level.

The	VAR	calculation	used	historical	interest	and	foreign	exchange	rates,	and	commodity	and	equity	prices	from	the	past	year	to	estimate	the	potential volatility	and	correlation	of	these	rates	in	the	future.	The	market	data	were	drawn	from	the	RiskMetrics™	data	set.	The	calculations	are	not	intended	to represent	actual	losses	in	fair	value	that	we	expect	to	incur.	Further,	since	the	hedging	instrument	(the	derivative)	inversely	correlates	with	the	underlying exposure,	we	would	expect	that	any	loss	or	gain	in	the	fair	value	of	our	derivatives	would	be	generally	offset	by	an	increase	or	decrease	in	the	fair	value	of the	underlying	exposure.	The	positions	included	in	the	calculations	were:	debt;	investments;	interest	rate	swaps;	foreign	exchange	forwards;	commodity swaps,	futures,	and	options;	and	equity	instruments.	The	calculations	do	not	include	the	underlying	foreign	exchange	and	commodities	or	equity-related positions	that	are	offset	by	these	market-risk-sensitive	instruments.

The	table	below	presents	the	estimated	maximum	potential	VAR	arising	from	a	one-day	loss	in	fair	value	for	our	interest	rate,	foreign	currency,	commodity, and	equity	market-risk-sensitive	instruments	outstanding	as	of	May	26,	2019	and	May	27,	2018,	and	the	average	fair	value	impact	during	the	year	ended May	26,	2019.

|  | May	26, | during | May	27, |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | fiscal\t2019 | 2018 |
| Interest\trate\tinstruments | $ \t\t\t\t\t\t\t\t74.4 | $\t\t\t\t\t\t\t\t46.1 | $\t\t\t\t\t\t\t\t33.2 |
| Foreign\tcurrency\tinstruments | 16.8 | 19.0 | 21.3 |
| Commodity\tinstruments | 4.1 | 2.5 | 1.9 |
| Equity\tinstruments | 2.3 | 2.2 | 2.0 |

# ITEM	8	Financial	Statements	and	Supplementary	Data

# REPORT	OF	MANAGEMENT	RESPONSIBILITIES

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

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

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

The	Audit	Committee	reviewed	and	approved	the	Company's	annual	financial	statements.	The	Audit	Committee	recommended,	and	the	Board	of	Directors approved,	that	the	consolidated	financial	statements	be	included	in	the	Annual	Report.	The	Audit	Committee	also	appointed	KPMG	LLP	to	serve	as	the Company's	independent	registered	public	accounting	firm	for	fiscal	2020.

J.	L.	Harmening

Chief	Executive	Officer

D.	L.	Mulligan

Chief	Financial	Officer

# Report	of	Independent	Registered	Public	Accounting	Firm

To	the	Stockholders	and	Board	of	Directors

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

We	have	audited	the	accompanying	consolidated	balance	sheets	of	General	Mills,	Inc.	and	subsidiaries	(the	"Company")	as	of	May	26,	2019	and	May	27, 2018,	the	related	consolidated	statements	of	earnings,	comprehensive	income,	total	equity	and	redeemable	interest,	and	cash	flows	for	each	of	the	fiscal years	in	the	three-year	period	ended	May	26,	2019,	and	the	related	notes	and	financial	statement	schedule	(collectively,	the	"consolidated	financial statements").	We	also	have	audited	the	Company's	internal	control	over	financial	reporting	as	of	May	26,	2019,	based	on	criteria	established	in	Internal Control	–	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of May	26,	2019	and	May	27,	2018,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	fiscal	years	in	the	three-year	period	ended	May	26,	2019, in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal control	over	financial	reporting	as	of	May	26,	2019	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework	(2013)	issued	by	the Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

# Basis	for	Opinions

The	Company's	management	is	responsible	for	these	consolidated	financial	statements,	for	maintaining	effective	internal	control	over	financial	reporting, and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Item	9a	Management's	Report	on Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	consolidated	financial	statements	and	an	opinion	on the	Company's	internal	control	over	financial	reporting	based	on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	Public	Company Accounting	Oversight	Board	(United	States)	("PCAOB")	and	are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S. federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

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

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

# Definition	and	Limitations	of	Internal	Control	Over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting and	the	preparation	of	financial	statements	for	external	purposes	in

accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial	reporting	includes	those	policies	and	procedures	that (1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company; (2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of	management and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

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

# /s/	KPMG	LLP

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

Minneapolis,	Minnesota

# Consolidated	Statements	of	Earnings

# GENERAL	MILLS,	INC.	AND	SUBSIDIARIES

(In	Millions,	Except	per	Share	Data)

|  | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tsales | \t$\t\t\t\t16,865.2 | \t$\t\t\t\t15,740.4 | \t$ \t\t\t\t15,619.8 |
| Cost\tof\tsales | 11,108.4 | 10,304.8 | 10,052.0 |
| Selling,\tgeneral,\tand\tadministrative\texpenses | 2,935.8 | 2,850.1 | 2,888.8 |
| Divestitures\tloss | 30.0 | - | 6.5 |
| Restructuring,\timpairment,\tand\tother\texit\tcosts | 275.1 | 165.6 | 180.4 |
| Operating\tprofit | 2,515.9 | 2,419.9 | 2,492.1 |
| Benefit\tplan\tnon-service\tincome | (87.9) | (89.4) | (74.3) |
| Interest,\tnet | 521.8 | 373.7 | 295.1 |
| Earnings\tbefore\tincome\ttaxes\tand\tafter-tax\tearnings\tfrom\tjoint\tventures | 2,082.0 | 2,135.6 | 2,271.3 |
| Income\ttaxes | 367.8 | 57.3 | 655.2 |
| After-tax\tearnings\tfrom\tjoint\tventures | 72.0 | 84.7 | 85.0 |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\tand\tnoncontrolling\ninterests | 1,786.2 | 2,163.0 | 1,701.1 |
| Net\tearnings\tattributable\tto\tredeemable\tand\tnoncontrolling\tinterests | 33.5 | 32.0 | 43.6 |
| Net\tearnings\tattributable\tto\tGeneral\tMills | \t$1,752.7 | \t$2,131.0 | \t$1,657.5 |
| Earnings\tper\tshare\t-\tbasic | \t$2.92 | \t$3.69 | \t$2.82 |
| Earnings\tper\tshare\t-\tdiluted | \t$2.90 | \t$3.64 | \t$2.77 |
| Dividends\tper\tshare | \t$1.96 | \t$1.96 | \t$1.92 |

See	accompanying	notes	to	consolidated	financial	statements.

# Consolidated	Statements	of	Comprehensive	Income

(In	Millions)

|  | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\tand\nnoncontrolling\tinterests | \t$ \t\t\t\t1,786.2 | \t$\t\t\t\t2,163.0 | \t$\t\t\t\t1,701.1 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |
| Foreign\tcurrency\ttranslation | (82.8) | (37.0) | 6.3 |
| Net\tactuarial\t(loss)\tincome | (253.4) | 140.1 | 197.9 |
| Other\tfair\tvalue\tchanges: |  |  |  |
| Securities | - | 1.2 | 0.8 |
| Hedge\tderivatives | 12.1 | (50.8) | 53.3 |
| Reclassification\tto\tearnings: |  |  |  |
| Securities | (2.0) | (5.1) | - |
| Hedge\tderivatives | 0.9 | 17.4 | (25.7) |
| Amortization\tof\tlosses\tand\tprior\tservice\tcosts | \t\t\t\t\t\t\t\t\t\t84.6 | \t\t\t\t\t\t117.6 | \t\t\t\t\t\t122.5 |
| Other\tcomprehensive\t(loss)\tincome,\tnet\tof\ttax | \t\t\t\t\t\t(240.6) | \t\t\t\t\t\t183.4 | \t\t\t\t\t\t355.1 |
| Total\tcomprehensive\tincome | 1,545.6 | 2,346.4 | 2,056.2 |
| Comprehensive\t(loss)\tincome\tattributable\tto\tredeemable\tand\nnoncontrolling\tinterests | \t\t\t\t\t\t\t(10.7) | \t\t\t\t\t\t\t\t70.5 | \t\t\t\t\t\t\t\t31.0 |
| Comprehensive\tincome\tattributable\tto\tGeneral\tMills | \t$ \t\t\t\t1,556.3 | \t$\t\t\t\t2,275.9 | \t$\t\t\t\t2,025.2 |

# Consolidated	Balance	Sheets

# (In	Millions,	Except	Par	Value)

|  | May	26,<br>						2019 | May	27,<br>						2018 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $450.0 | $399.0 |
| Receivables | 1,679.7 | 1,684.2 |
| Inventories | 1,559.3 | 1,642.2 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 497.5 | 398.3 |
| Total\tcurrent\tassets | 4,186.5 | 4,123.7 |
| Land,\tbuildings,\tand\tequipment | 3,787.2 | 4,047.2 |
| Goodwill | 13,995.8 | 14,065.0 |
| Other\tintangible\tassets | 7,166.8 | 7,445.1 |
| Other\tassets | 974.9 | 943.0 |
| Total\tassets | $\t\t\t\t\t\t\t30,111.2 | $\t\t\t\t\t\t\t30,624.0 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Accounts\tpayable | $2,854.1 | $2,746.2 |
| Current\tportion\tof\tlong-term\tdebt | 1,396.5 | 1,600.1 |
| Notes\tpayable | 1,468.7 | 1,549.8 |
| Other\tcurrent\tliabilities | 1,367.8 | 1,445.8 |
| Total\tcurrent\tliabilities | 7,087.1 | 7,341.9 |
| Long-term\tdebt | 11,624.8 | 12,668.7 |
| Deferred\tincome\ttaxes | 2,031.0 | 2,003.8 |
| Other\tliabilities | 1,448.9 | 1,341.0 |
| Total\tliabilities | 22,191.8 | 23,355.4 |
| Redeemable\tinterest | 551.7 | 776.2 |
| Stockholders'\tequity: |  |  |
| Common\tstock,\t754.6\tshares\tissued,\t$0.10\tpar\tvalue | 75.5 | 75.5 |
| Additional\tpaid-in\tcapital | 1,386.7 | 1,202.5 |
| Retained\tearnings | 14,996.7 | 14,459.6 |
|  | (6,779.0) | (7,167.5) |
| Accumulated\tother\tcomprehensive\tloss | (2,625.4) | (2,429.0) |
| Total\tstockholders'\tequity | 7,054.5 | 6,141.1 |
| Noncontrolling\tinterests | 313.2 | 351.3 |
| Total\tequity | 7,367.7 | 6,492.4 |
| Total\tliabilities\tand\tequity | $\t\t\t\t\t\t\t30,111.2 | $\t\t\t\t\t\t\t30,624.0 |

# Consolidated	Statements	of	Total	Equity,	and	Redeemable	Interest

# $.10	Par	Value	Common	Stock

|  |  | Issued | (One	Billion	Shares	Authorized) | Treasury |  |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  | Accumulated | Accumulated | Non- |  |  |
|  |  | Par | Additional\tPaid-In |  |  | Retained | Other | Other | controlling | Total | Redeemable |
|  | Shares | Amount | Capital | Shares | Amount | Earnings | Comprehensive\tLoss | Comprehensive\tLoss | Interests | Equity | Interest |
| \t\tBalance\tas\tof\tMay\t29,\t2016 | 754.6 | $75.5 | $1,177.0 | (157.8 |  |  |  |  |  |  |  |
|  |  |  |  | ) | $(6,326.6\n) | $12,616.5 | $(2,612.2 | ) | $376.9 | $5,307.1 | \t\t$\t\t\t\t\t\t\t\t845.6 |
| \t\tTotal\tcomprehensive\tincome |  |  |  |  |  | 1,657.5 | 367.7 | 367.7 | 13.8 | 2,039.0 | 17.2 |
| \t\tCash\tdividends\tdeclared\t($1.92\tper\tshare) |  |  |  |  |  | (1,135.1) |  |  |  | (1,135.1) |  |
| \t\tShares\tpurchased |  |  |  | (25.4) | (1,651.5) |  |  |  |  | (1,651.5) |  |
| \t\tStock\tcompensation\tplans\t(includes\tincome\ttax\tbenefits\tof\t$64.1) |  |  | 3.6 | 5.5 | 215.2 |  |  |  |  | 218.8 |  |
| \t\tUnearned\tcompensation\trelated\tto\tstock\tunit\tawards |  |  | (78.5) |  |  |  |  |  |  | (78.5) |  |
| \t\tEarned\tcompensation |  |  | 94.9 |  |  |  |  |  |  | 94.9 |  |
| \t\tIncrease\tin\tredemption\tvalue\tof\tredeemable\tinterest |  |  | (75.9) |  |  |  |  |  |  | (75.9) | 75.9 |
| \t\tAcquisition\tof\tinterest\tin\tsubsidiary |  |  | (0.2) |  |  |  |  |  | 0.1 | (0.1) |  |
| \t\tDistributions\tto\tredeemable\tand\tnoncontrolling\tinterest\tholders |  |  |  |  |  |  |  |  | (33.2) | (33.2) | (27.8) |
| \t\tBalance\tas\tof\tMay\t28,\t2017 | 754.6 | 75.5 | 1,120.9 | \t(177.7) | (7,762.9) | 13,138.9 | (2,244.5) | (2,244.5) | 357.6 | 4,685.5 | 910.9 |
| \t\tTotal\tcomprehensive\tincome |  |  |  |  |  | 2,131.0 | 144.9 | 144.9 | 26.9 | 2,302.8 | 43.6 |
| \t\tCash\tdividends\tdeclared\t($1.96\tper\tshare) |  |  |  |  |  | (1,139.7) |  |  |  | (1,139.7) |  |
| \t\tShares\tpurchased |  |  |  | (10.9) | (601.6) |  |  |  |  | (601.6) |  |
| \t\tShares\tissued |  |  | (39.1) | 22.7 | 1,009.0 |  |  |  |  | 969.9 |  |
| \t\tStock\tcompensation\tplans |  |  | (57.9) | 4.4 | 188.0 |  |  |  |  | 130.1 |  |
| \t\tUnearned\tcompensation\trelated\tto\tstock\tunit\tawards |  |  | (58.1) |  |  |  |  |  |  | (58.1) |  |
| \t\tEarned\tcompensation |  |  | 77.0 |  |  |  |  |  |  | 77.0 |  |
| \t\tDecrease\tin\tredemption\tvalue\tof\tredeemable\tinterest |  |  | 159.7 |  |  |  |  |  |  | 159.7 | (159.7) |
| \t\tDistributions\tto\tredeemable\tand\tnoncontrolling\tinterest\tholders |  |  |  |  |  |  |  |  | (33.2) | (33.2) | (18.6) |
| \t\tReclassification\tof\tcertain\tincome\ttax\teffects |  |  |  |  |  | 329.4 | (329.4) | (329.4) |  | - |  |
| \t\tBalance\tas\tof\tMay\t27,\t2018 | 754.6 | 75.5 | 1,202.5 | \t(161.5) | (7,167.5) | 14,459.6 | (2,429.0) | (2,429.0) | 351.3 | 6,492.4 | 776.2 |
| \t\tTotal\tcomprehensive\tincome\t(loss) |  |  |  |  |  | 1,752.7 | (196.4) | (196.4) | 0.4 | 1,556.7 | (11.1) |
| \t\tCash\tdividends\tdeclared\t($1.96\tper\tshare) |  |  |  |  |  | (1,181.7) |  |  |  | (1,181.7) |  |
| \t\tShares\tpurchased |  |  |  | - | (1.1) |  |  |  |  | (1.1) |  |
| \t\tStock\tcompensation\tplans |  |  | (96.4) | 8.8 | 389.6 |  |  |  |  | 293.2 |  |
| \t\tUnearned\tcompensation\trelated\tto\tstock\tunit\tawards |  |  | (71.3) |  |  |  |  |  |  | (71.3) |  |
| \t\tEarned\tcompensation |  |  | 82.8 |  |  |  |  |  |  | 82.8 |  |
| \t\tIncrease\tin\tinvestment\tin\tredeemable\tinterest |  |  |  |  |  |  |  |  |  | - | 55.7 |
| \t\tDecrease\tin\tredemption\tvalue\tof\tredeemable\tinterest |  |  | 269.1 |  |  |  |  |  |  | 269.1 | (269.1) |
| \t\tDistributions\tto\tredeemable\tand\tnoncontrolling\tinterest\tholders |  |  |  |  |  |  |  |  | (38.5) | (38.5) |  |
| \t\tAdoption\tof\trevenue\trecognition\taccounting\trequirements |  |  |  |  |  | (33.9) |  |  |  | (33.9) |  |
| \t\tBalance\tas\tof\tMay\t26,\t2019 | 754.6 | \t\t$\t\t\t\t75.5 | \t$\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t1,386.7 | \t(152.7) | \t$\t\t\t\t\t\t\t\t(6,779.0) | \t\t$\t\t\t\t14,996.7 | \t\t$\t\t\t\t\t\t\t\t(2,625.4) | \t\t$\t\t\t\t\t\t\t\t(2,625.4) | \t\t$\t\t\t\t\t\t\t\t313.2 | \t\t$\t\t\t\t\t\t\t\t7,367.7 | $551.7 |

# Consolidated	Statements	of	Cash	Flows

|  | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Cash\tFlows\t-\tOperating\tActivities |  |  |  |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\tand\tnoncontrolling\tinterests | $\t\t\t\t\t\t\t\t\t\t1,786.2 | $\t\t\t\t\t\t\t\t\t\t2,163.0 | $\t\t\t\t\t\t\t\t\t\t1,701.1 |
| Adjustments\tto\treconcile\tnet\tearnings\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 620.1 | 618.8 | 603.6 |
| After-tax\tearnings\tfrom\tjoint\tventures | (72.0) | (84.7) | (85.0) |
| Distributions\tof\tearnings\tfrom\tjoint\tventures | 86.7 | 113.2 | 75.6 |
| Stock-based\tcompensation | 84.9 | 77.0 | 95.7 |
| Deferred\tincome\ttaxes | 93.5 | (504.3) | 183.9 |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tcontributions | (28.8) | (31.8) | (45.4) |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tcosts | 6.1 | 4.6 | 35.7 |
| Divestitures\tloss | 30.0 | - | 13.5 |
| Restructuring,\timpairment,\tand\tother\texit\tcosts | 235.7 | 126.0 | 117.0 |
| Changes\tin\tcurrent\tassets\tand\tliabilities,\texcluding\tthe\teffects\tof\tacquisitions\tand\tdivestitures | (7.5) | 542.1 | (194.2) |
| Other,\tnet | (27.9) | (182.9) | (86.3) |
| Net\tcash\tprovided\tby\toperating\tactivities | 2,807.0 | 2,841.0 | 2,415.2 |
| Cash\tFlows\t-\tInvesting\tActivities |  |  |  |
| Purchases\tof\tland,\tbuildings,\tand\tequipment | (537.6) | (622.7) | (684.4) |
| Acquisition,\tnet\tof\tcash\tacquired | - | (8,035.8) | - |
| Investments\tin\taffiliates,\tnet | 0.1 | (17.3) | 3.3 |
| Proceeds\tfrom\tdisposal\tof\tland,\tbuildings,\tand\tequipment | 14.3 | 1.4 | 4.2 |
| Proceeds\tfrom\tdivestitures | 26.4 | - | 17.5 |
| Exchangeable\tnote | - | - | 13.0 |
| Other,\tnet | (59.7) | (11.0) | (0.5) |
| Net\tcash\tused\tby\tinvesting\tactivities | (556.5) | (8,685.4) | (646.9) |
| Cash\tFlows\t-\tFinancing\tActivities |  |  |  |
| Change\tin\tnotes\tpayable | (66.3) | 327.5 | 962.4 |
| Issuance\tof\tlong-term\tdebt | 339.1 | 6,550.0 | 1,072.1 |
| Payment\tof\tlong-term\tdebt | (1,493.8) | (600.1) | (1,000.0) |
| Proceeds\tfrom\tcommon\tstock\tissued\ton\texercised\toptions | 241.4 | 99.3 | 112.6 |
| Proceeds\tfrom\tcommon\tstock\tissued | - | 969.9 | - |
| Purchases\tof\tcommon\tstock\tfor\ttreasury | (1.1) | (601.6) | (1,651.5) |
| Dividends\tpaid | (1,181.7) | (1,139.7) | (1,135.1) |
| Investments\tin\tredeemable\tinterest | 55.7 | - | - |
| Distributions\tto\tnoncontrolling\tand\tredeemable\tinterest\tholders | (38.5) | (51.8) | (61.0) |
| Other,\tnet | (31.2) | (108.0) | (46.9) |
| Net\tcash\tprovided\t(used)\tby\tfinancing\tactivities | (2,176.4) | 5,445.5 | (1,747.4) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (23.1) | 31.8 | (18.5) |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | 51.0 | (367.1) | 2.4 |
| Cash\tand\tcash\tequivalents\t-\tbeginning\tof\tyear | 399.0 | 766.1 | 763.7 |
| Cash\tand\tcash\tequivalents\t-\tend\tof\tyear | $450.0 | $399.0 | $766.1 |
| Cash\tFlow\tfrom\tChanges\tin\tCurrent\tAssets\tand\tLiabilities,\texcluding\tthe\teffects\tof\tacquisitions |  |  |  |
| and\tdivestitures: |  |  |  |
| Receivables | $(42.7) | $(122.7) | $(69.2) |
| Inventories | 53.7 | 15.6 | (61.5) |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | (114.3) | (10.7) | 16.6 |
| Accounts\tpayable | 162.4 | 575.3 | 99.5 |
| Other\tcurrent\tliabilities | (66.6) | 84.6 | (179.6) |
| Changes\tin\tcurrent\tassets\tand\tliabilities | $(7.5) | $542.1 | $(194.2) |

# Notes	to	Consolidated	Financial	Statements

# NOTE	1.	BASIS	OF	PRESENTATION	AND	RECLASSIFICATIONS

# Basis	of	Presentation

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

Our	fiscal	year	ends	on	the	last	Sunday	in	May.

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

# Change	in	Reporting	Period

As	part	of	a	long-term	plan	to	conform	the	fiscal	year	ends	of	all	our	operations,	in	fiscal	2017	we	changed	the	reporting	period	of	General	Mills	Brasil Alimentos	Ltda	(Yoki)	within	our	Asia	&	Latin	America	segment	from	an	April	fiscal	year-end	to	a	May	fiscal	year-end	to	match	our	fiscal	calendar. Accordingly,	in	fiscal	2017,	our	results	included	13	months	of	results	from	the	affected	operations.	The	impact	of	these	changes	was	not	material	to	our consolidated	results	of	operations.	Our	General	Mills	India	business	and	Pet	operating	segment	are	on	an	April	fiscal	year	end.

# NOTE	2.	SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

# Cash	and	Cash	Equivalents

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

# Inventories

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

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

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

# Land,	Buildings,	Equipment,	and	Depreciation

Land	is	recorded	at	historical	cost.	Buildings	and	equipment,	including	capitalized	interest	and	internal	engineering	costs,	are	recorded	at	cost	and depreciated	over	estimated	useful	lives,	primarily	using	the	straight-line	method.	Ordinary	maintenance	and	repairs	are	charged	to	cost	of	sales.	Buildings are	usually	depreciated	over	40	years,	and	equipment,	furniture,	and	software	are	usually	depreciated	over	3	to	10	years.	Fully	depreciated	assets	are	retained in	buildings	and	equipment	until	disposal.	When	an	item	is	sold	or	retired,	the	accounts	are	relieved	of	its	cost	and	related	accumulated	depreciation	and	the resulting	gains	and	losses,	if	any,	are	recognized	in	earnings.	As	of	May	26,	2019,	assets	held	for	sale	were	insignificant.

Long-lived	assets	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	an	asset	(or	asset	group) may	not	be	recoverable.	An	impairment	loss	would	be	recognized	when	estimated	undiscounted	future	cash	flows	from	the	operation	and	disposition	of	the asset	group	are	less	than	the	carrying	amount	of	the	asset	group.	Asset	groups	have	identifiable	cash	flows	and	are	largely

independent	of	other	asset	groups.	Measurement	of	an	impairment	loss	would	be	based	on	the	excess	of	the	carrying	amount	of	the	asset	group	over	its	fair value.	Fair	value	is	measured	using	a	discounted	cash	flow	model	or	independent	appraisals,	as	appropriate.

# Goodwill	and	Other	Intangible	Assets

Goodwill	is	not	subject	to	amortization	and	is	tested	for	impairment	annually	and	whenever	events	or	changes	in	circumstances	indicate	that	impairment may	have	occurred.	We	perform	our	annual	goodwill	and	indefinite-lived	intangible	assets	impairment	test	as	of	the	first	day	of	the	second	quarter	of	the fiscal	year.	Impairment	testing	is	performed	for	each	of	our	reporting	units.	We	compare	the	carrying	value	of	a	reporting	unit,	including	goodwill,	to	the	fair value	of	the	unit.	Carrying	value	is	based	on	the	assets	and	liabilities	associated	with	the	operations	of	that	reporting	unit,	which	often	requires	allocation	of shared	or	corporate	items	among	reporting	units.	If	the	carrying	amount	of	a	reporting	unit	exceeds	its	fair	value,	impairment	has	occurred.	We	recognize	an impairment	charge	for	the	amount	by	which	the	carrying	amount	of	the	reporting	unit	exceeds	its	fair	value	up	to	the	total	amount	of	goodwill	allocated	to	the reporting	unit.	Our	estimates	of	fair	value	are	determined	based	on	a	discounted	cash	flow	model.	Growth	rates	for	sales	and	profits	are	determined	using inputs	from	our	long-range	planning	process.	We	also	make	estimates	of	discount	rates,	perpetuity	growth	assumptions,	market	comparables,	and	other factors.

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

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

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

# Investments	in	Unconsolidated	Joint	Ventures

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

In	addition,	we	assess	our	investments	in	our	joint	ventures	if	we	have	reason	to	believe	an	impairment	may	have	occurred	including,	but	not	limited	to,	as	a result	of	ongoing	operating	losses,	projected	decreases	in	earnings,	increases	in	the	weighted-average	cost	of	capital,	or	significant	business	disruptions.	The significant	assumptions

used	to	estimate	fair	value	include	revenue	growth	and	profitability,	royalty	rates,	capital	spending,	depreciation	and	taxes,	foreign	currency	exchange	rates, and	a	discount	rate.	By	their	nature,	these	projections	and	assumptions	are	uncertain.	If	we	were	to	determine	the	current	fair	value	of	our	investment	was less	than	the	carrying	value	of	the	investment,	then	we	would	assess	if	the	shortfall	was	of	a	temporary	or	permanent	nature	and	write	down	the	investment to	its	fair	value	if	we	concluded	the	impairment	is	other	than	temporary.

We	have	a	51	percent	controlling	interest	in	Yoplait	SAS,	a	consolidated	entity.	Sodiaal	International	(Sodiaal)	holds	the	remaining	49	percent	interest	in Yoplait	SAS.	Sodiaal	has	the	ability	to	put	all	or	a	portion	of	its	redeemable	interest	to	us	at	fair	value	once	per	year,	up	to	three	times	before	December 2024.	This	put	option	requires	us	to	classify	Sodiaal's	interest	as	a	redeemable	interest	outside	of	equity	on	our	Consolidated	Balance	Sheets	for	as	long	as the	put	is	exercisable	by	Sodiaal.	When	the	put	is	no	longer	exercisable,	the	redeemable	interest	will	be	reclassified	to	noncontrolling	interests	on	our Consolidated	Balance	Sheets.	We	adjust	the	value	of	the	redeemable	interest	through	additional	paid-in	capital	on	our	Consolidated	Balance	Sheets	quarterly to	the	redeemable	interest's	redemption	value,	which	approximates	its	fair	value.	During	the	second	and	fourth	quarters	of	fiscal	2019,	we	adjusted	the redeemable	interest's	redemption	value	based	on	a	discounted	cash	flow	model.	The	significant	assumptions	used	to	estimate	the	redemption	value	include projected	revenue	growth	and	profitability	from	our	long-range	plan,	capital	spending,	depreciation,	taxes,	foreign	currency	exchange	rates,	and	a	discount rate.

Our	revenues	primarily	result	from	contracts	with	customers,	which	are	generally	short-term	and	have	a	single	performance	obligation	–	the	delivery	of product.	We	recognize	revenue	for	the	sale	of	packaged	foods	at	the	point	in	time	when	our	performance	obligation	has	been	satisfied	and	control	of	the product	has	transferred	to	our	customer,	which	generally	occurs	when	the	shipment	is	accepted	by	our	customer.	Sales	include	shipping	and	handling charges	billed	to	the	customer	and	are	reported	net	of	variable	consideration	and	consideration	payable	to	our	customers,	including	trade	promotion, consumer	coupon	redemption	and	other	costs,	including	estimated	allowances	for	returns,	unsalable	product,	and	prompt	pay	discounts.	Sales,	use,	value- added,	and	other	excise	taxes	are	not	included	in	revenue.	Trade	promotions	are	recorded	using	significant	judgment	of	estimated	participation	and performance	levels	for	offered	programs	at	the	time	of	sale.	Differences	between	estimated	expenses	and	actual	costs	are	recognized	as	a	change	in management	estimate	in	a	subsequent	period.	We	generally	do	not	allow	a	right	of	return.	However,	on	a	limited	case-by-case	basis	with	prior	approval,	we may	allow	customers	to	return	product.	In	limited	circumstances,	product	returned	in	saleable	condition	is	resold	to	other	customers	or	outlets.	Receivables from	customers	generally	do	not	bear	interest.	Payment	terms	and	collection	patterns	are	short-term,	and	vary	around	the	world	and	by	channel,	and	as	such, we	do	not	have	any	significant	financing	components.	Our	allowance	for	doubtful	accounts	represents	our	estimate	of	probable	non-payments	and	credit losses	in	our	existing	receivables,	as	determined	based	on	a	review	of	past	due	balances	and	other	specific	account	data.	Account	balances	are	written	off against	the	allowance	when	we	deem	the	amount	is	uncollectible.	Please	see	Note	16	for	a	disaggregation	of	our	revenue	into	categories	that	depict	how	the nature,	amount,	timing,	and	uncertainty	of	revenue	and	cash	flows	are	affected	by	economic	factors.	We	do	not	have	material	contract	assets	or	liabilities arising	from	our	contracts	with	customers.

# Environmental	Costs

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

# Advertising	Production	Costs

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

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

# Foreign	Currency	Translation

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

# Derivative	Instruments

All	derivatives	are	recognized	on	our	Consolidated	Balance	Sheets	at	fair	value	based	on	quoted	market	prices	or	our	estimate	of	their	fair	value,	and	are recorded	in	either	current	or	noncurrent	assets	or	liabilities	based	on	their	maturity.	Changes	in	the	fair	values	of	derivatives	are	recorded	in	net	earnings	or other	comprehensive	income,	based	on	whether	the	instrument	is	designated	and	effective	as	a	hedge	transaction	and,	if	so,	the	type	of	hedge	transaction. Gains	or	losses	on	derivative	instruments	reported	in	AOCI	are	reclassified	to	earnings	in	the	period	the	hedged	item	affects	earnings.	If	the	underlying hedged	transaction	ceases	to	exist,	any	associated	amounts	reported	in	AOCI	are	reclassified	to	earnings	at	that	time.	Any	ineffectiveness	is	recognized	in earnings	in	the	current	period.

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

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

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

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

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

In	fiscal	2018,	we	approved	an	amendment	to	reorganize	the	U.S.	qualified	defined	benefit	pension	plans	and	the	supplemental	pension	plans	that	resulted	in the	spinoff	of	a	portion	of	the	General	Mills	Pension	Plan	(the	Plan)	and	the	2005	Supplemental	Retirement	Plan	and	the	Supplemental	Retirement	Plan (Grandfathered)	(together,	the	Supplemental	Plans)	into	new	plans	effective	May	31,	2018.	The	benefits	offered	to	the	plans'	participants	were	unchanged. The	result	of	the	reorganization	was	the	creation	of	the	General	Mills	Pension	Plan	I	(Plan	I)	and	the	2005	Supplemental	Retirement	Plan	I	and	the Supplemental	Retirement	Plan	I	(Grandfathered)	(together,	the	Supplemental	Plans	I).	The	reorganization	was	made	to	facilitate	a	targeted	investment strategy	over	time	and	to	provide	additional	flexibility	in	evaluating	opportunities	to	reduce	risk	and	volatility.	Actuarial	gains	and	losses	associated	with	the Plan	and	the	Supplemental	Plans	are	amortized	over	the	average	remaining	service	period	of	the	active	participants.	Actuarial	gains	and	losses	associated with	the	Plan	I	and	the	Supplemental	Plans	I	are	amortized	over	the	average	remaining	life	of	the	participants.	Please	refer	to	Note	13	for	a	description	of	our defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit	plans.

# Use	of	Estimates

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

# New	Accounting	Standards

In	the	first	quarter	of	fiscal	2019,	we	adopted	new	accounting	requirements	related	to	the	presentation	of	net	periodic	defined	benefit	pension	expense,	net periodic	postretirement	benefit	expense,	and	net	periodic	postemployment	benefit	expense	(collectively	"net	periodic	benefit	expense").	The	new	standard requires	the	service	cost	component	of	net	periodic	benefit	expense	to	be	recorded	in	the	same	line	items	as	other	employee	compensation	costs	within	our Consolidated	Statements	of	Earnings.	Other	components	of	net	periodic	benefit	expense	must	be	presented	separately	outside	of	operating	profit	in	our Consolidated	Statements	of	Earnings.	In	addition,	the	new	standard	requires	that	only	the	service	cost	component	of	net	periodic	benefit	expense	is	eligible for	capitalization.	The	new	standard	requires	retrospective	adoption	of	the	presentation	of	net	periodic	benefit	expense	and	prospective	application	of	the capitalization	of	the	service	cost	component.	The	impact	of	the	adoption	of	this	standard	on	our	results	of	operations	was	a	decrease	to	our	operating	profit	of $87.9	million,	$89.4	million	and	$74.3	million	and	a	corresponding	increase	to	benefit	plan	non-service	income	of	$87.9	million,	$89.4	million	and $74.3	million	for	fiscal	2019,	fiscal	2018	and	fiscal	2017,	respectively.	There	were	no	changes	to	our	reported	segment	operating	profit.

In	the	first	quarter	of	fiscal	2019,	we	adopted	new	accounting	requirements	for	the	recognition	of	revenue	from	contracts	with	customers.	Under	the	new standard,	we	apply	a	principles-based	five	step	model	to	recognize	revenue	upon	the	transfer	of	control	of	promised	goods	to	customers	and	in	an	amount that	reflects	the	consideration	for	which	we	expect	to	be	entitled	to	in	exchange	for	those	goods.	The	principles-based	five	step	model	includes:	1)	identifying the	contract(s)	with	a	customer;	2)	identifying	the	performance	obligations	in	the	contract;	3)	determining	the	transaction	price;	4)	allocating	the	transaction price	to	the	performance	obligations	in	the	contract;	and	5)	recognizing	revenue	when	(or	as)	we	satisfy	a	performance	obligation.	We	utilized	a comprehensive	approach	to	evaluate	and	document	the	impact	of	the	guidance	on	our	current	accounting	policies	and	practices.	We	did	not	identify	any material	differences	resulting	from	applying	the	new	requirements	to	our	revenue	contracts.	Additionally,	we	did	not	identify	any	significant	changes	to	our business	processes,	systems,	and	controls	to	support	recognition	and	disclosure	requirements	under	the	new	guidance.	We	adopted	the	requirements	of	the new	standard	and	subsequent	amendments	to	all	contracts	in	the	first	quarter	of	fiscal	2019	using	the	cumulative	effect	approach.

We	recorded	a	$33.9	million	cumulative	effect	adjustment	net	of	income	tax	effects	to	the	opening	balance	of	fiscal	2019	retained	earnings,	a	decrease	to deferred	income	taxes	of	$11.4	million,	and	an	increase	to	other	current	liabilities	of	$45.3	million	related	to	the	timing	of	recognition	of	certain	promotional expenditures.

In	the	third	quarter	of	fiscal	2018,	we	adopted	new	accounting	requirements	that	codify	Securities	and	Exchange	Commission	(SEC)	Staff	Accounting Bulletin	No.	118,	as	it	relates	to	allowing	for	recognition	of	provisional	amounts	related	to	the	U.S.	Tax	Cuts	and	Jobs	Act	(TCJA)	in	the	event	that	the accounting	is	not	complete	and	a	reasonable	estimate	can	be	made.	Where	necessary	information	is	not	available,	prepared,	or	analyzed	to	determine	a reasonable	estimate,	no	provisional	amount	should	be	recorded.	The	guidance	allows	for	a	measurement	period	of	up	to	one	year	from	the	enactment	date	to finalize	the	accounting	related	to	the	TCJA.	In	fiscal	2019,	we	completed	our	accounting	for	the	tax	effects	of	the	TCJA.

In	the	third	quarter	of	fiscal	2018,	we	adopted	new	accounting	requirements	that	provide	the	option	to	reclassify	stranded	income	tax	effects	resulting	from the	TCJA	from	AOCI	to	retained	earnings.	We	elected	to	reclassify	the	stranded	income	tax	effects	of	the	TCJA	of	$329.4	million	from	AOCI	to	retained earnings.	This	reclassification	consisted	of	deferred	taxes	originally	recorded	in	AOCI	that	exceeded	the	newly	enacted	federal	corporate	tax	rate.	The	new accounting	requirements	allowed	for	adjustments	to	reclassification	amounts	in	subsequent	periods	as	a	result	of	changes	to	the	provisional	amounts recorded.

In	the	first	quarter	of	fiscal	2018,	we	adopted	new	requirements	for	the	accounting	and	presentation	of	stock-based	payments.	The	adoption	of	this	guidance resulted	in	the	prospective	recognition	of	realized	windfall	and	shortfall	tax	benefits	related	to	the	exercise	or	vesting	of	stock-based	awards	in	our Consolidated	Statements	of	Earnings	instead	of	additional	paid-in	capital	within	our	Consolidated	Balance	Sheets.	We	retrospectively	adopted	the	guidance related	to	reclassification	of	realized	windfall	tax	benefits,	which	resulted	in	reclassifications	of	cash	provided	by	financing	activities	to	operating	activities	in our	Consolidated	Statements	of	Cash	Flows.	Additionally,	we	retrospectively	adopted	the	guidance	related	to	reclassification	of	employee	tax	withholdings, which	resulted	in	reclassifications	of	cash	used	by	operating	activities	to	financing	activities	in	our	Consolidated	Statements	of	Cash	Flows.	Stock-based compensation	expense	continues	to	reflect	estimated	forfeitures.

In	the	first	quarter	of	fiscal	2018,	we	adopted	new	accounting	requirements	which	permit	reporting	entities	to	measure	a	goodwill	impairment	loss	by	the amount	by	which	a	reporting	unit's	carrying	value	exceeds	the	reporting	unit's	fair	value.	Previously,	goodwill	impairment	losses	were	required	to	be measured	by	determining	the	implied	fair	value	of	goodwill.	Our	annual	goodwill	impairment	test	was	performed	as	of	the	first	day	of	the	second	quarter	of fiscal	2018,	and	the	adoption	of	this	guidance	did	not	impact	our	results	of	operations	or	financial	position.

In	the	first	quarter	of	fiscal	2017,	we	adopted	new	accounting	requirements	for	the	presentation	of	certain	investments	using	the	net	asset	value,	providing	a practical	expedient	to	exclude	such	investments	from	categorization	within	the	fair	value	hierarchy	and	separate	disclosure.	We	adopted	the	guidance retrospectively	and	restated	the	fiscal	2016	fair	value	of	plan	asset	tables	in	Note	13.	The	adoption	of	this	guidance	did	not	impact	our	results	of	operations or	financial	position.

In	the	first	quarter	of	fiscal	2017,	we	adopted	new	accounting	requirements	which	permit	reporting	entities	with	a	fiscal	year-end	that	does	not	coincide	with a	month-end	to	apply	a	practical	expedient	that	permits	the	entity	to	measure	defined	benefit	plan	assets	and	obligations	using	the	month-end	that	is	closest to	the	entity's	fiscal	year-end	and	apply	such	practical	expedient	consistently	to	all	plans.	The	adoption	of	this	guidance	did	not	have	a	material	impact	on our	results	of	operations	or	financial	position.

# NOTE	3.	ACQUISITION	AND	DIVESTITURES

During	the	third	quarter	of	fiscal	2019,	we	sold	our	La	Salteña	fresh	pasta	and	refrigerated	dough	business	in	Argentina,	and	recorded	a	pre-tax	loss	of $35.4	million.	During	the	fourth	quarter	of	fiscal	2019,	we	sold	our

yogurt	business	in	China	and	simultaneously	entered	into	a	new	Yoplait	license	agreement	with	the	purchaser	for	their	use	of	the	Yoplait	brand.	We	recorded a	pre-tax	gain	of	$5.4	million.

During	the	fourth	quarter	of	fiscal	2018,	we	acquired	Blue	Buffalo	Pet	Products,	Inc.	("Blue	Buffalo")	for	an	aggregate	purchase	price	of	$8.0	billion, including	$103.0	million	of	consideration	for	net	debt	repaid	at	the	time	of	the	acquisition.	In	accordance	with	the	definitive	agreement	and	plan	of	merger,	a subsidiary	of	General	Mills	merged	into	Blue	Buffalo,	with	Blue	Buffalo	surviving	the	merger	as	a	wholly	owned	subsidiary	of	General	Mills.	In	accordance with	the	merger	agreement,	equity	holders	of	Blue	Buffalo	received	$40.00	per	share	in	cash.	We	financed	the	transaction	with	a	combination	of	$6.0	billion in	debt,	$1.0	billion	in	equity,	and	cash	on	hand.	In	fiscal	2019,	we	recorded	acquisition	integration	costs	of	$25.6	million	in	SG&A	expenses.	In	fiscal	2018, we	recorded	acquisition	transaction	and	integration	costs	of	$34.0	million	in	SG&A	expenses	and	$49.9	million	in	interest,	net	related	to	the	debt	issued	to finance	the	acquisition.

We	consolidated	Blue	Buffalo	into	our	Consolidated	Balance	Sheets	and	recorded	goodwill	of	$5.3	billion,	an	indefinite-lived	intangible	asset	for	the	Blue Buffalo	brand	of	$2.7	billion,	and	a	finite-lived	customer	relationship	asset	of	$269.0	million.	The	goodwill	was	primarily	attributable	to	future	growth opportunities	and	any	intangible	assets	that	did	not	qualify	for	separate	recognition.	The	goodwill	is	included	in	the	Pet	reporting	unit	and	is	not	deductible for	tax	purposes.	In	the	fourth	quarter	of	fiscal	2019,	we	recorded	adjustments	to	certain	purchase	accounting	liabilities	that	resulted	in	a	$5.6	million increase	to	goodwill.

The	consolidated	results	of	Blue	Buffalo	are	reported	as	our	Pet	operating	segment	on	a	one-month	lag.

The	following	unaudited	supplemental	pro	forma	information	is	presented	as	if	we	had	acquired	Blue	Buffalo	at	the	beginning	of	fiscal	2017:

| In	Millions | 2018 | 2017 |
| :--- | :--- | :--- |
| Net\tsales | $17,057.4 | $16,772.9 |
| Net\tearnings\tattributable\tto\tGeneral\tMills | 2,252.4 | 1,540.2 |

The	fiscal	2017	pro	forma	amounts	include	transaction	and	integration	costs	of	$83.9	million	and	the	purchase	accounting	adjustment	to	record	inventory	at fair	value	of	$52.7	million.	The	fiscal	2017	and	fiscal	2018	pro	forma	amounts	include	interest	expense	of	$238.7	million	on	the	debt	issued	to	finance	the transaction	and	amortization	expense	of	$13.5	million	based	on	the	estimated	fair	value	and	useful	life	of	the	customer	relationships	intangible	asset.

Additionally,	the	pro	forma	amounts	include	an	increase	to	cost	of	sales	by	$1.6	million	in	fiscal	2017	and	$5.1	million	in	fiscal	2018	to	reflect	the	impact	of using	the	LIFO	method	of	inventory	valuation	on	Blue	Buffalo's	historical	operating	results.	Pro	forma	amounts	include	related	tax	effects	of	$125.1	million in	fiscal	2017	and	$14.5	million	in	fiscal	2018.	Unaudited	pro	forma	amounts	are	not	necessarily	indicative	of	results	had	the	acquisition	occurred	at	the beginning	of	fiscal	2017	or	of	future	results.

# NOTE	4.	RESTRUCTURING,	IMPAIRMENT,	AND	OTHER	EXIT	COSTS

# ASSET	IMPAIRMENTS

In	fiscal	2019,	we	recorded	a	$192.6	million	charge	related	to	the	impairment	of	our	Progresso,	Food	Should	Taste	Good,	and	Mountain	High	brand intangible	assets	in	restructuring,	impairment,	and	other	exit	costs.	Please	see	Note	6	for	additional	information.

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

In	fiscal	2018,	we	recorded	a	$96.9	million	charge	related	to	the	impairment	of	our	Yoki,	Mountain	High,	and	Immaculate	Baking	brand	intangible	assets	in restructuring,	impairment,	and	other	exit	costs.

# RESTRUCTURING	INITIATIVES

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

Charges	recorded	in	fiscal	2019	were	as	follows:

In	fiscal	2019,	we	approved	restructuring	actions	to	drive	efficiencies	in	targeted	areas	of	our	global	supply	chain.	In	our	North	America	Retail	segment,	we approved	actions	at	certain	facilities	to	consolidate	production	and	optimize	our	labor	and	manufacturing	platforms.	In	connection	with	these	actions	we	will exit	our	Carson,	California	yogurt	manufacturing	facility.	We	expect	to	incur	approximately	$101	million	of	restructuring	charges	related	to	these	actions, including	$10	million	of	severance	expense	and	$91	million	of	other	costs,	primarily	asset	write-offs.	We	also	expect	to	incur	approximately	$2	million	of project-related	costs.	We	recorded	$9.9	million	of	severance	and	$44.5	million	of	other	costs	in	fiscal	2019.	In	fiscal	2019,	we	approved	targeted	systems	and process	optimization	actions	in	our	Europe	&	Australia	segment	and	expect	to	incur	approximately	$15	million	of	restructuring	charges,	including $11	million	of	severance	expense	and	$4	million	of	other	costs.	We	recorded	$11.3	million	of	severance	and	$0.7	million	of	other	costs	in	fiscal	2019.	In fiscal	2019,	we	decided	to	exit	underperforming	product	lines	in	our	Asia	&	Latin	America	segment	and	expect	to	incur	approximately	$14	million	of restructuring	charges,	including	$1	million	of	severance	expense	and	$13	million	of	other	costs,	primarily	asset	write-offs.	We	recorded	$1.0	million	of severance	and	$11.5	million	of	other	costs	in	fiscal	2019.	In	fiscal	2019,	we	decided	to	exit	underperforming	markets	in	our	Pet	segment	and	expect	to	incur approximately	$8	million	of	restructuring	charges,	including	$2	million	of	severance	expense	and	$6	million	of	other	costs,	primarily	asset	write-offs.	We recorded	$0.8	million	of	severance	and	$0.5	million	of	other	costs	in	fiscal	2019.

Certain	of	these	global	supply	chain	actions	are	subject	to	union	negotiations	and	works	counsel	consultations,	where	required.	We	expect	to	spend approximately	$35	million	of	cash	related	to	these	actions	and	spent	$1.7	million	in	fiscal	2019.	We	expect	these	actions	to	be	completed	by	the	end	of	fiscal 2022.

In	fiscal	2019,	we	paid	$49.3	million	in	cash	related	to	restructuring	initiatives	in	fiscal	2019.

| Expense,	in	Millions |  |
| :--- | :--- |
| Global\tcost\tsavings\tinitiatives | $49.3 |
| Charges\tassociated\twith\trestructuring\tactions\tpreviously\tannounced | \t 33.4 |
| Total | $82.7 |
| Charges\trecorded\tin\tfiscal\t2017\twere\tas\tfollows: |  |
| Expense,\tin\tMillions |  |
| Global\treorganization | $72.1 |
| Restructuring\tof\tcertain\tinternational\tproduct\tlines | 45.1 |
| Closure\tof\tVineland,\tNew\tJersey\tplant | 41.4 |
| Closure\tof\tMelbourne,\tAustralia\tplant | 21.9 |
| Charges\tassociated\twith\trestructuring\tactions\tpreviously\tannounced | 43.6 |
| Total | $224.1 |

Restructuring	and	impairment	charges	and	project-related	costs	are	classified	in	our	Consolidated	Statements	of	Earnings	as	follows:

|  |  | Fiscal |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Restructuring,\timpairment,\tand\tother\texit\tcosts | $275.1 | $165.6 | $180.4 |
| Cost\tof\tsales | 9.9 | 14.0 | 41.5 |
| Total\trestructuring\tcharges | 285.0 | 179.6 | 221.9 |
| Project-related\tcosts\tclassified\tin\tcost\tof\tsales | $\t\t\t\t\t\t\t\t1.3 | $\t\t\t\t\t\t\t\t11.3 | $\t\t\t\t\t\t\t\t43.9 |

The	roll	forward	of	our	restructuring	and	other	exit	cost	reserves,	included	in	other	current	liabilities,	is	as	follows:

|  |  | Contract | Other |  |
| :--- | :--- | :--- | :--- | :--- |
| In\tMillions | Severance | Termination | Exit\tCosts | Total |
| Reserve\tbalance\tas\tof\tMay\t29,\t2016 | $73.6 | $1.5 | $1.5 | $76.6 |
| Fiscal\t2017\tcharges,\tincluding\tforeign |  |  |  |  |
| currency\ttranslation | 95.0 | 0.9 | 8.1 | \t\t\t\t\t\t\t\t104.0 |
| Utilized\tin\tfiscal\t2017 | (86.8) | (1.7) | (7.1) | (95.6) |
| Reserve\tbalance\tas\tof\tMay\t28,\t2017 | 81.8 | 0.7 | 2.5 | 85.0 |
| Fiscal\t2018\tcharges,\tincluding\tforeign |  |  |  |  |
| currency\ttranslation | 40.8 | 0.2 | (0.7) | 40.3 |
| Utilized\tin\tfiscal\t2018 | (56.6) | (0.8) | (1.1) | (58.5) |
| Reserve\tbalance\tas\tof\tMay\t27,\t2018 | 66.0 | 0.1 | 0.7 | 66.8 |
| Fiscal\t2019\tcharges,\tincluding\tforeign |  |  |  |  |
| currency\ttranslation | 7.7 | 2.5 | 1.4 | 11.6 |
| Utilized\tin\tfiscal\t2019 | (37.2) | (2.6) | (2.1) | (41.9) |
| Reserve\tbalance\tas\tof\tMay\t26,\t2019 | $36.5 | $- | $- | $36.5 |

The	charges	recognized	in	the	roll	forward	of	our	reserves	for	restructuring	and	other	exit	costs	do	not	include	items	charged	directly	to	expense	(e.g.,	asset impairment	charges,	the	gain	or	loss	on	the	sale	of	restructured	assets,	and	the	write-off	of	spare	parts)	and	other	periodic	exit	costs	recognized	as	incurred, as	those	items	are	not	reflected	in	our	restructuring	and	other	exit	cost	reserves	on	our	Consolidated	Balance	Sheets.

# NOTE	5.	INVESTMENTS	IN	UNCONSOLIDATED	JOINT	VENTURES

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

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

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

Joint	venture	related	balance	sheet	activity	is	as	follows:

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Cumulative\tinvestments | $452.9 | $499.6 |
| Goodwill\tand\tother\tintangibles | 472.1 | 488.7 |
| Aggregate\tadvances\tincluded\tin\tcumulative\tinvestments | \t\t\t\t\t\t\t\t249.0 | \t\t\t\t\t\t\t\t295.3 |

Joint	venture	earnings	and	cash	flow	activity	is	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Sales\tto\tjoint\tventures | $4.2 | $7.4 | $7.0 |
| Net\t(repayments)\tadvances | (0.1) | 17.3 | (3.3) |
| Dividends\treceived | \t\t\t\t\t\t\t\t86.7 | \t\t\t\t\t\t\t\t113.2 | \t\t\t\t\t\t\t\t75.6 |

Summary	combined	financial	information	for	the	joint	ventures	on	a	100	percent	basis	is	as	follows:

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| CPW | $\t\t1,647.7 | $\t\t1,734.0 | $\t\t1,648.4 |
| HDJ | 396.2 | 430.4 | 435.1 |
| Total\tnet\tsales | 2,043.9 | 2,164.4 | 2,083.5 |
| Gross\tmargin | 744.4 | 853.6 | 865.9 |
| Earnings\tbefore\tincome\ttaxes | 155.4 | 216.2 | 243.3 |
| Earnings\tafter\tincome\ttaxes | 111.9 | 176.7 | 190.3 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Current\tassets | $895.6 | $938.5 |
| Noncurrent\tassets | 839.2 | 902.5 |
| Current\tliabilities | \t\t1,517.3 | \t\t1,579.3 |
| Noncurrent\tliabilities | 77.1 | 72.6 |

# NOTE	6.	GOODWILL	AND	OTHER	INTANGIBLE	ASSETS

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

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Goodwill | $13,995.8 | $14,065.0 |
| Other\tintangible\tassets: |  |  |
| Intangible\tassets\tnot\tsubject\tto\tamortization: |  |  |
| Brands\tand\tother\tindefinite-lived\tintangibles | 6,590.8 | 6,818.7 |
| Intangible\tassets\tsubject\tto\tamortization: |  |  |
| Franchise\tagreements,\tcustomer\trelationships,\tand\tother\tfinite-lived |  |  |
| intangibles | 786.1 | 811.7 |
| Less\taccumulated\tamortization | (210.1) | (185.3) |
| Intangible\tassets\tsubject\tto\tamortization | 576.0 | 626.4 |
| Other\tintangible\tassets | 7,166.8 | 7,445.1 |
| Total | $\t\t\t\t21,162.6 | $ \t\t\t\t21,510.1 |

Based	on	the	carrying	value	of	finite-lived	intangible	assets	as	of	May	26,	2019,	amortization	expense	for	each	of	the	next	five	fiscal	years	is	estimated	to	be approximately	$40	million.

In	fiscal	2018,	we	acquired	Blue	Buffalo,	which	became	our	Pet	operating	segment	and	we	recorded	$5.3	billion	of	goodwill,	$2.7	billion	related	to	an indefinite-lived	brand	intangible	asset,	and	$269.0	million	related	to	a	customer	relationships	intangible	asset.	In	the	fourth	quarter	of	fiscal	2019,	we recorded	adjustments	to	certain	purchase	accounting	liabilities	that	resulted	in	a	$5.6	million	increase	to	goodwill.

The	changes	in	the	carrying	amount	of	goodwill	for	fiscal	2017,	2018,	and	2019	are	as	follows:

|  | North |  | Convenience |  | Asia	&amp; |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | America |  | Stores\t&amp; | Europe\t&amp; | Latin | Joint |  |
| In\tMillions | Retail | Pet | Foodservice | Australia | America | Ventures | Total |
| Balance\tas\tof\tMay\t29,\t2016 | $6,410.3 | $- | $921.1 | $716.5 | $287.1 | $406.2 | $8,741.2 |
| Divestiture | - | - | (2.3) | - | - | - | (2.3) |
| Other\tactivity,\tprimarily\tforeign\tcurrency |  |  |  |  |  |  |  |
| translation | (3.8) | - | - | (15.7) | 25.3 | 2.5 | 8.3 |
| Balance\tas\tof\tMay\t28,\t2017 | 6,406.5 | - | 918.8 | 700.8 | 312.4 | 408.7 | 8,747.2 |
| Acquisition | - | 5,294.9 | - | - | - | - | 5,294.9 |
| Other\tactivity,\tprimarily\tforeign\tcurrency |  |  |  |  |  |  |  |
| translation | 4.1 | - | - | 29.1 | (27.4) | 17.1 | 22.9 |
| Balance\tas\tof\tMay\t27,\t2018 | 6,410.6 | 5,294.9 | 918.8 | 729.9 | 285.0 | 425.8 | 14,065.0 |
| Divestitures | - | - | - | - | (0.5) | - | (0.5) |
| Purchase\taccounting\tadjustment | - | 5.6 | - | - | - | - | 5.6 |
| Other\tactivity,\tprimarily\tforeign\tcurrency |  |  |  |  |  |  |  |
| translation | (4.1) | - | - | (29.5) | (24.3) | (16.4) | (74.3) |
| Balance\tas\tof\tMay\t26,\t2019 | $\t\t\t\t6,406.5 | $\t\t\t\t5,300.5 | $918.8 | $700.4 | $260.2 | $409.4 | $\t\t\t\t13,995.8 |

The	changes	in	the	carrying	amount	of	other	intangible	assets	for	fiscal	2017,	2018,	and	2019	are	as	follows:

Our	annual	goodwill	and	indefinite-lived	intangible	assets	test	was	performed	on	the	first	day	of	the	second	quarter	of	fiscal	2019.	As	a	result	of	lower	sales projections	in	our	long-range	plans	for	the	businesses	supporting	the	Progresso,	Food	Should	Taste	Good,	and	Mountain	High	brand	intangible	assets,	we recorded	the	following	impairment	charges:

|  | Impairment | Fair	Value	as	of |
| :--- | :--- | :--- |
| In\tMillions | Charge | Nov.\t25,\t2018\t(a) |
| Progresso | $\t\t\t\t\t\t\t\t\t\t\t\t132.1 | $\t\t\t\t\t\t\t\t\t\t\t\t330.0 |
| Food\tShould\tTaste\tGood | 45.1 | - |
| Mountain\tHigh | 15.4 | - |
| Total | $192.6 | $330.0 |

(a)	Level	3	assets	in	the	fair	value	hierarchy.

Our	Latin	America	reporting	unit	and	the	Yoki	brand	intangible	asset	had	fair	values	that	were	not	substantially	in	excess	of	the	carrying	values.	The	excess fair	value	as	of	the	fiscal	2019	test	date	of	the	Latin	America	reporting	unit	and	the	Yoki	brand	intangible	asset	were	as	follows:

|  | Carrying	Value | Excess	Fair	Value	as |
| :--- | :--- | :--- |
|  | of\tIntangible | of\tFiscal\t2019\tTest |
| In\tMillions | Asset | Date |
| Latin\tAmerica | $\t\t\t\t\t\t\t\t\t\t\t\t209.0 | 7% |
| Yoki | $49.1 | 10% |

# NOTE	7.	FINANCIAL	INSTRUMENTS,	RISK	MANAGEMENT	ACTIVITIES,	AND	FAIR	VALUES

# FINANCIAL	INSTRUMENTS

The	carrying	values	of	cash	and	cash	equivalents,	receivables,	accounts	payable,	other	current	liabilities,	and	notes	payable	approximate	fair	value. Marketable	securities	are	carried	at	fair	value.	As	of	May	26,	2019	and	May	27,	2018,	a	comparison	of	cost	and	market	values	of	our	marketable	debt	and equity	securities	is	as	follows:

|  | Cost | Cost | Fair	Value | Fair	Value | Gross	Gains | Gross	Gains | Gross	Losses | Gross	Losses |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear |
| In\tMillions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Available\tfor\tsale\tdebt\tsecurities | $\t\t\t\t\t\t34.3 | $\t\t\t\t\t\t25.4 | $\t\t\t\t\t\t34.3 | $\t\t\t\t\t\t25.4 | $- | $- | $- | $- |
| Equity\tsecurities | 0.6 | 0.3 | 18.5 | 3.5 | 17.9 | 3.2 | - | - |
| Total | $34.9 | $25.7 | $52.8 | $28.9 | $\t\t\t\t\t\t17.9 | $\t\t\t\t\t\t3.2 | $\t\t\t\t\t\t- | $\t\t\t\t\t\t- |

There	were	no	realized	gains	or	losses	from	sales	of	marketable	securities	in	fiscal	2019.	In	fiscal	2018,	we	realized	$6.8	million	of	gains	from	the	sale	of available-for-sale	marketable	securities.	Gains	and	losses	are	determined	by	specific	identification.	Classification	of	marketable	securities	as	current	or noncurrent	is	dependent	upon	our	intended	holding	period	and	the	security's	maturity	date.	The	aggregate	unrealized	gains	and	losses	on	available-for-sale debt	securities,	net	of	tax	effects,	are	classified	in	AOCI	within	stockholders'	equity.

Scheduled	maturities	of	our	marketable	securities	are	as	follows:

| In	Millions | Cost | Fair	Value |
| :--- | :--- | :--- |
| Under\t1\tyear\t(current) | $\t\t\t\t34.3 | $\t\t\t\t\t\t34.3 |
| Equity\tsecurities | 0.6 | 18.5 |
| Total | $34.9 | $52.8 |

As	of	May	26,	2019,	we	had	$2.3	million	of	certain	marketable	debt	securities	pledged	as	collateral	for	derivative	contracts.	As	of	May	26,	2019, $34.8	million	of	certain	accounts	receivable	were	pledged	as	collateral	against	a	foreign	uncommitted	line	of	credit.

The	fair	value	and	carrying	amounts	of	long-term	debt,	including	the	current	portion,	were	$13,272.8	million	and	$13,021.3	million,	respectively,	as	of May	26,	2019.	The	fair	value	of	long-term	debt	was	estimated	using	market	quotations	and	discounted	cash	flows	based	on	our	current	incremental borrowing	rates	for	similar	types	of	instruments.	Long-term	debt	is	a	Level	2	liability	in	the	fair	value	hierarchy.

# RISK	MANAGEMENT	ACTIVITIES

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

# COMMODITY	PRICE	RISK

Many	commodities	we	use	in	the	production	and	distribution	of	our	products	are	exposed	to	market	price	risks.	We	utilize	derivatives	to	manage	price	risk for	our	principal	ingredients	and	energy	costs,	including	grains	(oats,	wheat,	and	corn),	oils	(principally	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	to	our	planned	cost	as	possible.

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	fiscal	2019,	2018	and	2017	included:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Net\tgain\t(loss)\ton\tmark-to-market\tvaluation\tof\tcommodity\tpositions | $(39.0) | $14.3 | $(22.0) |
| Net\tloss\ton\tcommodity\tpositions\treclassified\tfrom\tunallocated\tcorporate\titems\tto |  |  |  |
| segment\toperating\tprofit | \t\t10.0 | \t\t11.3 | \t\t32.0 |
| Net\tmark-to-market\trevaluation\tof\tcertain\tgrain\tinventories | (7.0) | 6.5 | 3.9 |
| Net\tmark-to-market\tvaluation\tof\tcertain\tcommodity\tpositions\trecognized\tin |  |  |  |
| unallocated\tcorporate\titems | $(36.0) | $32.1 | $13.9 |

As	of	May	26,	2019,	the	net	notional	value	of	commodity	derivatives	was	$312.5	million,	of	which	$242.9	million	related	to	agricultural	inputs	and $69.6	million	related	to	energy	inputs.	These	contracts	relate	to	inputs	that	generally	will	be	utilized	within	the	next	12	months.

# INTEREST	RATE	RISK

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

Floating	Interest	Rate	Exposures	—	Floating-to-fixed	interest	rate	swaps	are	accounted	for	as	cash	flow	hedges,	as	are	all	hedges	of	forecasted	issuances	of debt.	Effectiveness	is	assessed	based	on	either	the	perfectly	effective	hypothetical	derivative	method	or	changes	in	the	present	value	of	interest	payments	on the	underlying	debt.	Effective	gains	and	losses	deferred	to	AOCI	are	reclassified	into	earnings	over	the	life	of	the	associated	debt.	Ineffective	gains	and losses	are	recorded	as	net	interest.	The	amount	of	hedge	ineffectiveness	was	less	than	$1	million	in	fiscal	2019,	a	$2.6	million	loss	in	fiscal	2018,	and	less than	$1	million	in	fiscal	2017.

Fixed	Interest	Rate	Exposures	—	Fixed-to-floating	interest	rate	swaps	are	accounted	for	as	fair	value	hedges	with	effectiveness	assessed	based	on	changes	in the	fair	value	of	the	underlying	debt	and	derivatives,	using

incremental	borrowing	rates	currently	available	on	loans	with	similar	terms	and	maturities.	Ineffective	gains	and	losses	on	these	derivatives	and	the underlying	hedged	items	are	recorded	as	net	interest.	The	amount	of	hedge	ineffectiveness	was	a	$2.4	million	gain	in	fiscal	2019,	a	$3.4	million	loss	in	fiscal 2018,	and	a	$4.3	million	gain	in	fiscal	2017.

In	advance	of	planned	debt	financing	related	to	the	acquisition	of	Blue	Buffalo,	we	entered	into	$3,800.0	million	of	treasury	locks	due	April	19,	2018,	with an	average	fixed	rate	of	2.9	percent.	All	of	these	treasury	locks	were	cash	settled	for	$43.9	million	during	the	fourth	quarter	of	fiscal	2018,	concurrent	with the	issuance	of	our	$850.0	million	5.5-year	fixed-rate	notes,	$800.0	million	7-year	fixed-rate	notes,	$1,400.0	million	10-year	fixed-rate	notes,	$500.0	million 20-year	fixed-rate	notes,	and	$650.0	million	30-year	fixed-rate	notes.

In	advance	of	planned	debt	financing,	in	fiscal	2018,	we	entered	into	$500.0	million	of	treasury	locks	due	October	15,	2017	with	an	average	fixed	rate	of 1.8	percent.	All	of	these	treasury	locks	were	cash	settled	for	$3.7	million	during	the	second	quarter	of	fiscal	2018,	concurrent	with	the	issuance	of	our $500.0	million	5-year	fixed-rate	notes.

As	of	May	26,	2019,	the	pre-tax	amount	of	cash-settled	interest	rate	hedge	gain	or	loss	remaining	in	AOCI,	which	will	be	reclassified	to	earnings	over	the remaining	term	of	the	related	underlying	debt,	follows:

| In	Millions | Gain/(Loss) |
| :--- | :--- |
| 3.15%\tnotes\tdue\tDecember\t15,\t2021 | $(25.3) |
| 2.6%\tnotes\tdue\tOctober\t12,\t2022 | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t2.5 |
| 1.0%\tnotes\tdue\tApril\t27,\t2023 | (0.9) |
| 3.7%\tnotes\tdue\tOctober\t17,\t2023 | (1.5) |
| 3.65%\tnotes\tdue\tFebruary\t15,\t2024 | 8.4 |
| 4.0%\tnotes\tdue\tApril\t17,\t2025 | (3.4) |
| 3.2%\tnotes\tdue\tFebruary\t10,\t2027 | 13.2 |
| 1.5%\tnotes\tdue\tApril\t27,\t2027 | (2.6) |
| 4.2%\tnotes\tdue\tApril\t17,\t2028 | (9.1) |
| 4.55%\tnotes\tdue\tApril\t17,\t2038 | (10.3) |
| 5.4%\tnotes\tdue\tJune\t15,\t2040 | (11.8) |
| 4.15%\tnotes\tdue\tFebruary\t15,\t2043 | 9.3 |
| 4.7%\tnotes\tdue\tApril\t17,\t2048 | (13.7) |
| Net\tpre-tax\thedge\tloss\tin\tAOCI | $(45.2) |

The	following	table	summarizes	the	notional	amounts	and	weighted-average	interest	rates	of	our	interest	rate	derivatives.	Average	floating	rates	are	based	on rates	as	of	the	end	of	the	reporting	period.

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Pay-floating\tswaps\t-\tnotional\tamount | $\t\t\t\t\t\t\t\t500.0 | $\t\t\t\t\t\t\t\t500.0 |
| Average\treceive\trate | 2.2% | 2.2% |
| Average\tpay\trate | 3.1% | 2.9% |

The	swap	contracts	outstanding	as	of	May	26,	2019	mature	in	fiscal	2020.

# FOREIGN	EXCHANGE	RISK

Foreign	currency	fluctuations	affect	our	net	investments	in	foreign	subsidiaries	and	foreign	currency	cash	flows	related	to	third	party	purchases, intercompany	loans,	product	shipments,	and	foreign-denominated	debt.	We	are	also	exposed	to	the	translation	of	foreign	currency	earnings	to	the	U.S.	dollar. Our	principal	exposures	are	to	the	Australian	dollar,	Brazilian	real,	British	pound	sterling,	Canadian	dollar,	Chinese	renminbi,	euro,	Japanese	yen,

Mexican	peso,	and	Swiss	franc.	We	primarily	use	foreign	currency	forward	contracts	to	selectively	hedge	our	foreign	currency	cash	flow	exposures.	We	also generally	swap	our	foreign-denominated	commercial	paper	borrowings	and	nonfunctional	currency	intercompany	loans	back	to	U.S.	dollars	or	the functional	currency	of	the	entity	with	foreign	exchange	exposure.	The	gains	or	losses	on	these	derivatives	offset	the	foreign	currency	revaluation	gains	or losses	recorded	in	earnings	on	the	associated	borrowings.	We	generally	do	not	hedge	more	than	18	months	in	advance.

As	of	May	26,	2019,	the	net	notional	value	of	foreign	exchange	derivatives	was	$1,008.5	million.	The	amount	of	hedge	ineffectiveness	was	less	than $1	million	in	fiscal	2019,	2018,	and	2017.

We	also	have	net	investments	in	foreign	subsidiaries	that	are	denominated	in	euros.	We	previously	hedged	a	portion	of	these	net	investments	by	issuing euro-denominated	commercial	paper	and	foreign	exchange	forward	contracts.	As	of	May	26,	2019,	we	hedged	a	portion	of	these	net	investments	with €2,200.0	million	of	euro	denominated	bonds.	As	of	May	26,	2019,	we	had	deferred	net	foreign	currency	transaction	losses	of	$51.5	million	in	AOCI associated	with	net	investment	hedging	activity.

# EQUITY	INSTRUMENTS

Equity	price	movements	affect	our	compensation	expense	as	certain	investments	made	by	our	employees	in	our	deferred	compensation	plan	are	revalued. We	use	equity	swaps	to	manage	this	risk.	As	of	May	26,	2019,	the	net	notional	amount	of	our	equity	swaps	was	$169.1	million.	These	swap	contracts mature	in	fiscal	2020.

# FAIR	VALUE	MEASUREMENTS	AND	FINANCIAL	STATEMENT	PRESENTATION

The	fair	values	of	our	assets,	liabilities,	and	derivative	positions	recorded	at	fair	value	and	their	respective	levels	in	the	fair	value	hierarchy	as	of	May	26, 2019	and	May	27,	2018,	were	as	follows:

|  | May	26,	2019 | May	26,	2019 | May	26,	2019 | May	26,	2019 | May	26,	2019 | May	26,	2019 | May	26,	2019 | May	26,	2019 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Fair\tValues\tof\tAssets | Fair\tValues\tof\tAssets |  |  | Fair\tValues\tof\tLiabilities | Fair\tValues\tof\tLiabilities |  |
| In\tMillions | Level\t1 | Level\t2 | Level\t3 | Total | Level\t1 | Level\t2 | \t\t Level\t3 | Total |
| Derivatives\tdesignated\tas\thedging\tinstruments: |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts\t(a)\t(b) | $- | $- | $- | $- | $- | $(1.9) | $- | $(1.9) |
| Foreign\texchange\tcontracts\t(c)\t(d) | - | 12.9 | - | 12.9 | - | (3.3) | - | (3.3) |
| Total | - | 12.9 | - | 12.9 | - | (5.2) | - | (5.2) |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |  |  |  |  |
| Foreign\texchange\tcontracts\t(c)\t(d) | - | 2.4 | - | 2.4 | - | (1.9) | - | (1.9) |
| Commodity\tcontracts\t(c)\t(e) | 1.4 | 5.2 | - | 6.6 | (4.4) | (3.5) | - | (7.9) |
| Grain\tcontracts\t(c)\t(e) | - | 6.7 | - | 6.7 | - | (2.3) | - | (2.3) |
| Total | 1.4 | 14.3 | - | 15.7 | (4.4) | (7.7) | - | (12.1) |
| Other\tassets\tand\tliabilities\treported\tat\tfair\tvalue: |  |  |  |  |  |  |  |  |
| Marketable\tinvestments\t(a)\t(f) | 18.5 | 34.3 | - | 52.8 | - | - | - | - |
| Long-lived\tassets\t(g) | - | 19.0 | - | 19.0 | - | - | - | - |
| Indefinite-lived\tintangible\tassets\t(h) | - | - | 330.0 | 330.0 | - | - | - | - |
| Total | 18.5 | 53.3 | 330.0 | 401.8 | - | - | - | - |
| Total\tassets,\tliabilities,\tand\tderivative\tpositions\trecorded\tat\tfair |  |  |  |  |  |  |  |  |
| value | $\t\t\t\t19.9 | $\t\t\t\t80.5 | $\t\t\t\t330.0 | $\t\t\t\t430.4 | $\t\t\t\t(4.4) | $\t\t\t\t(12.9) | $\t\t\t\t\t\t- | $\t\t\t\t(17.3) |

(a) These	contracts	and	investments	are	recorded	as	prepaid	expenses	and	other	current	assets,	other	assets,	other	current	liabilities	or	other	liabilities,	as appropriate,	based	on	whether	in	a	gain	or	loss	position.	Certain	marketable	investments	are	recorded	as	cash	and	cash	equivalents.

(b) Based	on	LIBOR	and	swap	rates.

(c) These	contracts	are	recorded	as	prepaid	expenses	and	other	current	assets,	other	assets,	other	current	liabilities	or	other	liabilities,	as	appropriate,	based on	whether	in	a	gain	or	loss	position.

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

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

(f) Based	on	prices	of	common	stock	and	bond	matrix	pricing.

(g) We	recorded	$61.2	million	in	non-cash	impairment	charges	in	fiscal	2019	to	write	down	certain	long-lived	assets	to	their	fair	value.	Fair	value	was based	on	recently	reported	transactions	for	similar	assets	in	the	marketplace.	These	assets	had	a	carrying	value	of	$80.2	million	and	were	associated with	the	restructuring	actions	described	in	Note	4.

|  | May	27,	2018 | May	27,	2018 | May	27,	2018 | May	27,	2018 | May	27,	2018 | May	27,	2018 | May	27,	2018 | May	27,	2018 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Fair\tValues\tof\tAssets | Fair\tValues\tof\tAssets |  | Fair\tValues\tof\tLiabilities | Fair\tValues\tof\tLiabilities | Fair\tValues\tof\tLiabilities |  |
| In\tMillions | Level\t1 | Level\t2 | Level\t3 | Total | Level\t1 | Level\t2 | \t\t Level\t3 | Total |
| Derivatives\tdesignated\tas\thedging\tinstruments: |  |  |  |  |  |  |  |  |
| Interest\trate\tcontracts\t(a)\t(b) | $-\t\t $-\t\t $-\t\t $-\t\t $- | $-\t\t $-\t\t $-\t\t $-\t\t $- | $-\t\t $-\t\t $-\t\t $-\t\t $- | $-\t\t $-\t\t $-\t\t $-\t\t $- | $-\t\t $-\t\t $-\t\t $-\t\t $- | $(6.6) | $- | $(6.6) |
| Foreign\texchange\tcontracts\t(c)\t(d) | - | 9.4 | - | 9.4 | - | (6.4) | - | (6.4) |
| Total | - | 9.4 | - | 9.4 | - | (13.0) | - | (13.0) |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |  |  |  |  |
| Foreign\texchange\tcontracts\t(c)\t(d) | - | 2.5 | - | 2.5 | - | (0.8) | - | (0.8) |
| Commodity\tcontracts\t(c)\t(e) | 14.7 | 13.0 | - | 27.7 | (0.5) | (0.6) | - | (1.1) |
| Grain\tcontracts\t(c)\t(e) | - | 7.1 | - | 7.1 | - | (1.2) | - | (1.2) |
| Total | 14.7 | 22.6 | - | 37.3 | (0.5) | (2.6) | - | (3.1) |
| Other\tassets\tand\tliabilities\treported\tat\tfair\tvalue: |  |  |  |  |  |  |  |  |
| Marketable\tinvestments\t(a)\t(f) | 3.5 | 25.4 | - | 28.9 | - | - | - | - |
| Long-lived\tassets\t(g) | - | 10.0 | - | 10.0 | - | - | - | - |
| Indefinite-lived\tintangible\tassets\t(h) | - | - | 79.0 | 79.0 | - | - | - | - |
| Total | 3.5 | 35.4 | 79.0 | 117.9 | - | - | - | - |
| Total\tassets,\tliabilities,\tand\tderivative\tpositions\trecorded\tat\tfair |  |  |  |  |  |  |  |  |
| value | $\t\t\t\t18.2 | $\t\t\t\t67.4 | $\t\t\t\t\t\t79.0 | $\t\t\t\t164.6 | $\t\t\t\t(0.5) | $\t\t\t\t(15.6) | $\t\t\t\t\t\t- | $\t\t\t\t(16.1) |

(g) We	recorded	$9.0	million	in	non-cash	impairment	charges	in	fiscal	2018	to	write	down	certain	long-lived	assets	to	their	fair	value.	Fair	value	was	based on	recently	reported	transactions	for	similar	assets	in	the	marketplace.	These	assets	had	a	carrying	value	of	$19.0	million	and	were	associated	with	the restructuring	actions	described	in	Note	4.

We	did	not	significantly	change	our	valuation	techniques	from	prior	periods.

Information	related	to	our	cash	flow	hedges,	fair	value	hedges,	and	other	derivatives	not	designated	as	hedging	instruments	for	the	fiscal	years	ended May	26,	2019	and	May	27,	2018,	follows:

|  | Interest	Rate | Interest	Rate | Foreign	Exchange | Foreign	Exchange | Equity | Equity | Commodity | Commodity |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Contracts | Contracts | Contracts | Contracts | Contracts | Contracts | Contracts | Contracts | Total | Total |
|  | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear |
| In\tMillions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Derivatives\tin\tCash\tFlow\tHedging\tRelationships: |  |  |  |  |  |  |  |  |  |  |
| Amount\tof\tgain\t(loss)\trecognized\tin\tother\tcomprehensive |  |  |  |  |  |  |  |  |  |  |
| income\t(OCI)\t(a) | $- | $\t\t\t\t(50.5) | $\t\t\t\t15.7 | $\t\t\t\t(14.6) | $- | $- | $- | $- | $\t\t\t\t15.7 | $\t\t\t\t(65.1) |
| Amount\tof\tnet\tgain\t(loss)\treclassified\tfrom\tAOCI\tinto\tearnings |  |  |  |  |  |  |  |  |  |  |
| (a)\t(b) | \t\t\t\t(9.0) | 19.3 | 8.4 | (4.2) | - | - | - | - | (0.6) | 15.1 |
| Amount\tof\tnet\tgain\t(loss)\trecognized\tin\tearnings\t(c) | - | (2.6) | 0.5 | (0.3) | - | - | - | - | 0.5 | (2.9) |
| Derivatives\tin\tFair\tValue\tHedging\tRelationships: |  |  |  |  |  |  |  |  |  |  |
| Amount\tof\tnet\tgain\t(loss)\trecognized\tin\tearnings\t(d) | 2.4 | (3.4) | - | - | - | - | - | - | 2.4 | (3.4) |
| Derivatives\tNot\tDesignated\tas\tHedging\tInstruments: |  |  |  |  |  |  |  |  |  |  |
| Amount\tof\tnet\tgain\t(loss)\trecognized\tin\tearnings\t(d) | - | - | 7.5 | (2.8) | \t\t0.7 | \t\t14.3 | \t\t(33.6) | \t\t26.9 | (25.4) | 38.4 |

(a) Effective	portion.

(b) Gain	(loss)	reclassified	from	AOCI	into	earnings	is	reported	in	interest,	net	for	interest	rate	swaps	and	in	cost	of	sales	and	SG&A	expenses	for	foreign exchange	contracts.

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

(d) Gain	(loss)	recognized	in	earnings	is	reported	in	interest,	net	for	interest	rate	contracts,	in	cost	of	sales	for	commodity	contracts,	and	in	SG&A	expenses for	equity	contracts	and	foreign	exchange	contracts.

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

(a)	Includes	related	collateral	offset	in	our	Consolidated	Balance	Sheets.

(b)	Net	fair	value	as	recorded	in	our	Consolidated	Balance	Sheets.

(c)	Fair	value	of	assets	that	could	be	reported	net	in	our	Consolidated	Balance	Sheets.

(d)	Fair	value	of	liabilities	that	could	be	reported	net	in	our	Consolidated	Balance	Sheets.

(e)	Fair	value	of	assets	and	liabilities	reported	on	a	gross	basis	in	our	Consolidated	Balance	Sheets.

# AMOUNTS	RECORDED	IN	ACCUMULATED	OTHER	COMPREHENSIVE	LOSS

As	of	May	26,	2019,	the	after-tax	amounts	of	unrealized	gains	and	losses	in	AOCI	related	to	hedge	derivatives	follows:

The	net	amount	of	pre-tax	gains	and	losses	in	AOCI	as	of	May	26,	2019	that	we	expect	to	be	reclassified	into	net	earnings	within	the	next	12	months	is	a $7.2	million	net	gain.

# CREDIT-RISK-RELATED	CONTINGENT	FEATURES

Certain	of	our	derivative	instruments	contain	provisions	that	require	us	to	maintain	an	investment	grade	credit	rating	on	our	debt	from	each	of	the	major credit	rating	agencies.	If	our	debt	were	to	fall	below	investment	grade,	the	counterparties	to	the	derivative	instruments	could	request	full	collateralization	on derivative	instruments	in	net	liability	positions.	The	aggregate	fair	value	of	all	derivative	instruments	with	credit-risk-related	contingent	features	that	were	in a	liability	position	on	May	26,	2019,	was	$7.4	million.	We	have	posted	no	collateral	under	these	contracts.	If	the	credit-risk-related	contingent	features underlying	these	agreements	had	been	triggered	on	May	26,	2019,	we	would	have	been	required	to	post	$7.4	million	of	collateral	to	counterparties.

# CONCENTRATIONS	OF	CREDIT	AND	COUNTERPARTY	CREDIT	RISK

During	fiscal	2019,	customer	concentration	was	as	follows:

|  |  | North | Convenience |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | America | Stores\t&amp; | Europe\t&amp; | Asia\t&amp;\tLatin |  |
| Percent\tof\ttotal | Consolidated | Retail | Foodservice | Australia | America | \t\t\t\tPet |
| Walmart\t(a): |  |  |  |  |  |  |
| Net\tsales | 20% | 31% | 7% | 1% | 4% | 3% |
| Accounts\treceivable |  | 22% | 3% | 1% | 6% | 9% |
| Five\tlargest\tcustomers: |  |  |  |  |  |  |
| Net\tsales |  | 55% | 45% | 24% | 12% | 69% |
| (a)\nIncludes\tWalmart\tInc.\tand\tits\taffiliates. |  |  |  |  |  |  |

(a) Includes	Walmart	Inc.	and	its	affiliates.

No	customer	other	than	Walmart	accounted	for	10	percent	or	more	of	our	consolidated	net	sales.

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

The	amount	of	loss	due	to	the	credit	risk	of	the	counterparties,	should	the	counterparties	fail	to	perform	according	to	the	terms	of	the	contracts,	is $2.4	million	against	which	we	do	not	hold	collateral.	Under	the	terms	of	our	swap	agreements,	some	of	our	transactions	require	collateral	or	other	security	to support	financial	instruments	subject	to	threshold	levels	of	exposure	and	counterparty	credit	risk.	Collateral	assets	are	either	cash	or	U.S.	Treasury instruments	and	are	held	in	a	trust	account	that	we	may	access	if	the	counterparty	defaults.

We	offer	certain	suppliers	access	to	third	party	services	that	allow	them	to	view	our	scheduled	payments	online.	The	third	party	services	also	allow	suppliers to	finance	advances	on	our	scheduled	payments	at	the	sole	discretion	of	the	supplier	and	the	third	party.	We	have	no	economic	interest	in	these	financing arrangements	and	no	direct	relationship	with	the	suppliers,	the	third	parties,	or	any	financial	institutions	concerning	this	service.	All	of	our	accounts	payable remain	as	obligations	to	our	suppliers	as	stated	in	our	supplier	agreements.	As	of	May	26,	2019,	$1,049.8	million	of	our	accounts	payable	is	payable	to suppliers	who	utilize	these	third	party	services.

# NOTE	8.	DEBT

# NOTES	PAYABLE

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

|  | May	26,	2019 |  | May	27,	2018 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Weighted- | Weighted- |  | Weighted- |
|  | Notes | Average | Notes | Average |
| In\tMillions | Payable | Interest\tRate | Payable | Interest\tRate |
| U.S.\tcommercial\tpaper | $\t\t\t\t1,298.5 | 2.7% | $\t\t\t\t1,213.5 | 2.2% |
| Financial\tinstitutions | 170.2 | 9.0 | 336.3 | 6.2 |
| Total | $1,468.7 | 3.4% | $1,549.8 | 3.1% |

|  | Facility | Borrowed |
| :--- | :--- | :--- |
| In\tBillions | Amount | Amount |
| Credit\tfacility\texpiring: |  |  |
| May\t2022 | $2.7 | $- |
| June\t2019 | 0.2 | - |
| Total\tcommitted\tcredit\tfacilities | 2.9 | - |
| Uncommitted\tcredit\tfacilities | 0.7 | 0.2 |
| Total\tcommitted\tand\tuncommitted\tcredit\tfacilities | $\t\t\t\t\t\t\t\t3.6 | $\t\t\t\t\t\t\t\t0.2 |

The	credit	facilities	contain	covenants,	including	a	requirement	to	maintain	a	fixed	charge	coverage	ratio	of	at	least	2.5	times.	We	were	in	compliance	with all	credit	facility	covenants	as	of	May	26,	2019.

# LONG-TERM	DEBT

In	March	2019,	we	issued	€300.0	million	principal	amount	of	0.0	percent	fixed-rate	notes	due	January	15,	2020.	We	may	redeem	the	notes	if	certain	tax laws	change	and	we	would	be	obligated	to	pay	additional	amounts	on	the	notes.	These	notes	are	senior	unsecured	obligations	that	include	a	change	of control	repurchase	provision.	We	used	the	net	proceeds,	together	with	cash	on	hand,	to	repay	our	€300.0	million	floating	rate	notes.

In	February	2019,	we	repaid	$1,150.0	million	of	5.65	percent	fixed-rate	notes	with	proceeds	from	commercial	paper.

In	April	2018,	we	issued	$4,800.0	million	principal	amount	of	fixed-rate	notes.	Interest	on	the	notes	is	payable	semi-annually	in	arrears.	We	may	redeem	the notes	in	whole,	or	in	part,	at	any	time	at	the	applicable	redemption	price.	The	notes	are	senior	unsecured	obligations	that	include	a	change	of	control repurchase	provision.	The	net	proceeds	were	used	to	finance	a	portion	of	the	Blue	Buffalo	acquisition.	The	principal	amounts	of	these	fixed-rate	notes	were as	follows:

| In	Millions | Principal |
| :--- | :--- |
| 4.2%\tnotes\tdue\tApril\t17,\t2028 | $\t\t\t\t\t\t1,400.0 |
| 3.7%\tnotes\tdue\tOctober\t17,\t2023 | 850.0 |
| 4.0%\tnotes\tdue\tApril\t17,\t2025 | 800.0 |
| 4.7%\tnotes\tdue\tApril\t17,\t2048 | 650.0 |
| 3.2%\tnotes\tdue\tApril\t16,\t2021 | 600.0 |
| 4.55%\tnotes\tdue\tApril\t17,\t2038 | 500.0 |
| Total | $4,800.0 |

In	April	2018,	we	issued	$1,250.0	million	principal	amount	of	floating-rate	notes.	Interest	on	the	notes	is	payable	quarterly	in	arrears.	The	notes	are	not generally	redeemable	prior	to	maturity.	These	notes	are	senior	unsecured	obligations	that	include	a	change	of	control	repurchase	provision.	The	net	proceeds were	used	to	finance	a	portion	of	the	Blue	Buffalo	acquisition.	The	principal	amounts	of	these	floating-rate	notes	were	as	follows:

| In	Millions | Principal |
| :--- | :--- |
| Floating-rate\tnotes\tdue\tApril\t16,\t2021 | $850.0 |
| Floating-rate\tnotes\tdue\tOctober\t17,\t2023 | 400.0 |
| Total | $\t\t\t\t\t\t1,250.0 |

In	February	2018,	we	paid	$113.8	million	to	repurchase	$100.0	million	of	our	previously	issued	6.39	percent	medium	term	notes	due	2023.	We	recorded	the $13.8	million	premium	paid	in	the	repurchase	as	net	interest	expense.

In	October	2017,	we	issued	$500.0	million	principal	amount	of	2.6	percent	fixed-rate	notes	due	October	12,	2022.	Interest	on	the	notes	is	payable semiannually	in	arrears.	We	may	redeem	the	notes	in	whole,	or	in	part,	at	any	time	at	the	applicable	redemption	price.	The	notes	are	senior	unsecured obligations	that	include	a	change	of	control	repurchase	provision.	The	net	proceeds,	together	with	cash	on	hand,	were	used	to	repay	$500.0	million	of 1.4	percent	fixed-rate	notes.

A	summary	of	our	long-term	debt	is	as	follows:

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| 4.2%\tnotes\tdue\tApril\t17,\t2028 | $1,400.0 | $1,400.0 |
| 5.65%\tnotes\tdue\tFebruary\t15,\t2019 | - | 1,150.0 |
| 3.15%\tnotes\tdue\tDecember\t15,\t2021 | 1,000.0 | 1,000.0 |
| 3.7%\tnotes\tdue\tOctober\t17,\t2023 | 850.0 | 850.0 |
| Floating-rate\tnotes\tdue\tApril\t16,\t2021 | 850.0 | 850.0 |
| 4.0%\tnotes\tdue\tApril\t17,\t2025 | 800.0 | 800.0 |
| 3.2%\tnotes\tdue\tFebruary\t10,\t2027 | 750.0 | 750.0 |
| 4.7%\tnotes\tdue\tApril\t17,\t2048 | 650.0 | 650.0 |
| 3.2%\tnotes\tdue\tApril\t16,\t2021 | 600.0 | 600.0 |
| Euro-denominated\t2.1%\tnotes\tdue\tNovember\t16,\t2020 | 560.1 | 582.6 |
| Euro-denominated\t1.0%\tnotes\tdue\tApril\t27,\t2023 | 560.1 | 582.6 |
| Euro-denominated\tfloating-rate\tnotes\tdue\tJanuary\t15,\t2020 | 560.1 | 582.6 |
| 4.55%\tnotes\tdue\tApril\t17,\t2038 | 500.0 | 500.0 |
| 2.6%\tnotes\tdue\tOctober\t12,\t2022 | 500.0 | 500.0 |
| 5.4%\tnotes\tdue\tJune\t15,\t2040 | 500.0 | 500.0 |
| 4.15%\tnotes\tdue\tFebruary\t15,\t2043 | 500.0 | 500.0 |
| 3.65%\tnotes\tdue\tFebruary\t15,\t2024 | 500.0 | 500.0 |
| 2.2%\tnotes\tdue\tOctober\t21,\t2019 | 500.0 | 500.0 |
| Euro-denominated\t1.5%\tnotes\tdue\tApril\t27,\t2027 | 448.1 | 466.1 |
| Floating-rate\tnotes\tdue\tOctober\t17,\t2023 | 400.0 | 400.0 |
| Euro-denominated\t0.0%\tnotes\tdue\tJanuary\t15,\t2020 | 336.1 | - |
| Euro-denominated\tfloating-rate\tnotes\tdue\tMarch\t20,\t2019 | - | 349.6 |
| Euro-denominated\t2.2%\tnotes\tdue\tJune\t24,\t2021 | 224.0 | 232.8 |
| Medium-term\tnotes,\t2.36%\tto\t6.59%,\tdue\tfiscal\t2022\tor\tlater | 104.2 | 104.2 |
| Other,\tincluding\tdebt\tissuance\tcosts\tand\tcapital\tleases | (71.4) | (81.7) |
|  | 13,021.3 | 14,268.8 |
| Less\tamount\tdue\twithin\tone\tyear | (1,396.5) | (1,600.1) |
| Total\tlong-term\tdebt | $\t\t\t\t\t\t11,624.8 | $\t\t\t\t\t\t12,668.7 |

Principal	payments	due	on	long-term	debt	and	capital	leases	in	the	next	five	years	based	on	stated	contractual	maturities,	our	intent	to	redeem,	or	put	rights of	certain	note	holders	are	as	follows:

| In	Millions |  |
| :--- | :--- |
| 2020 | $\t\t\t\t\t\t1,396.5 |
| 2021 | 2,114.4 |
| 2022 | 1,224.1 |
| 2023 | 1,060.2 |
| 2024 | 1,750.0 |

Certain	of	our	long-term	debt	agreements	contain	restrictive	covenants.	As	of	May	26,	2019,	we	were	in	compliance	with	all	of	these	covenants.

As	of	May	26,	2019,	the	$45.2	million	pre-tax	loss	recorded	in	AOCI	associated	with	our	previously	designated	interest	rate	swaps	will	be	reclassified	to	net interest	over	the	remaining	lives	of	the	hedged	transactions.	The	amount	expected	to	be	reclassified	from	AOCI	to	net	interest	in	fiscal	2020	is	a	$9.4	million pre-tax	loss.

# NOTE	9.	REDEEMABLE	AND	NONCONTROLLING	INTERESTS

Our	principal	redeemable	and	noncontrolling	interests	relate	to	our	Yoplait	SAS,	Yoplait	Marques	SNC,	Liberté	Marques	Sàrl,	and	General	Mills	Cereals, LLC	(GMC)	subsidiaries.	In	addition,	we	have	4	foreign	subsidiaries	that	have	noncontrolling	interests	totaling	$4.9	million	as	of	May	26,	2019.

We	have	a	51	percent	controlling	interest	in	Yoplait	SAS	and	a	50	percent	interest	in	Yoplait	Marques	SNC	and	Liberté	Marques	Sàrl.	Sodiaal	holds	the remaining	interests	in	each	of	the	entities.	On	the	acquisition	date,	we	recorded	the	$904.4	million	fair	value	of	Sodiaal's	49	percent	euro-denominated interest	in	Yoplait	SAS	as	a	redeemable	interest	on	our	Consolidated	Balance	Sheets.	Sodiaal	has	the	ability	to	put	all	or	a	portion	of	its	redeemable	interest to	us	at	fair	value	once	per	year,	up	to	three	times	before	December	2024.	We	adjust	the	value	of	the	redeemable	interest	through	additional	paid-in	capital on	our	Consolidated	Balance	Sheets	quarterly	to	the	redeemable	interest's	redemption	value,	which	approximates	its	fair	value.	Yoplait	SAS	pays	dividends annually	if	it	meets	certain	financial	metrics	set	forth	in	its	shareholders'	agreement.	As	of	May	26,	2019,	the	redemption	value	of	the	euro-denominated redeemable	interest	was	$551.7	million.

On	the	acquisition	dates,	we	recorded	the	$281.4	million	fair	value	of	Sodiaal's	50	percent	euro-denominated	interest	in	Yoplait	Marques	SNC	and 50	percent	Canadian	dollar-denominated	interest	in	Liberté	Marques	Sàrl	as	noncontrolling	interests	on	our	Consolidated	Balance	Sheets.	Yoplait	Marques SNC	earns	a	royalty	stream	through	a	licensing	agreement	with	Yoplait	SAS	for	the	rights	to	Yoplait	and	related	trademarks.	Liberté	Marques	Sàrl	earns	a royalty	stream	through	licensing	agreements	with	certain	Yoplait	group	companies	for	the	rights	to	Liberté	and	related	trademarks.	These	entities	pay dividends	annually	based	on	their	available	cash	as	of	their	fiscal	year	end.

We	paid	dividends	of	$22.0	million	in	fiscal	2019	and	$37.7	million	in	fiscal	2018	to	Sodiaal	under	the	terms	of	the	Yoplait	SAS,	Yoplait	Marques	SNC,	and Liberté	Marques	Sàrl	shareholder	agreements.

A	subsidiary	of	Yoplait	SAS	has	entered	into	an	exclusive	milk	supply	agreement	for	its	European	operations	with	Sodiaal	at	market-determined	prices through	July	1,	2021.	Net	purchases	totaled	$210.8	million	for	fiscal	2019	and	$230.8	million	for	fiscal	2018.

The	holder	of	the	GMC	Class	A	Interests	receives	quarterly	preferred	distributions	from	available	net	income	based	on	the	application	of	a	floating	preferred return	rate	to	the	holder's	capital	account	balance	established	in	the	most	recent	mark-to-market	valuation	(currently	$251.5	million).	On	June	1,	2018,	the floating	preferred	return	rate	on	GMC's	Class	A	interests	was	reset	to	the	sum	of	three-month	LIBOR	plus	142.5	basis	points.	The	preferred	return	rate	is adjusted	every	three	years	through	a	negotiated	agreement	with	the	Class	A	Interest	holder	or	through	a	remarketing	auction.

For	financial	reporting	purposes,	the	assets,	liabilities,	results	of	operations,	and	cash	flows	of	our	non-wholly	owned	consolidated	subsidiaries	are	included in	our	Consolidated	Financial	Statements.	The	third-party	investor's	share	of	the	net	earnings	of	these	subsidiaries	is	reflected	in	net	earnings	attributable	to redeemable	and	noncontrolling	interests	in	our	Consolidated	Statements	of	Earnings.

Our	noncontrolling	interests	contain	restrictive	covenants.	As	of	May	26,	2019,	we	were	in	compliance	with	all	of	these	covenants.

# NOTE	10.	STOCKHOLDERS'	EQUITY

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

On	May	6,	2014,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	100	million	shares	of	our	common	stock.	Purchases	under	the	authorization	can be	made	in	the	open	market	or	in	privately	negotiated	transactions,	including	the	use	of	call	options	and	other	derivative	instruments,	Rule	10b5-1	trading plans,	and	accelerated	repurchase	programs.	The	authorization	has	no	specified	termination	date.

On	March	27,	2018,	we	issued	22.7	million	shares	of	the	Company's	common	stock,	par	value	$0.10	per	share,	at	a	public	offering	price	of	$44.00	per	share for	total	proceeds	of	$1.0	billion.	We	paid	$30.1	million	in	issuance	costs,	that	were	recorded	in	additional	paid-in	capital.	The	net	proceeds	of	$969.9	million were	used	to	finance	a	portion	of	the	acquisition	of	Blue	Buffalo.

Share	repurchases	were	as	follows:

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Shares\tof\tcommon\tstock | - | 10.9 | 25.4 |
| Aggregate\tpurchase\tprice | $ 1.1 | $601.6 | $1,651.5 |

The	following	table	provides	details	of	total	comprehensive	income:

| In	Millions | Pretax | General	Mills<br>Tax | Net | Noncontrolling<br>Interests<br>Net | Redeemable<br>Interest<br>Net |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\nredeemable\tand\tnoncontrolling\tinterests |  |  | $1,752.7 | $13.9 | $19.6 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |  |
| Foreign\tcurrency\ttranslation | $\t\t\t\t\t\t\t\t(38.3) | $- | (38.3) | (13.5) | (31.0) |
| Net\tactuarial\tloss | (325.6) | 72.2 | (253.4) | - | - |
| Other\tfair\tvalue\tchanges: |  |  |  |  |  |
| Hedge\tderivatives | 15.9 | (3.7) | 12.2 | - | (0.1) |
| Reclassification\tto\tearnings: |  |  |  |  |  |
| Securities\t(a) | (2.6) | 0.6 | (2.0) | - | - |
| Hedge\tderivatives\t(b) | 0.1 | 0.4 | 0.5 | - | 0.4 |
| Amortization\tof\tlosses\tand\tprior\tservice\tcosts |  |  |  |  |  |
| (c) | 107.5 | \t\t\t\t\t\t\t\t(22.9) | 84.6 | - | - |
| Other\tcomprehensive\tloss | (243.0) | 46.6 | (196.4) | \t\t\t\t\t\t\t\t(13.5) | (30.7) |
| Total\tcomprehensive\tincome\t(loss) |  |  | $\t\t\t\t\t\t\t\t1,556.3 | $0.4 | $ \t\t\t\t\t\t\t\t(11.1) |

(a) Gain	reclassified	from	AOCI	into	earnings	is	reported	in	interest,	net	for	securities.

(b) Loss	reclassified	from	AOCI	into	earnings	is	reported	in	interest,	net	for	interest	rate	swaps	and	in	cost	of	sales	and	SG&A	expenses	for	foreign exchange	contracts.

(c) Loss	reclassified	from	AOCI	into	earnings	is	reported	in	benefit	plan	non-service	income.	Please	refer	to	Note	2.

|  |  |  |  | Noncontrolling | Redeemable |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | General\tMills |  | Interests | Interest |
| In\tMillions | Pretax | Tax | Net | Net | Net |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\tredeemable\nand\tnoncontrolling\tinterests |  |  | $\t\t\t\t\t\t2,131.0 | $ \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t13.4 | $\t\t\t\t\t\t\t\t\t\t\t\t18.6 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |  |
| Foreign\tcurrency\ttranslation | $(76.9) | $- | (76.9) | 13.5 | 26.4 |
| Net\tactuarial\tincome | \t\t\t\t\t\t\t\t185.5 | \t\t\t\t(45.4) | 140.1 | - | - |
| Other\tfair\tvalue\tchanges: |  |  |  |  |  |
| Securities | 1.8 | (0.6) | 1.2 | - | - |
| Hedge\tderivatives | (64.7) | 14.2 | (50.5) | - | (0.3) |
| Reclassification\tto\tearnings: |  |  |  |  |  |
| Securities\t(a) | (6.6) | 1.5 | (5.1) | - | - |
| Hedge\tderivatives\t(b) | 24.9 | (6.4) | 18.5 | - | (1.1) |
| Amortization\tof\tlosses\tand\tprior\tservice\tcosts\t(c) | 176.8 | (59.2) | 117.6 | - | - |
| Other\tcomprehensive\tincome | 240.8 | (95.9) | 144.9 | 13.5 | 25.0 |
| Total\tcomprehensive\tincome |  |  | $2,275.9 | $26.9 | $43.6 |

(b) Loss	(gain)	reclassified	from	AOCI	into	earnings	is	reported	in	interest,	net	for	interest	rate	swaps	and	in	cost	of	sales	and	SG&A	expenses	for	foreign exchange	contracts.

|  |  |  |  | Noncontrolling | Redeemable |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | General\tMills |  | Interests | Interest |
| In\tMillions | Pretax | Tax | Net | Net | Net |
| Net\tearnings,\tincluding\tearnings\tattributable\tto\nredeemable\tand\tnoncontrolling\tinterests |  |  | $\t\t\t\t\t\t\t\t1,657.5 | $\t\t\t\t\t\t\t\t11.3 | $\t\t\t\t\t\t\t\t32.3 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |  |
| Foreign\tcurrency\ttranslation | $19.5 | $- | 19.5 | 2.5 | (15.7) |
| Net\tactuarial\tincome | \t\t\t\t307.3 | \t\t\t\t(109.4) | 197.9 | - | - |
| Other\tfair\tvalue\tchanges: |  |  |  |  |  |
| Securities | 1.3 | (0.5) | 0.8 | - | - |
| Hedge\tderivatives | 65.9 | (16.1) | 49.8 | - | 3.5 |
| Reclassification\tto\tearnings: |  |  |  |  |  |
| Hedge\tderivatives\t(a) | (25.2) | 2.4 | (22.8) | - | (2.9) |
| Amortization\tof\tlosses\tand\tprior\tservice\tcosts\t(b) | 197.2 | (74.7) | 122.5 | - | - |
| Other\tcomprehensive\tincome\t(loss) | 566.0 | (198.3) | 367.7 | 2.5 | (15.1) |
| Total\tcomprehensive\tincome |  |  | $2,025.2 | $13.8 | $17.2 |

(a) Gain	reclassified	from	AOCI	into	earnings	is	reported	in	interest,	net	for	interest	rate	swaps	and	in	cost	of	sales	and	SG&A	expenses	for	foreign exchange	contracts.

(b) Loss	reclassified	from	AOCI	into	earnings	is	reported	in	benefit	plan	non-service	income.	Please	refer	to	Note	2.

In	fiscal	2019,	2018,	and	2017,	except	for	reclassifications	to	earnings,	changes	in	other	comprehensive	income	(loss)	were	primarily	non-cash	items.

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

| In	Millions | May	26,<br>2019 | May	27,<br>2018 |
| :--- | :--- | :--- |
| Foreign\tcurrency\ttranslation\tadjustments | $(739.9) | $(701.6) |
| Unrealized\tgain\t(loss)\tfrom: |  |  |
| Securities | - | 2.0 |
| Hedge\tderivatives | (19.4) | (32.1) |
| Pension,\tother\tpostretirement,\tand\tpostemployment\tbenefits: |  |  |
| Net\tactuarial\tloss | (1,880.5) | (1,723.6) |
| Prior\tservice\tcredits | 14.4 | 26.3 |
| Accumulated\tother\tcomprehensive\tloss | $\t\t\t\t(2,625.4) | $\t\t\t\t(2,429.0) |

In	the	third	quarter	of	fiscal	2018,	we	adopted	new	accounting	requirements	that	provide	the	option	to	reclassify	stranded	income	tax	effects	resulting	from the	TCJA	from	AOCI	to	retained	earnings.	We	elected	to	reclassify	the	stranded	income	tax	effects	of	the	TCJA	of	$329.4	million	from	AOCI	to	retained earnings.	Please	see	Note	14	for	additional	information.

# NOTE	11.	STOCK	PLANS

We	use	broad-based	stock	plans	to	help	ensure	that	management's	interests	are	aligned	with	those	of	our	shareholders.	As	of	May	26,	2019,	a	total	of 30.3	million	shares	were	available	for	grant	in	the	form	of	stock	options,	restricted	stock,	restricted	stock	units,	and	shares	of	unrestricted	stock	under	the 2017	Stock	Compensation	Plan	(2017	Plan).	The	2017	Plan	also	provides	for	the	issuance	of	cash-settled	share-based	units,	stock	appreciation	rights,	and performance-based	stock	awards.	Stock-based	awards	now	outstanding	include	some	granted	under	the	2007,	2009,	and	2011	stock	plans	and	the	2006	and 2011	compensation	plans	for	non-employee	directors,	under	which	no	further	awards	may	be	granted.	The	stock	plans	provide	for	potential	accelerated vesting	of	awards	upon	retirement,	termination,	or	death	of	eligible	employees	and	directors.

# Stock	Options

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
|  | 2019 | 2018 | 2017 |
| Estimated\tfair\tvalues\tof\tstock\toptions\tgranted | $5.35 | $6.18 | $8.80 |
| Assumptions: |  |  |  |
| \tRisk-free\tinterest\trate | 2.9\t% | 2.2% | 1.7\t% |
| \tExpected\tterm | \t 8.5\tyears | \t 8.2\tyears | \t 8.5\tyears |
| \tExpected\tvolatility | 16.3\t% | 15.8% | 17.8\t% |
| \tDividend\tyield | 4.3\t% | 3.6% | 2.9\t% |

We	estimate	the	fair	value	of	each	option	on	the	grant	date	using	a	Black-Scholes	option-pricing	model,	which	requires	us	to	make	predictive	assumptions regarding	future	stock	price	volatility,	employee	exercise	behavior,	dividend	yield,	and	the	forfeiture	rate.	We	estimate	our	future	stock	price	volatility	using the	historical	volatility	over	the	expected	term	of	the	option,	excluding	time	periods	of	volatility	we	believe	a	marketplace	participant	would	exclude	in estimating	our	stock	price	volatility.	We	also	have	considered,	but	did	not	use,	implied	volatility	in	our	estimate,	because	trading	activity	in	options	on	our stock,	especially	those	with	tenors	of	greater	than	6	months,	is	insufficient	to	provide	a	reliable	measure	of	expected	volatility.

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

Any	corporate	income	tax	benefit	realized	upon	exercise	or	vesting	of	an	award	in	excess	of	that	previously	recognized	in	earnings	(referred	to	as	a	windfall tax	benefit)	is	presented	in	our	Consolidated	Statements	of	Cash	Flows	as	an	operating	cash	flow.	Realized	windfall	tax	benefits	and	shortfall	tax deficiencies	related	to	the	exercise	or	vesting	of	stock-based	awards	are	recognized	in	the	Consolidated	Statement	of	Earnings.	We	recognized	windfall	tax benefits	from	stock-based	payments	in	income	tax	expense	in	our	Consolidated	Statements	of	Earnings	of	$24.5	million	in	fiscal	2019	and	$25.5	million	in fiscal	2018.

Options	may	be	priced	at	100	percent	or	more	of	the	fair	market	value	on	the	date	of	grant,	and	generally	vest	four	years	after	the	date	of	grant.	Options generally	expire	within	10	years	and	one	month	after	the	date	of	grant.

# Information	on	stock	option	activity	follows:

|  |  | Weighted- | Weighted- |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Average | Average | Aggregate |
|  | Options | Exercise | Remaining | Intrinsic |
|  | Outstanding | Price\tPer | Contractual | Value |
|  | (Thousands) | Share | Term\t(Years) | (Millions) |
| Balance\tas\tof\tMay\t27,\t2018 | 28,963.8 | $\t\t\t\t\t\t\t\t42.90 |  |  |
| Granted | 3,149.8 | 46.09 |  |  |
| Exercised | (7,968.1) | 30.96 |  |  |
| Forfeited\tor\texpired | (492.5) | 53.73 |  |  |
| Outstanding\tas\tof\tMay\t26,\t2019 | 23,653.0 | $47.12 | 4.82 | $\t\t\t\t\t\t\t\t180.0 |
| Exercisable\tas\tof\tMay\t26,\t2019 | 14,219.0 | 41.80 | 2.79 | $159.8 |

Stock-based	compensation	expense	related	to	stock	option	awards	was	$14.7	million	in	fiscal	2019,	$15.5	million	in	fiscal	2018,	and	$18.0	million	in	fiscal 2017.	Compensation	expense	related	to	stock-based	payments	recognized	in	our	Consolidated	Statements	of	Earnings	includes	amounts	recognized	in restructuring,	impairment,	and	other	exit	costs	for	fiscal	2018	and	2017.

Net	cash	proceeds	from	the	exercise	of	stock	options	less	shares	used	for	minimum	withholding	taxes	and	the	intrinsic	value	of	options	exercised	were	as follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Net\tcash\tproceeds | $\t\t\t\t\t\t\t\t241.4 | $\t\t\t\t99.3 | $\t\t\t\t112.6 |
| Intrinsic\tvalue\tof\toptions\texercised | $126.7 | $83.6 | $176.5 |

# Restricted	Stock,	Restricted	Stock	Units,	and	Performance	Share	Units

Stock	and	units	settled	in	stock	subject	to	a	restricted	period	and	a	purchase	price,	if	any	(as	determined	by	the	Compensation	Committee	of	the	Board	of Directors),	may	be	granted	to	key	employees	under	the	2017	Plan.	Restricted	stock	and	restricted	stock	units	generally	vest	and	become	unrestricted	four years	after	the	date	of	grant.	Performance	share	units	are	earned	primarily	based	on	our	future	achievement	of	three-year	goals	for	average	organic	net	sales growth	and	cumulative	free	cash	flow.	Performance	share	units	are	settled	in	common	stock	and	are	generally	subject	to	a	three	year	performance	and vesting	period.	The	sale	or	transfer	of	these

awards	is	restricted	during	the	vesting	period.	Participants	holding	restricted	stock,	but	not	restricted	stock	units	or	performance	share	units,	are	entitled	to vote	on	matters	submitted	to	holders	of	common	stock	for	a	vote.	These	awards	accumulate	dividends	from	the	date	of	grant,	but	participants	only	receive payment	if	the	awards	vest.

Information	on	restricted	stock	unit	and	performance	share	unit	activity	follows:

|  | Equity	Classified |  | Liability	Classified |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Share-\nSettled\nUnits\n(Thousands) | Weighted-\nAverage\nGrant-Date\nFair\tValue | Share-\nSettled\nUnits\n(Thousands) | Weighted-\nAverage\nGrant-Date\nFair\tValue |
| Non-vested\tas\tof\tMay\t27,\t2018 | 3,731.8 | $57.50 | 121.3 | $58.26 |
| Granted | 1,814.5 | 46.14 | 33.8 | 46.16 |
| Vested | (880.6) | 51.30 | (35.2) | 55.48 |
| Forfeited\tor\texpired | (393.4) | 58.44 | (11.8) | 57.64 |
| Non-vested\tas\tof\tMay\t26,\t2019 | 4,272.3 | $\t\t\t\t\t\t\t\t53.87 | 108.1 | $\t\t\t\t\t\t\t\t55.45 |

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
|  | 2019 | 2018 | 2017 |
| Number\tof\tunits\tgranted\t(thousands) | \t\t1,848.2 | \t\t1,551.3 | \t\t1,462.3 |
| Weighted-average\tprice\tper\tunit | $46.14 | $55.12 | $67.01 |

The	total	grant-date	fair	value	of	restricted	stock	unit	awards	that	vested	was	$47.1	million	in	fiscal	2019	and	$93.0	million	in	fiscal	2018.

As	of	May	26,	2019,	unrecognized	compensation	expense	related	to	non-vested	stock	options,	restricted	stock	units,	and	performance	share	units	was $98.4	million.	This	expense	will	be	recognized	over	21	months,	on	average.

Stock-based	compensation	expense	related	to	restricted	stock	units	and	performance	share	units	was	$70.2	million	for	fiscal	2019,	$62.4	million	for	fiscal 2018,	and	$77.9	million	for	fiscal	2017.	Compensation	expense	related	to	stock-based	payments	recognized	in	our	Consolidated	Statements	of	Earnings includes	amounts	recognized	in	restructuring,	impairment,	and	other	exit	costs	for	fiscal	2019,	2018,	and	2017.

# NOTE	12.	EARNINGS	PER	SHARE

Basic	and	diluted	EPS	were	calculated	using	the	following:

| In	Millions,	Except	per	Share	Data | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tearnings\tattributable\tto\tGeneral\tMills | $ \t\t\t\t1,752.7 | $\t\t\t\t2,131.0 | $\t\t\t\t1,657.5 |
| Average\tnumber\tof\tcommon\tshares—basic\tEPS | 600.4 | 576.8 | 587.1 |
| Incremental\tshare\teffect\tfrom:\t(a) |  |  |  |
| Stock\toptions | 3.1 | 6.9 | 8.1 |
| Restricted\tstock\tunits,\tperformance\tshare\tunits,\tand\tother | 1.9 | 2.0 | 2.8 |
| Average\tnumber\tof\tcommon\tshares—diluted\tEPS | 605.4 | 585.7 | 598.0 |
| Earnings\tper\tshare—basic | $2.92 | $3.69 | $2.82 |
| Earnings\tper\tshare\t—diluted | $2.90 | $3.64 | $2.77 |

(a) Incremental	shares	from	stock	options,	restricted	stock	units,	and	performance	share	units	are	computed	by	the	treasury	stock	method.	Stock	options, restricted	stock	units,	and	performance	share	units	excluded	from	our	computation	of	diluted	EPS	because	they	were	not	dilutive	were	as	follows:

# NOTE	13.	RETIREMENT	BENEFITS	AND	POSTEMPLOYMENT	BENEFITS

# Defined	Benefit	Pension	Plans

We	have	defined	benefit	pension	plans	covering	many	employees	in	the	United	States,	Canada,	Switzerland,	France,	and	the	United	Kingdom.	Benefits	for salaried	employees	are	based	on	length	of	service	and	final	average	compensation.	Benefits	for	hourly	employees	include	various	monthly	amounts	for	each year	of	credited	service.	Our	funding	policy	is	consistent	with	the	requirements	of	applicable	laws.	We	made	no	voluntary	contributions	to	our	principal	U.S. plans	in	fiscal	2019	or	2018.	We	do	not	expect	to	be	required	to	make	any	contributions	in	fiscal	2020.	Our	principal	domestic	retirement	plan	covering salaried	employees	has	a	provision	that	any	excess	pension	assets	would	be	allocated	to	active	participants	if	the	plan	is	terminated	within	five	years	of	a change	in	control.	All	salaried	employees	hired	on	or	after	June	1,	2013,	are	eligible	for	a	retirement	program	that	does	not	include	a	defined	benefit	pension plan.

In	fiscal	2018,	we	approved	an	amendment	to	reorganize	the	U.S.	qualified	defined	benefit	pension	plans	and	the	supplemental	pension	plans	that	resulted	in the	spinoff	of	a	portion	of	the	General	Mills	Pension	Plan	(the	Plan)	and	the	2005	Supplemental	Retirement	Plan	and	the	Supplemental	Retirement	Plan (Grandfathered)	(together,	the	Supplemental	Plans)	into	new	plans	effective	May	31,	2018.	The	benefits	offered	to	the	plans'	participants	were	unchanged. The	result	of	the	reorganization	was	the	creation	of	the	General	Mills	Pension	Plan	I	(Plan	I)	and	the	2005	Supplemental	Retirement	Plan	I	and	the Supplemental	Retirement	Plan	I	(Grandfathered)	(together,	the	Supplemental	Plans	I).	The	reorganization	was	made	to	facilitate	a	targeted	investment strategy	over	time	and	to	provide	additional	flexibility	in	evaluating	opportunities	to	reduce	risk	and	volatility.	Actuarial	gains	and	losses	associated	with	the Plan	and	the	Supplemental	Plans	are	amortized	over	the	average	remaining	service	life	of	the	active	participants.	Actuarial	gains	and	losses	associated	with the	Plan	I	and	the	Supplemental	Plans	I	are	amortized	over	the	average	remaining	life	of	the	participants.

# Other	Postretirement	Benefit	Plans

We	also	sponsor	plans	that	provide	health	care	benefits	to	many	of	our	retirees	in	the	United	States,	Canada,	and	Brazil.	The	United	States	salaried	health care	benefit	plan	is	contributory,	with	retiree	contributions	based	on	years	of	service.	We	make	decisions	to	fund	related	trusts	for	certain	employees	and retirees	on	an	annual	basis.	We	made	no	voluntary	contributions	to	these	plans	in	fiscal	2019	or	fiscal	2018.

Assumed	health	care	cost	trends	are	as	follows:

|  | One | One |
| :--- | :--- | :--- |
|  | Percentage | Percentage |
|  | Point | Point |
| In\tMillions | Increase | Decrease |
| Effect\ton\tthe\taggregate\tof\tthe\tservice\tand\tinterest\tcost\tcomponents\tin\tfiscal\t2020 | $1.4 | $(1.3) |
| Effect\ton\tthe\tother\tpostretirement\taccumulated\tbenefit\tobligation\tas\tof\tMay\t26,\t2019 | $\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t43.5 | $\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t(40.3) |

# Postemployment	Benefit	Plans

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

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

|  | Defined	Benefit | Defined	Benefit | Postretirement | Postretirement | Postemployment | Postemployment |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pension\tPlans | Pension\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans |
|  | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear |
| In\tMillions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Change\tin\tPlan\tAssets: |  |  |  |  |  |  |
| Fair\tvalue\tat\tbeginning\tof\tyear | $6,177.4 | $5,925.2 | $726.1 | $694.8 |  |  |
| Actual\treturn\ton\tassets | 391.9 | 496.5 | 41.3 | 50.5 |  |  |
| Employer\tcontributions | 30.4 | 41.8 | 0.1 | 0.1 |  |  |
| Plan\tparticipant\tcontributions | 3.9 | 6.1 | 15.0 | 15.7 |  |  |
| Benefits\tpayments | (305.2) | (298.0) | (28.7) | (35.0) |  |  |
| Foreign\tcurrency | (6.8) | 5.8 | - | - |  |  |
| Fair\tvalue\tat\tend\tof\tyear\t(a) | $6,291.6 | $6,177.4 | $753.8 | $726.1 |  |  |
| Change\tin\tProjected\tBenefit\tObligation: |  |  |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $6,416.0 | $6,458.6 | $871.8 | $951.4 | $\t\t\t\t126.7 | $\t\t\t\t134.5 |
| Service\tcost | 94.6 | 102.9 | 9.9 | 11.6 | 7.6 | 8.6 |
| Interest\tcost | 248.0 | 217.9 | 33.1 | 30.1 | 3.0 | 2.3 |
| Plan\tamendment | - | 25.4 | - | (0.7) | 1.7 | 1.2 |
| Curtailment/other | (0.7) | - | - | - | - | - |
| Plan\tparticipant\tcontributions | 3.9 | 6.1 | 15.0 | 15.7 | - | - |
| Medicare\tPart\tD\treimbursements | - | - | 2.5 | 3.0 | - | - |
| Actuarial\tloss\t(gain) | 301.8 | (102.0) | (45.4) | (73.9) | 2.6 | (7.0) |
| Benefits\tpayments | (305.8) | (298.6) | (62.2) | (64.9) | (13.2) | (13.1) |
| Foreign\tcurrency | (7.1) | 5.7 | (0.6) | (0.5) | (0.4) | 0.2 |
| Projected\tbenefit\tobligation\tat\tend\tof\tyear\t(a) | $ \t\t\t\t6,750.7 | $ \t\t\t\t6,416.0 | $ \t\t\t\t824.1 | $\t\t\t\t871.8 | $128.0 | $126.7 |
| Plan\tassets\tless\tthan\tbenefit\tobligation\tas\tof\tfiscal\tyear\tend | $(459.1) | $(238.6) | $(70.3) | $(145.7) | $(128.0) | $(126.7) |

As	of	May	26,	2019,	other	postretirement	benefit	plans	had	benefit	obligations	of	$498.4	million	that	exceeded	plan	assets	of	$233.7	million.	As	of	May	27, 2018,	other	postretirement	benefit	plans	had	benefit	obligations	of	$507.3	million	that	exceeded	plan	assets	of	$223.1	million.	Postemployment	benefit	plans are	not	funded	and	had	benefit	obligations	of	$128.0	million	and	$126.7	million	as	of	May	26,	2019	and	May	27,	2018,	respectively.

|  | Defined	Benefit |  | Postretirement | Postretirement | Postemployment | Postemployment |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pension\tPlans | Pension\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Total | Total |
|  | Fiscal\tYear |  | Fiscal\tYear | Fiscal\tYear | Fiscal\tYear |  | Fiscal\tYear |  |
| In\tMillions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Net\tactuarial\t(loss)\tgain | \t $\t\t(1,961.6)\t\t $\t\t(1,764.1)\t\t $ | \t $\t\t(1,961.6)\t\t $\t\t(1,764.1)\t\t $ | 81.0\t\t $\t\t44.4\t\t $ | 81.0\t\t $\t\t44.4\t\t $ | 0.1\t\t\t $ | (3.9)\t\t $ | (1,880.5)\t\t $\t\t(1,723.6) | (1,880.5)\t\t $\t\t(1,723.6) |
| Prior\tservice\t(costs)\tcredits | (5.9) | (7.1) | 26.3 | 33.1 | (6.0) | 0.3 | 14.4 | 26.3 |
| Amounts\trecorded\tin\taccumulated\tother\tcomprehensive\nloss | \t $(1,967.5)\t\t $ | (1,771.2)\t\t $\t\t107.3\t\t $ | (1,771.2)\t\t $\t\t107.3\t\t $ | 77.5\t\t $ | \t\t(5.9)\t\t $ | \t\t(3.6)\t\t $\t\t(1,866.1)\t\t $ | \t\t(3.6)\t\t $\t\t(1,866.1)\t\t $ | (1,697.3) |

Plans	with	accumulated	benefit	obligations	in	excess	of	plan	assets	as	of	May	26,	2019	and	May	27,	2018	are	as	follows:

|  | Defined	Benefit | Defined	Benefit |
| :--- | :--- | :--- |
|  | Pension\tPlans | Pension\tPlans |
|  | Fiscal\tYear | Fiscal\tYear |
| In\tMillions | 2019 | 2018 |
| Projected\tbenefit\tobligation | $\t\t\t\t589.7 | $\t\t\t\t551.6 |
| Accumulated\tbenefit\tobligation | 552.2 | 498.8 |
| Plan\tassets\tat\tfair\tvalue | 14.4 | 10.2 |

Components	of	net	periodic	benefit	expense	are	as	follows:

|  |  | Defined	Benefit |  | Other	Postretirement | Other	Postretirement | Other	Postretirement |  | Postemployment |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pension\tPlans | Pension\tPlans | Pension\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans |
|  |  | Fiscal\tYear |  |  | Fiscal\tYear |  |  | Fiscal\tYear |  |
| In\tMillions | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 |
| Service\tcost | $94.6 | $102.9 | $119.7 | $9.9 | $11.6 | $\t\t\t\t12.5 | $7.6 | $8.6 | $8.8 |
| Interest\tcost | \t\t\t\t248.0 | 217.9 | 216.5 | \t\t\t\t33.1 | \t\t\t\t30.1 | 32.2 | 3.0 | 2.3 | 2.6 |
| Expected\treturn\ton\tplan\tassets | (445.8) | (480.2) | (486.7) | (40.4) | (52.2) | (48.5) | - | - | - |
| Amortization\tof\tlosses | 109.8 | \t\t\t\t177.0 | \t\t\t\t190.2 | 0.6 | 0.8 | 2.5 | 0.1 | 0.8 | 1.7 |
| Amortization\tof\tprior\tservice\tcosts\t(credits) | 1.5 | 1.9 | 2.5 | (5.5) | (5.4) | (5.4) | 0.7 | 0.6 | 0.6 |
| Other\tadjustments | - | - | 3.1 | - | - | 1.3 | 6.7 | 6.7 | 1.3 |
| Settlement\tor\tcurtailment\tlosses | 0.3 | - | 3.8 | - | - | (0.9) | - | - | (1.4) |
| Net\texpense | $8.4 | $19.5 | $49.1 | $(2.3) | $(15.1) | $(6.3) | $\t\t\t\t18.1 | $\t\t\t\t19.0 | $\t\t\t\t13.6 |

We	expect	to	recognize	the	following	amounts	in	net	periodic	benefit	expense	in	fiscal	2020:

|  | Defined | Other |  |
| :--- | :--- | :--- | :--- |
|  | Benefit | Postretirement | Postemployment |
| In\tMillions | Pension\tPlans | Benefit\tPlans | Benefit\tPlans |
| Amortization\tof\tlosses | $106.9 | $(2.1) | $0.4 |
| Amortization\tof\tprior\tservice\tcosts\t(credits) | 1.5 | (5.5) | 0.9 |

# Assumptions

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

|  | Defined	Benefit | Other	Postretirement | Other	Postretirement | Postemployment | Postemployment |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pension\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans |
|  | Fiscal\tYear | Fiscal\tYear |  | Fiscal\tYear | Fiscal\tYear |
|  | 2019\n2018 | 2019 | 2018 | 2019 | 2018 |
| Discount\trate | \t3.91\t%\n\t4.20\t% | 3.79\t% | 4.17\t% | \t3.10\t% | \t 3.60\t% |
| Rate\tof\tsalary\tincreases | \t4.17\n\t4.27 | - | - | \t4.47 | \t4.44 |

Weighted-average	assumptions	used	to	determine	fiscal	year	net	periodic	benefit	expense	are	as	follows:

|  |  |  | Defined	Benefit |  | Other	Postretirement | Other	Postretirement | Other	Postretirement | Postemployment | Postemployment |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tPlans | Pension\tPlans | Pension\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans | Benefit\tPlans |
|  |  |  | Fiscal\tYear |  |  | Fiscal\tYear |  |  | Fiscal\tYear |  |
|  |  | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 |
| Discount\trate\t(a) | Discount\trate\t(a) | \t 4.20\t% | 4.08\t% | 4.19\t% | \t 4.17\t% | 3.92\t% | 3.97\t% | \t 3.60\t% | 2.87\t% | 2.94\t% |
| Service\tcost\teffective\trate | Service\tcost\teffective\trate | \t 4.34 | \t 4.37 | \t 4.57 | \t 4.27 | \t 4.27 | \t 4.42 | \t 3.99 | 3.54 | 3.55 |
| Interest\tcost\teffective\trate | Interest\tcost\teffective\trate | \t 3.92 | \t 3.45 | \t 3.44 | \t 3.80 | \t 3.24 | \t 3.17 | \t 3.37 | 2.67 | 2.67 |
| Rate\tof\tsalary\tincreases | Rate\tof\tsalary\tincreases | \t 4.27 | \t 4.25 | \t 4.28 | - | - | - | \t 4.44 | 4.46 | 4.35 |
| Expected\tlong-term\trate\tof\treturn\ton\tplan\tassets | Expected\tlong-term\trate\tof\treturn\ton\tplan\tassets | \t 7.25 | \t 7.88 | \t 8.17 | \t 5.67 | \t 7.59 | \t 7.85 | - | - | - |
| (a) | Determined\tutilizing\tthe\tfull\tyield\tcurve\tmethod. |  |  |  |  |  |  |  |  |  |

(a) Determined	utilizing	the	full	yield	curve	method.

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

# Fair	Value	of	Plan	Assets

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

|  |  | Fiscal	Year	2019 | Fiscal	Year	2019 |  |  | Fiscal	Year	2018 | Fiscal	Year	2018 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Total |  |  |  | Total |
| In\tMillions | Level\t1 | Level\t2 | Level\t3 | Assets | Level\t1 | Level\t2 | Level\t3 | Assets |
| Fair\tvalue\tmeasurement\tof\tpension\tplan\tassets: |  |  |  |  |  |  |  |  |
| Equity\t(a) | $\t\t1,226.2 | $664.6 | $- | $\t\t1,890.8 | $\t\t1,722.5 | $782.1 | $- | $\t\t2,504.6 |
| Fixed\tincome\t(b) | 1,635.5 | 1,144.9 | - | 2,780.4 | 1,264.5 | 714.5 | - | 1,979.0 |
| Real\tasset\tinvestments\t(c) | 179.4 | 59.9 | - | 239.3 | 229.1 | 115.2 | - | 344.3 |
| Other\tinvestments\t(d) | - | - | 0.3 | 0.3 | - | - | 0.3 | 0.3 |
| Cash\tand\taccruals | 186.5 | - | - | 186.5 | 124.4 | - | - | 124.4 |
| Fair\tvalue\tmeasurement\tof\tpension\tplan\tassets | $3,227.6 | $\t\t1,869.4 | $\t\t\t\t\t\t\t\t0.3 | $5,097.3 | $3,340.5 | $\t\t1,611.8 | $\t\t\t\t\t\t\t\t0.3 | $4,952.6 |
| Assets\tmeasured\tat\tnet\tasset\tvalue\t(e) |  |  |  | 1,194.3 |  |  |  | 1,224.8 |
| Total\tpension\tplan\tassets\t(f) |  |  |  | $6,291.6 |  |  |  | $6,177.4 |
| Fair\tvalue\tmeasurement\tof\tpostretirement\tbenefit\tplan\tassets: |  |  |  |  |  |  |  |  |
| Equity\t(a) | $- | $66.8 | $- | $66.8 | $- | $35.8 | $- | $35.8 |
| Fixed\tincome\t(b) | 139.7 | 241.4 | - | 381.1 | 241.0 | 123.6 | - | 364.6 |
| Real\tasset\tinvestments\t(c) | 0.3 | - | - | 0.3 | 8.0 | - | - | 8.0 |
| Cash\tand\taccruals | 11.1 | - | - | 11.1 | 19.1 | - | - | 19.1 |
| Fair\tvalue\tmeasurement\tof\tPostretirement\tbenefit\tplan\tassets | $151.1 | $308.2 | $- | $459.3 | $268.1 | $159.4 | $- | $427.5 |
| Assets\tmeasured\tat\tnet\tasset\tvalue\t(e) |  |  |  | 294.5 |  |  |  | 298.6 |
| Total\tpostretirement\tbenefit\tplan\tassets\t(f) |  |  |  | $753.8 |  |  |  | $726.1 |
| (a) |  |  |  |  |  |  |  |  |

(a) Primarily	publicly	traded	common	stock	for	purposes	of	total	return	and	to	maintain	equity	exposure	consistent	with	policy	allocations.	Investments	include:	United States	and	international	equity	securities,	mutual	funds,	and	equity	futures	valued	at	closing	prices	from	national	exchanges,	and	commingled	funds	valued	at	unit values	provided	by	the	investment	managers,	which	are	based	on	the	fair	value	of	the	underlying	investments.

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

(c) Publicly	traded	common	stock	and	limited	partnerships	in	the	energy	and	real	estate	sectors	for	purposes	of	total	return.	Investments	include:	energy	and	real	estate securities	generally	valued	at	closing	prices	from	national	exchanges,	and	commingled	funds	valued	at	unit	values	provided	by	the	investment	managers,	which	are based	on	the	fair	value	of	the	underlying	investments.

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

(e) Primarily	private	investments,	insurance	contracts,	and	common	collective	trusts	that	are	measured	at	fair	value	using	the	net	asset	value	per	share	(or	its	equivalent) practical	expedient	and	have	not	been	classified	in	the	fair	value	hierarchy.

There	were	no	material	changes	in	our	level	3	investments	in	fiscal	2019	and	fiscal	2018.

Weighted-average	asset	allocations	for	the	past	two	fiscal	years	for	our	defined	benefit	pension	and	other	postretirement	benefit	plans	are	as	follows:

|  | Defined	Benefit | Defined	Benefit | Other	Postretirement | Other	Postretirement |
| :--- | :--- | :--- | :--- | :--- |
|  | Pension\tPlans | Pension\tPlans | Benefit\tPlans | Benefit\tPlans |
|  | Fiscal\tYear\n\t\t\t\t2019 | \t\t\t\t2018 | Fiscal\tYear\n\t\t\t\t2019 | \t\t\t\t2018 |
| Asset\tcategory: |  |  |  |  |
| \t\tUnited\tStates\tequities | 20.3\t% | 25.8\t% | 19.1\t% | 20.6\t% |
| \t\tInternational\tequities | 12.5 | 16.1 | 11.2 | 10.7 |
| \t\tPrivate\tequities | 8.1 | 7.7 | 4.9 | 4.2 |
| \t\tFixed\tincome | 46.7 | 36.1 | 61.3 | 59.6 |
| \t\tReal\tassets | 12.4 | 14.3 | 3.5 | 4.9 |
| Total | 100.0\t% | 100.0\t% | 100.0\t% | 100.0\t% |

The	investment	objective	for	our	defined	benefit	pension	and	other	postretirement	benefit	plans	is	to	secure	the	benefit	obligations	to	participants	at	a reasonable	cost	to	us.	Our	goal	is	to	optimize	the	long-term	return	on	plan	assets	at	a	moderate	level	of	risk.	The	defined	benefit	pension	plan	and	other postretirement	benefit	plan	portfolios	are	broadly	diversified	across	asset	classes.	Within	asset	classes,	the	portfolios	are	further	diversified	across investment	styles	and	investment	organizations.	For	the	U.S.	defined	benefit	pension	plans,	the	long-term	investment	policy	allocation	is:	18	percent	to equities	in	the	United	States;	11	percent	to	international	equities;	9	percent	to	private	equities;	48	percent	to	fixed	income;	and	14	percent	to	real	assets	(real estate,	energy,	and	infrastructure).	For	other	U.S.	postretirement	benefit	plans,	the	long-term	investment	policy	allocations	are:	18	percent	to	equities	in	the United	States;	10	percent	to	international	equities;	4	percent	to	private	equities;	65	percent	to	fixed	income;	and	3	percent	to	real	assets	(real	estate,	energy, and	timber).	The	actual	allocations	to	these	asset	classes	may	vary	tactically	around	the	long-term	policy	allocations	based	on	relative	market	valuations.

# Contributions	and	Future	Benefit	Payments

We	do	not	expect	to	be	required	to	make	contributions	to	our	defined	benefit	pension,	other	postretirement	benefit,	and	postemployment	benefit	plans	in fiscal	2020.	Actual	fiscal	2020	contributions	could	exceed	our	current	projections,	as	influenced	by	our	decision	to	undertake	discretionary	funding	of	our benefit	trusts	and	future	changes	in	regulatory	requirements.	Estimated	benefit	payments,	which	reflect	expected	future	service,	as	appropriate,	are	expected to	be	paid	from	fiscal	2020	to	2029	as	follows:

|  | Defined | Other |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Benefit | Postretirement | Medicare | Postemployment |
|  | Pension | Benefit\tPlans | Subsidy | Benefit |
| In\tMillions | Plans | Gross\tPayments | Receipts | Plans |
| 2020 | $319.0 | $52.4 | $3.2 | $20.1 |
| 2021 | 324.9 | 53.9 | 3.1 | 18.0 |
| 2022 | 331.8 | 55.7 | 2.9 | 16.6 |
| 2023 | 338.8 | 57.2 | 3.0 | 15.3 |
| 2024 | 346.3 | 56.9 | 3.1 | 14.3 |
| 2025-2029 | \t\t\t\t1,856.4 | 282.4 | 15.7 | 59.6 |

# Defined	Contribution	Plans

The	General	Mills	Savings	Plan	is	a	defined	contribution	plan	that	covers	domestic	salaried,	hourly,	nonunion,	and	certain	union	employees.	This	plan	is	a 401(k)	savings	plan	that	includes	a	number	of	investment	funds,	including	a	Company	stock	fund	and	an	Employee	Stock	Ownership	Plan	(ESOP).	We sponsor	another	money	purchase	plan	for	certain	domestic	hourly	employees	with	net	assets	of	$22.3	million	as	of	May	26,	2019,	and	$23.9	million	as	of May	27,	2018.	We	also	sponsor	defined	contribution	plans	in	many	of	our	foreign	locations.	Our	total	recognized	expense	related	to	defined	contribution plans	was	$52.7	million	in	fiscal	2019,	$49.2	million	in	fiscal	2018,	and	$54.1	million	in	fiscal	2017.

We	match	a	percentage	of	employee	contributions	to	the	General	Mills	Savings	Plan.	The	Company	match	is	directed	to	investment	options	of	the participant's	choosing.	The	number	of	shares	of	our	common	stock	allocated	to	participants	in	the	ESOP	was	5.1	million	as	of	May	26,	2019,	and	5.6	million as	of	May	27,	2018.	The	ESOP's	only	assets	are	our	common	stock	and	temporary	cash	balances.

The	Company	stock	fund	and	the	ESOP	collectively	held	$410.1	million	and	$392.1	million	of	Company	common	stock	as	of	May	26,	2019	and	May	27, 2018,	respectively.

# NOTE	14.	INCOME	TAXES

The	components	of	earnings	before	income	taxes	and	after-tax	earnings	from	joint	ventures	and	the	corresponding	income	taxes	thereon	are	as	follows:

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Earnings\tbefore\tincome\ttaxes\tand\tafter-tax\tearnings\tfrom\tjoint |  |  |  |
| ventures: |  |  |  |
| United\tStates | $1,788.2 | $1,884.0 | $1,941.6 |
| Foreign | 293.8 | 251.6 | 329.7 |
| Total\tearnings\tbefore\tincome\ttaxes\tand\tafter-tax\tearnings\tfrom |  |  |  |
| joint\tventures | $2,082.0 | $2,135.6 | $2,271.3 |
| Income\ttaxes: |  |  |  |
| Currently\tpayable: |  |  |  |
| Federal | $151.9 | $441.2 | $368.5 |
| State\tand\tlocal | 35.3 | 35.2 | 21.1 |
| Foreign | 84.6 | 85.2 | 81.7 |
| Total\tcurrent | 271.8 | 561.6 | 471.3 |
| Deferred: |  |  |  |
| Federal | 86.7 | (478.5) | 201.3 |
| State\tand\tlocal | 21.6 | 15.7 | 10.2 |
| Foreign | (12.3) | (41.5) | (27.6) |
| Total\tdeferred | 96.0 | (504.3) | 183.9 |
| Total\tincome\ttaxes | $\t\t\t\t\t\t\t\t367.8 | $ \t\t\t\t\t\t\t\t57.3 | $\t\t\t\t\t\t\t\t655.2 |

The	following	table	reconciles	the	United	States	statutory	income	tax	rate	with	our	effective	income	tax	rate:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
|  | 2019 | 2018 | 2017 |
| United\tStates\tstatutory\trate | \t21.0% | \t 29.4% | \t35.0% |
| State\tand\tlocal\tincome\ttaxes,\tnet\tof\tfederal\ttax\tbenefits | 2.5 | 1.7 | 0.8 |
| Foreign\trate\tdifferences | - | (2.0) | \t(3.5) |
| Provisional\tnet\ttax\tbenefit | \t(0.4) | \t(24.5) | - |
| Stock\tbased\tcompensation | \t(1.2) | (1.2) | - |
| Capital\tloss\t(a) | \t(3.7) | - | - |
| Prior\tperiod\ttax\tadjustment | - | 1.9 | - |
| Domestic\tmanufacturing\tdeduction | - | (1.9) | \t(2.8) |
| Other,\tnet | \t(0.5) | (0.7) | \t(0.7) |
| Effective\tincome\ttax\trate | \t17.7% | 2.7% | \t28.8% |

(a) During	the	fourth	quarter	of	fiscal	2019	we	recorded	a	discrete	benefit	related	to	a	capital	loss	carryback	of	$72.9	million.

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

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Accrued\tliabilities | $50.9 | $47.2 |
| Compensation\tand\temployee\tbenefits | 196.6 | 210.2 |
| Pension | 103.2 | 57.1 |
| Tax\tcredit\tcarryforwards | 7.3 | 7.4 |
| Stock,\tpartnership,\tand\tmiscellaneous\tinvestments | 104.2 | 147.9 |
| Capital\tlosses | 73.1 | 12.9 |
| Net\toperating\tlosses | 141.7 | 161.2 |
| Other | 71.3 | 52.9 |
| Gross\tdeferred\ttax\tassets | 748.3 | 696.8 |
| Valuation\tallowance | 213.7 | 176.0 |
| Net\tdeferred\ttax\tassets | 534.6 | 520.8 |
| Brands | 1,472.6 | 1,498.7 |
| Fixed\tassets | 377.8 | 329.5 |
| Intangible\tassets | 259.7 | 255.1 |
| Tax\tlease\ttransactions | 23.9 | 26.0 |
| Inventories | 39.0 | 38.8 |
| Stock,\tpartnership,\tand\tmiscellaneous\tinvestments | 330.0 | 317.1 |
| Unrealized\thedges | 27.9 | 28.5 |
| Other | 34.7 | 30.9 |
| Gross\tdeferred\ttax\tliabilities | 2,565.6 | 2,524.6 |
| Net\tdeferred\ttax\tliability | $\t\t\t\t\t\t2,031.0 | $\t\t\t\t\t\t2,003.8 |

We	have	established	a	valuation	allowance	against	certain	of	the	categories	of	deferred	tax	assets	described	above	as	current	evidence	does	not	suggest	we will	realize	sufficient	taxable	income	of	the	appropriate	character	(e.g.,	ordinary	income	versus	capital	gain	income)	within	the	carryforward	period	to	allow us	to	realize	these	deferred	tax	benefits.

Information	about	our	valuation	allowance	follows:

|  | May	26, |
| :--- | :--- |
| In\tMillions | 2019 |
| Pillsbury\tacquisition\tlosses | $\t\t\t\t108.2 |
| State\tand\tforeign\tloss\tcarryforwards | 27.0 |
| Capital\tloss\tcarryforwards | 73.0 |
| Other | 5.5 |
| Total | $213.7 |

As	of	May	26,	2019,	we	believe	it	is	more-likely-than-not	that	the	remainder	of	our	deferred	tax	assets	are	realizable.

Information	about	our	tax	loss	carryforwards	follows:

|  | May	26, |
| :--- | :--- |
| In\tMillions | 2019 |
| Foreign\tloss\tcarryforwards | $\t\t\t\t138.1 |
| State\toperating\tloss\tcarryforwards | 12.5 |
| Total\ttax\tloss\tcarryforwards | $150.6 |

Our	foreign	loss	carryforwards	expire	as	follows:

|  | May	26, |
| :--- | :--- |
| In\tMillions | 2019 |
| Expire\tin\tfiscal\t2020\tand\t2021 | $3.4 |
| Expire\tin\tfiscal\t2022\tand\tbeyond | 14.2 |
| Do\tnot\texpire | 120.5 |
| Total\tforeign\tloss\tcarryforwards | $\t\t\t\t138.1 |

On	December	22,	2017,	the	TCJA	was	signed	into	law.	The	TCJA	results	in	significant	revisions	to	the	U.S.	corporate	income	tax	system,	including	a reduction	in	the	U.S.	corporate	income	tax	rate,	implementation	of	a	territorial	system,	and	a	one-time	deemed	repatriation	tax	on	untaxed	foreign	earnings. As	a	result	of	the	TCJA,	we	recorded	a	provisional	benefit	of	$523.5	million	during	fiscal	2018.	During	fiscal	2019,	we	completed	our	accounting	for	the	tax effects	of	the	TCJA	and	recorded	a	benefit	of	$7.2	million	which	included	adjustments	to	the	transition	tax	and	the	measurement	of	our	net	U.S.	deferred	tax liability.	While	our	accounting	for	the	recorded	impact	of	the	TCJA	is	deemed	to	be	complete,	these	amounts	were	based	on	prevailing	regulations	and currently	available	information,	and	any	additional	guidance	issued	by	the	Internal	Revenue	Service	(IRS)	could	impact	the	aforementioned	amounts	in future	periods.

The	legislation	also	includes	provisions	that	affected	our	fiscal	2019	results,	including	but	not	limited	to,	a	reduction	in	the	U.S.	corporate	tax	rate	on domestic	operations;	the	creation	of	a	new	minimum	tax	called	the	base	erosion	anti-abuse	tax;	a	new	provision	that	taxes	U.S.	allocated	expenses	as	well	as currently	taxes	certain	income	from	foreign	operations	(Global	Intangible	Low	Tax	Income	or	GILTI);	a	new	limitation	on	deductible	interest	expense;	the repeal	of	the	domestic	manufacturing	deduction;	and	limitations	on	the	deductibility	of	certain	executive	compensation.

While	the	new	legislation	generally	eliminates	U.S.	federal	income	tax	on	dividends	from	foreign	subsidiaries	going	forward,	certain	income	earned	by foreign	subsidiaries	must	be	included	currently	in	our	U.S.	taxable	income	under	the	new	GILTI	inclusion	rules.	Under	U.S.	GAAP,	we	are	allowed	to	make an	accounting	policy	election	and	record	the	taxes	as	a	period	cost	as	incurred	or	factor	such	amounts	into	the	measurement	of	deferred	taxes.	In	fiscal	2018, we	made	an	accounting	policy	election	to	record	these	taxes	as	a	period	cost.

As	of	May	26,	2019,	we	have	not	recognized	a	deferred	tax	liability	for	unremitted	earnings	of	approximately	$2.3	billion	from	our	foreign	operations because	we	currently	believe	our	subsidiaries	have	invested	the	undistributed	earnings	indefinitely,	or	the	earnings	will	be	remitted	in	a	tax-neutral transaction.	It	is	not	practicable	for	us	to	determine	the	amount	of	unrecognized	tax	expense	on	these	reinvested	earnings.	Deferred	taxes	are	recorded	for earnings	of	our	foreign	operations	when	we	determine	that	such	earnings	are	no	longer	indefinitely	reinvested.	As	a	result	of	the	TCJA,	we	re-evaluated	our assertion	and	have	concluded	that	although	earnings	prior	to	fiscal	2018	will	remain	permanently	reinvested,	we	will	no	longer	make	a	permanent reinvestment	assertion	beginning	with	our	fiscal	2018	earnings.	As	part	of	the	accounting	for	the	TCJA,	we	recorded	local	country	withholding	taxes	related to	certain	entities	from	which	we	began	repatriating	undistributed	earnings	and	will	continue	to	record	local	country	withholding	taxes	on	all	future	earnings.

In	addition,	in	fiscal	2018,	we	adopted	Accounting	Standards	Update	2018-02:	Income	Statement	–	Reporting	Comprehensive	Income	(Topic	220)	(ASU 2018-02),	which	provides	the	option	to	reclassify	stranded	income	tax

effects	resulting	from	the	TCJA	from	AOCI	to	retained	earnings.	We	elected	to	reclassify	the	stranded	income	tax	effects	of	the	TCJA	of	$329.4	million from	AOCI	to	retained	earnings.	This	reclassification	consists	of	deferred	taxes	originally	recorded	in	AOCI	that	exceed	the	newly	enacted	federal	corporate tax	rate.

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

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

Several	state	and	foreign	examinations	are	currently	in	progress.	We	do	not	expect	these	examinations	to	result	in	a	material	impact	on	our	results	of operations	or	financial	position.	During	fiscal	2018,	we	recorded	an	adjustment	related	to	a	prior	year	which	increased	income	tax	expense	by $40.9	million.	We	determined	the	adjustment	to	be	immaterial	to	our	Consolidated	Statements	of	Earnings	for	the	fiscal	year	ended	May	27,	2018.	We	have effectively	settled	all	issues	with	the	IRS	for	fiscal	years	2015	and	prior.

During	fiscal	2017,	the	Brazilian	tax	authority,	Secretaria	da	Receita	Federal	do	Brasil	(RFB),	concluded	audits	of	our	2012	and	2013	tax	return	years.	These audits	included	a	review	of	our	determinations	of	amortization	of	certain	goodwill	arising	from	the	acquisition	of	Yoki	Alimentos	S.A.	The	RFB	has proposed	adjustments	that	effectively	eliminate	the	goodwill	amortization	benefits	related	to	this	transaction.	We	believe	we	have	meritorious	defenses	and intend	to	contest	the	disallowance.

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

The	following	table	sets	forth	changes	in	our	total	gross	unrecognized	tax	benefit	liabilities,	excluding	accrued	interest,	for	fiscal	2019	and	fiscal	2018. Approximately	$81.2	million	of	this	total	in	fiscal	2019	represents	the	amount	that,	if	recognized,	would	affect	our	effective	income	tax	rate	in	future periods.	This	amount	differs	from	the	gross	unrecognized	tax	benefits	presented	in	the	table	because	certain	of	the	liabilities	below	would	impact	deferred taxes	if	recognized.	We	also	would	record	a	decrease	in	U.S.	federal	income	taxes	upon	recognition	of	the	state	tax	benefits	included	therein.

|  | Fiscal	Year |  |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Balance,\tbeginning\tof\tyear | $196.3 | $135.5 |
| Tax\tpositions\trelated\tto\tcurrent\tyear: |  |  |
| Additions | 19.5 | 24.1 |
| Reductions | (0.1) | - |
| Tax\tpositions\trelated\tto\tprior\tyears: |  |  |
| Additions | 3.8 | 54.8 |
| Reductions | (13.2) | (7.9) |
| Settlements | (41.0) | (3.9) |
| Lapses\tin\tstatutes\tof\tlimitations | (26.2) | (6.3) |
| Balance,\tend\tof\tyear | $\t\t\t\t\t\t139.1 | $\t\t\t\t\t\t196.3 |

As	of	May	26,	2019,	we	expect	to	pay	approximately	$2.0	million	of	unrecognized	tax	benefit	liabilities	and	accrued	interest	within	the	next	12	months.	We are	not	able	to	reasonably	estimate	the	timing	of	future	cash	flows	beyond	12	months	due	to	uncertainties	in	the	timing	of	tax	audit	outcomes.	The	remaining amount	of	our	unrecognized	tax	liability	was	classified	in	other	liabilities.

We	report	accrued	interest	and	penalties	related	to	unrecognized	tax	benefit	liabilities	in	income	tax	expense.	For	fiscal	2019,	we	recognized	$0.5	million	of tax-related	net	interest	and	penalties,	and	had	$26.0	million	of	accrued	interest	and	penalties	as	of	May	26,	2019.	For	fiscal	2018,	we	recognized	a	net	benefit of	$3.1	million	of	tax-related	net	interest	and	penalties,	and	had	$27.3	million	of	accrued	interest	and	penalties	as	of	May	27,	2018.

# NOTE	15.	LEASES,	OTHER	COMMITMENTS,	AND	CONTINGENCIES

Our	leases	are	generally	for	warehouse	space	and	equipment.	Rent	expense	under	all	operating	leases	from	continuing	operations	was	$184.9	million	in fiscal	2019,	$189.4	million	in	fiscal	2018,	and	$188.1	million	in	fiscal	2017.

Some	operating	leases	require	payment	of	property	taxes,	insurance,	and	maintenance	costs	in	addition	to	the	rent	payments.	Contingent	and	escalation	rent in	excess	of	minimum	rent	payments	and	sublease	income	netted	in	rent	expense	were	insignificant.

Noncancelable	future	lease	commitments	are:

|  | Operating | Capital |
| :--- | :--- | :--- |
| In\tMillions | Leases | Leases |
| Fiscal\t2020 | $\t\t\t\t\t\t\t\t120.0 | $\t\t\t\t\t\t\t\t\t\t0.2 |
| Fiscal\t2021 | 101.7 | 0.1 |
| Fiscal\t2022 | 85.0 | - |
| Fiscal\t2023 | 63.8 | - |
| Fiscal\t2024 | 49.1 | - |
| After\tfiscal\t2024 | 63.0 | - |
| Total\tnoncancelable\tfuture\tlease\tcommitments | $482.6 | $0.3 |
| Less:\tinterest |  | - |
| Present\tvalue\tof\tobligations\tunder\tcapital\tleases |  | $0.3 |

Depreciation	on	capital	leases	is	recorded	as	depreciation	expense	in	our	results	of	operations.

# NOTE	16.	BUSINESS	SEGMENT	AND	GEOGRAPHIC	INFORMATION

We	operate	in	the	packaged	foods	industry.	Our	operating	segments	are	as	follows:	North	America	Retail;	Convenience	Stores	&	Foodservice;	Europe	& Australia;	Asia	&	Latin	America;	and	Pet.

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	domestic	employee	benefits	and	incentives,	contributions	to	the General	Mills	Foundation,	asset	and	liability	remeasurement	impact	of	hyperinflationary	economies,	restructuring	initiative	project-related	costs,	and	other items	that	are	not	part	of	our	measurement	of	segment	operating	performance.	These	include	gains	and	losses	arising	from	the	revaluation	of	certain	grain inventories	and	gains	and	losses	from	mark-to-market	valuation	of	certain	commodity	positions	until	passed	back	to	our	operating	segments.	These	items affecting	operating	profit	are	centrally	managed	at	the	corporate	level	and	are	excluded	from	the	measure	of	segment	profitability	reviewed	by	executive management.	Under	our	supply	chain	organization,	our	manufacturing,	warehouse,	and	distribution	activities	are	substantially	integrated	across	our operations	in	order	to	maximize	efficiency	and	productivity.	As	a	result,	fixed	assets	and	depreciation	and	amortization	expenses	are	neither	maintained	nor available	by	operating	segment.

Our	operating	segment	results	were	as	follows:

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| North\tAmerica\tRetail | \t$ \t\t\t\t9,925.2 | $\t\t\t\t10,115.4 | $\t\t\t\t10,196.9 |
| Convenience\tStores\t&amp;\tFoodservice | 1,969.1 | 1,930.2 | 1,870.0 |
| Europe\t&amp;\tAustralia | 1,886.7 | 1,984.6 | 1,824.5 |
| Asia\t&amp;\tLatin\tAmerica | 1,653.3 | 1,710.2 | 1,728.4 |
| Pet | 1,430.9 | - | - |
| Total | $16,865.2 | $15,740.4 | $15,619.8 |
| Operating\tprofit: |  |  |  |
| North\tAmerica\tRetail | $2,277.2 | $2,217.4 | $2,303.6 |
| Convenience\tStores\t&amp;\tFoodservice | 419.5 | 392.6 | 401.2 |
| Europe\t&amp;\tAustralia | 123.3 | 142.1 | 164.2 |
| Asia\t&amp;\tLatin\tAmerica | 72.4 | 39.6 | 83.6 |
| Pet | 268.4 | - | - |
| Total\tsegment\toperating\tprofit | $3,160.8 | $2,791.7 | $2,952.6 |
| Unallocated\tcorporate\titems | 339.8 | 206.2 | 273.6 |
| Divestitures\tloss | 30.0 | - | 6.5 |
| Restructuring,\timpairment,\tand\tother\texit\tcosts | 275.1 | 165.6 | 180.4 |
| Operating\tprofit | $2,515.9 | $2,419.9 | $2,492.1 |

Net	sales	for	our	North	America	Retail	operating	units	were	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| U.S.\tMeals\t&amp;\tBaking | $3,839.8 | $3,865.7 | $3,876.6 |
| U.S.\tCereal | 2,255.4 | 2,251.8 | 2,251.8 |
| U.S.\tSnacks | 2,060.9 | 2,140.5 | 2,098.2 |
| U.S.\tYogurt\tand\tOther | 906.7 | 927.4 | 1,064.3 |
| Canada | 862.4 | 930.0 | 906.0 |
| Total | $9,925.2 | $10,115.4 | $10,196.9 |

Net	sales	by	class	of	similar	products	were	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Snacks | $3,359.3 | $3,419.0 | $3,302.2 |
| Cereal | 2,672.2 | 2,679.2 | 2,673.2 |
| Convenient\tmeals | 2,641.8 | 2,677.4 | 2,653.6 |
| Yogurt | 2,193.6 | 2,320.1 | 2,403.5 |
| Dough | 1,692.8 | 1,684.1 | 1,690.6 |
| Baking\tmixes\tand\tingredients | 1,608.9 | 1,653.4 | 1,654.1 |
| Pet | 1,430.9 | - | - |
| Super-premium\tice\tcream | 813.2 | 803.7 | 738.4 |
| Other | 452.5 | 503.5 | 504.2 |
| Total | $16,865.2 | $15,740.4 | $15,619.8 |

The	following	table	provides	financial	information	by	geographic	area:

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Net\tsales: |  |  |  |
| United\tStates | $\t\t12,462.8 | $\t\t11,115.6 | $\t\t11,160.9 |
| Non-United\tStates | 4,402.4 | 4,624.8 | 4,458.9 |
| Total | $16,865.2 | $15,740.4 | $15,619.8 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Cash\tand\tcash\tequivalents: |  |  |
| United\tStates | $51.0 | $15.7 |
| Non-United\tStates | 399.0 | 383.3 |
| Total | $450.0 | $399.0 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Land,\tbuildings,\tand\tequipment: |  |  |
| United\tStates | $2,872.8 | $3,031.7 |
| Non-United\tStates | 914.4 | \t 1,015.5 |
| Total | $3,787.2 | $4,047.2 |

# NOTE	17.	SUPPLEMENTAL	INFORMATION

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

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Receivables: |  |  |
| Customers | $\t\t\t\t1,708.5 | $\t\t\t\t1,712.6 |
| Less\tallowance\tfor\tdoubtful\taccounts | (28.8) | (28.4) |
| Total | $\t\t\t\t1,679.7 | $\t\t\t\t1,684.2 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Inventories: |  |  |
| Raw\tmaterials\tand\tpackaging | $434.9 | $400.0 |
| Finished\tgoods | 1,245.9 | 1,364.2 |
| Grain | 92.0 | 91.2 |
| Excess\tof\tFIFO\tover\tLIFO\tcost\t(a) | (213.5) | (213.2) |
| Total | $\t\t\t\t1,559.3 | $\t\t\t\t1,642.2 |

The	difference	between	replacement	cost	and	the	stated	LIFO	inventory	value	is	not	materially	different	from	the reserve	for	the	LIFO	valuation	method.

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets: |  |  |
| Other\treceivables | $250.2 | $174.4 |
| Prepaid\texpenses | 189.0 | 165.6 |
| Derivative\treceivables,\tprimarily\tcommodity-related | 42.2 | 40.5 |
| Grain\tcontracts | 6.7 | 7.1 |
| Miscellaneous | 9.4 | 10.7 |
| Total | $\t\t\t\t497.5 | $\t\t\t\t398.3 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Land,\tbuildings,\tand\tequipment: |  |  |
| Land | $73.6 | $77.7 |
| Buildings | 2,477.2 | 2,396.3 |
| Buildings\tunder\tcapital\tlease | 0.3 | 0.3 |
| Equipment | 6,548.3 | 6,236.6 |
| Equipment\tunder\tcapital\tlease | 5.7 | 5.8 |
| Capitalized\tsoftware | 631.6 | 593.6 |
| Construction\tin\tprogress | 343.8 | 692.9 |
| Total\tland,\tbuildings,\tand\tequipment | 10,080.5 | 10,003.2 |
| Less\taccumulated\tdepreciation | (6,293.3) | \t\t\t\t(5,956.0) |
| Total | $3,787.2 | $4,047.2 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Other\tassets: |  |  |
| Investments\tin\tand\tadvances\tto\tjoint\tventures | $\t\t\t\t452.9 | $\t\t\t\t499.6 |
| Pension\tassets | 323.5 | 309.9 |
| Life\tinsurance | 22.7 | 26.9 |
| Miscellaneous | 175.8 | 106.6 |
| Total | $974.9 | $943.0 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Other\tcurrent\tliabilities: |  |  |
| Accrued\ttrade\tand\tconsumer\tpromotions | $484.4 | $499.6 |
| Accrued\tpayroll | 345.5 | 347.0 |
| Dividends\tpayable | 19.2 | 17.5 |
| Accrued\ttaxes | 37.5 | 94.8 |
| Accrued\tinterest,\tincluding\tinterest\trate\tswaps | 92.6 | 107.7 |
| Grain\tcontracts | 2.3 | 1.2 |
| Restructuring\tand\tother\texit\tcosts\treserve | 36.5 | 66.8 |
| Derivative\tpayable | 13.2 | 8.3 |
| Miscellaneous | 336.6 | 302.9 |
| Total | $ \t\t\t\t1,367.8 | $\t\t\t\t1,445.8 |

|  | May	26, | May	27, |
| :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 |
| Other\tnoncurrent\tliabilities: |  |  |
| Accrued\tcompensation\tand\tbenefits,\tincluding\tobligations\tfor\tunderfunded |  |  |
| other\tpostretirement\tbenefit\tand\tpostemployment\tbenefit\tplans | $1,153.3 | $999.4 |
| Accrued\ttaxes | 227.1 | 265.3 |
| Miscellaneous | 68.5 | 76.3 |
| Total | $\t\t\t\t1,448.9 | $\t\t\t\t1,341.0 |

Certain	Consolidated	Statements	of	Earnings	amounts	are	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Depreciation\tand\tamortization | $\t\t\t\t620.1 | $\t\t\t\t618.8 | $\t\t\t\t603.6 |
| Research\tand\tdevelopment\texpense | 221.9 | 219.1 | 218.2 |
| Advertising\tand\tmedia\texpense\t(including\tproduction\tand\tcommunication\tcosts) | 601.6 | 575.9 | 623.8 |

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| Expense\t(Income),\tin\tMillions | 2019 | 2018 | 2017 |
| Interest\texpense | $530.2 | $389.5 | $306.7 |
| Capitalized\tinterest | (2.8) | (4.1) | (4.6) |
| Interest\tincome | (5.6) | (11.7) | (7.0) |
| Interest,\tnet | $\t\t\t\t521.8 | $\t\t\t\t373.7 | $\t\t\t\t295.1 |

Certain	Consolidated	Statements	of	Cash	Flows	amounts	are	as	follows:

|  |  | Fiscal	Year |  |
| :--- | :--- | :--- | :--- |
| In\tMillions | 2019 | 2018 | 2017 |
| Cash\tinterest\tpayments | $\t\t\t\t500.1 | $\t\t\t\t269.5 | $\t\t\t\t285.8 |
| Cash\tpaid\tfor\tincome\ttaxes | 440.8 | 489.4 | 551.1 |

# NOTE	18.	QUARTERLY	DATA	(UNAUDITED)

Summarized	quarterly	data	for	fiscal	2019	and	fiscal	2018	follows:

|  | First	Quarter | First	Quarter | Second	Quarter | Second	Quarter | Third	Quarter |  | Fourth	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| In\tMillions,\tExcept\tPer | Fiscal\tYear |  | Fiscal\tYear |  | Fiscal\tYear |  | Fiscal\tYear |  |
| Share\tAmounts | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Net\tsales | $\t\t4,094.0 | $\t\t3,769.2 | $\t\t4,411.2 | $\t\t4,198.7 | $\t\t4,198.3 | $\t\t3,882.3 | $\t\t4,161.7 | $\t\t3,890.2 |
| Gross\tmargin | 1,342.8 | 1,313.3 | 1,509.7 | 1,446.2 | 1,443.0 | 1,256.5 | 1,461.3 | 1,419.6 |
| Net\tearnings\tattributable\tto\tGeneral\tMills | 392.3 | 404.7 | 343.4 | 430.5 | 446.8 | 941.4 | 570.2 | 354.4 |
| EPS: |  |  |  |  |  |  |  |  |
| Basic | $0.66 | $0.70 | $0.57 | $0.75 | $0.74 | $1.64 | $0.95 | $0.60 |
| Diluted | $0.65 | $0.69 | $0.57 | $0.74 | $0.74 | $1.62 | $0.94 | $0.59 |

During	the	fourth	quarter	of	fiscal	2019,	we	sold	our	yogurt	business	in	China	and	simultaneously	entered	into	a	new	Yoplait	license	agreement	with	the purchaser	for	their	use	of	the	Yoplait	brand.	We	recorded	a	gain	of	$5.4	million.	In	the	fourth	quarter	of	fiscal	2019,	we	recorded	restructuring	and impairment	charges	of	$7.4	million.	Please	see	Note	4	for	more	information.	We	recorded	$4.3	million	of	integration	costs	related	to	the	acquisition	of	Blue Buffalo	and	$9.8	million	of	gains	related	to	an	investment	valuation	adjustment	in	the	fourth	quarter	of	fiscal	2019.	We	also	recorded	a	tax	benefit	of $72.9	million	in	the	fourth	quarter	of	fiscal	2019.	Please	see	Note	14	for	more	information.

We	recorded	brand	intangible	asset	impairment	charges	of	$96.9	million	in	the	fourth	quarter	of	fiscal	2018.	Please	see	Note	6	for	more	information.	We also	recorded	$64.5	million	of	transaction	and	integration	costs	related	to	the	acquisition	of	Blue	Buffalo	in	the	fourth	quarter	of	fiscal	2018.

# Glossary

Accelerated	depreciation	associated	with	restructured	assets.	The	increase	in	depreciation	expense	caused	by	updating	the	salvage	value	and	shortening the	useful	life	of	depreciable	fixed	assets	to	coincide	with	the	end	of	production	under	an	approved	restructuring	plan,	but	only	if	impairment	is	not	present.

# AOCI.	Accumulated	other	comprehensive	income	(loss).

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

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

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

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

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

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

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

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

# Euribor.	European	Interbank	Offered	Rate.

Fair	value	hierarchy.	For	purposes	of	fair	value	measurement,	we	categorize	assets	and	liabilities	into	one	of	three	levels	based	on	the	assumptions	(inputs) used	in	valuing	the	asset	or	liability.	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.

Focus	6	platforms.	The	Focus	6	platforms	for	the	Convenience	Stores	&	Foodservice	segment	consist	of	cereal,	yogurt,	snacks,	frozen	meals,	biscuits,	and baking	mixes.

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

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

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.

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

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

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

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

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

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

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

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

OCI.	Other	comprehensive	income	(loss).

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

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

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

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

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

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

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.

TCJA.	U.S.	Tax	Cuts	and	Jobs	Act	which	was	signed	into	law	on	December	22,	2017.

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

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

Variable	interest	entities	(VIEs).	A	legal	structure	that	is	used	for	business	purposes	that	either	(1)	does	not	have	equity	investors	that	have	voting	rights and	share	in	all	the	entity's	profits	and	losses	or	(2)	has	equity	investors	that	do	not	provide	sufficient	financial	resources	to	support	the	entity's	activities.

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

# ITEM	9				Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure

# ITEM	9A				Controls	and	Procedures

We,	under	the	supervision	and	with	the	participation	of	our	management,	including	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	have	evaluated the	effectiveness	of	the	design	and	operation	of	our	disclosure	controls	and	procedures	(as	defined	in	Rule	13a-15(e)	under	the	1934	Act).	Based	on	that evaluation,	our	Chief	Executive	Officer	and	Chief	Financial	Officer	have	concluded	that,	as	of	May	26,	2019,	our	disclosure	controls	and	procedures	were effective	to	ensure	that	information	required	to	be	disclosed	by	us	in	reports	that	we	file	or	submit	under	the	1934	Act	is	(1)	recorded,	processed,

summarized,	and	reported	within	the	time	periods	specified	in	applicable	rules	and	forms,	and	(2)	accumulated	and	communicated	to	our	management, including	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	in	a	manner	that	allows	timely	decisions	regarding	required	disclosure.

There	were	no	changes	in	our	internal	control	over	financial	reporting	(as	defined	in	Rule	13a-15(f)	under	the	1934	Act)	during	our	fiscal	quarter	ended May	26,	2019,	that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

# MANAGEMENT'S	REPORT	ON	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

The	management	of	General	Mills,	Inc.	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	such	term	is defined	in	Rule	13a-15(f)	under	the	1934	Act.	The	Company's	internal	control	system	was	designed	to	provide	reasonable	assurance	to	our	management	and the	Board	of	Directors	regarding	the	preparation	and	fair	presentation	of	published	financial	statements.	Under	the	supervision	and	with	the	participation	of management,	including	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	we	conducted	an	assessment	of	the	effectiveness	of	our	internal	control over	financial	reporting	as	of	May	26,	2019.	In	making	this	assessment,	management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	(COSO)	in	Internal	Control	–	Integrated	Framework	(2013).

Based	on	our	assessment	using	the	criteria	set	forth	by	COSO	in	Internal	Control	–	Integrated	Framework	(2013),	management	concluded	that	our	internal control	over	financial	reporting	was	effective	as	of	May	26,	2019.

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

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

# ITEM	9B				Other	Information

# PART	III

# ITEM	10				Directors,	Executive	Officers	and	Corporate	Governance

The	information	contained	in	the	sections	entitled	"Proposal	Number	1—Election	of	Directors,"	"Shareholder	Director	Nominations,"	and	"Section	16(a) Beneficial	Ownership	Reporting	Compliance"	contained	in	our	definitive	Proxy	Statement	for	our	2019	Annual	Meeting	of	Shareholders	is	incorporated herein	by	reference.

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

The	information	regarding	our	Audit	Committee,	including	the	members	of	the	Audit	Committee	and	audit	committee	financial	experts,	set	forth	in	the section	entitled	"Board	Committees	and	Their	Functions"	contained	in	our	definitive	Proxy	Statement	for	our	2019	Annual	Meeting	of	Shareholders	is incorporated	herein	by	reference.

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

# ITEM	11				Executive	Compensation

The	information	contained	in	the	sections	entitled	"Executive	Compensation,"	"Director	Compensation,"	and	"Overseeing	Risk	Management"	in	our definitive	Proxy	Statement	for	our	2019	Annual	Meeting	of	Shareholders	is	incorporated	herein	by	reference.

# ITEM	12				Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

The	information	contained	in	the	section	entitled	"Ownership	of	General	Mills	Common	Stock	by	Directors,	Officers	and	Certain	Beneficial	Owners"	in	our definitive	Proxy	Statement	for	our	2019	Annual	Meeting	of	Stockholders	is	incorporated	herein	by	reference.

# EQUITY	COMPENSATION	PLAN	INFORMATION

The	following	table	provides	certain	information	as	of	May	26,	2019,	with	respect	to	our	equity	compensation	plans:

|  |  |  | Number	of	Securities	Remaining |
| :--- | :--- | :--- | :--- |
|  | Number\tof\tSecurities\tto | Weighted-Average | Available\tfor\tFuture\tIssuance\tUnder |
|  | be\tIssued\tupon\tExercise\tof | Exercise\tPrice\tof | Equity\tCompensation |
|  | Outstanding\tOptions, | Outstanding\tOptions, | Plans\t(Excluding |
|  | Warrants\t\tand\tRights | Warrants\tand\tRights | Securities\tReflected\tin\tColumn\t(1)) |
| Plan\tCategory | (1) | (2)(a) | (3) |
| Equity\tcompensation |  |  |  |
| plans\tapproved\tby |  |  |  |
| security\tholders | 30,678,206(b) | $47.12 | 30,265,462(d) |
| Equity\tcompensation |  |  |  |
| plans\tnot\tapproved\tby |  |  |  |
| security\tholders | 123,190(c) | $- | - |
| Total | 30,801,396 | $47.12 | 30,265,462 |

(a)Only	includes	the	weighted-average	exercise	price	of	outstanding	options,	whose	weighted-average	term	is	4.82	years.

(b)Includes	23,652,995	stock	options,	3,692,867	restricted	stock	units,	687,728	performance	share	units	(assuming	pay	out	for	target	performance),	and 2,644,616	restricted	stock	units	that	have	vested	and	been	deferred.

(c)Includes	123,190	restricted	stock	units	that	have	vested	and	been	deferred.	These	awards	were	made	in	lieu	of	salary	increases	and	certain	other compensation	and	benefits.	We	granted	these	awards	under	our	1998	Employee	Stock	Plan,	which	provided	for	the	issuance	of	stock	options,	restricted stock	and	restricted	stock	units	to	attract	and	retain	employees	and	to	align	their	interests	with	those	of	shareholders.	We	discontinued	the	1998	Employee Stock	Plan	in	September	2003,	and	no	future	awards	may	be	granted	under	that	plan.

(d)Includes	stock	options,	restricted	stock,	restricted	stock	units,	shares	of	unrestricted	stock,	stock	appreciation	rights,	and	performance	awards	that	we may	award	under	our	2017	Stock	Compensation	Plan,	which	had	30,265,462	shares	available	for	grant	at	May	26,	2019.

# ITEM	13				Certain	Relationships	and	Related	Transactions,	and	Director	Independence

The	information	set	forth	in	the	section	entitled	"Board	Independence	and	Related	Person	Transactions"	contained	in	our	definitive	Proxy	Statement	for	our 2019	Annual	Meeting	of	Shareholders	is	incorporated	herein	by	reference.

# ITEM	14				Principal	Accounting	Fees	and	Services

The	information	contained	in	the	section	entitled	"Independent	Registered	Public	Accounting	Firm	Fees"	in	our	definitive	Proxy	Statement	for	our	2019 Annual	Meeting	of	Shareholders	is	incorporated	herein	by	reference.

# PART	IV

# ITEM	15				Exhibits,	Financial	Statement	Schedules

# 1. Financial	Statements:

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

Consolidated	Statements	of	Total	Equity	and	Redeemable	Interest	for	the	fiscal	years	ended	May	26,	2019,	May	27,	2018,	and	May	28,	2017.

# 2. Financial	Statement	Schedule:

II	–	Valuation	and	Qualifying	Accounts

# 3.	Exhibits:

10.4* 2009	Stock	Compensation	Plan	(incorporated	herein	by	reference	to	Exhibit	10.7	to	the	Company's	Quarterly Report	on	Form	10-Q	for	the	fiscal	quarter	ended	August	29,	2010).

10.5* 2011	Stock	Compensation	Plan	(incorporated	herein	by	reference	to	Exhibit	10.6	to	the	Company's	Annual	Report on	Form	10-K	for	the	fiscal	year	ended	May	31,	2015).

10.6* 2011	Compensation	Plan	for	Non-Employee	Directors	(incorporated	herein	by	reference	to	Exhibit	10.2	to	the Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	November	27,	2011).

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

10.9* Separation	Pay	and	Benefits	Program	for	Officers	(incorporated	herein	by	reference	to	Exhibit	10.11	to	the Company's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	May	25,	2014).

10.10* Supplemental	Savings	Plan	(incorporated	herein	by	reference	to	Exhibit	10.11	to	the	Company's	Quarterly	Report on	Form	10-Q	for	the	fiscal	quarter	ended	February	22,	2009).

10.14* 2005	Deferred	Compensation	Plan	(incorporated	herein	by	reference	to	Exhibit	10.15	to	the	Company's	Quarterly Report	on	Form	10-Q	for	the	fiscal	quarter	ended	February	22,	2009).

10.17* Supplemental	Benefits	Trust	Agreement,	dated	September		26,	1988,	between	the	Company	and	Norwest	Bank Minnesota,	N.A.	(incorporated	herein	by	reference	to	Exhibit	10.4	to	the	Company's	Quarterly	Report	on	Form 10-Q	for	the	fiscal	quarter	ended	November		27,	2011).

10.18* Form	of	Performance	Share	Unit	Award	Agreement	(incorporated	herein	by	reference	to	Exhibit	10.18	to	the Company's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	May	27,	2018).

10.19* Form	of	Stock	Option	Agreement	(incorporated	herein	by	reference	to	Exhibit	10.19	to	the	Company's	Annual Report	on	Form	10-K	for	the	fiscal	year	ended	May	27,	2018).

10.20* Form	of	Restricted	Stock	Unit	Agreement	(incorporated	herein	by	reference	to	Exhibit	10.20	to	the	Company's Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	May	27,	2018).

10.21* Deferred	Compensation	Plan	for	Non-Employee	Directors	(incorporated	herein	by	reference	to	Exhibit	10.1	to	the Company's	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	November	26,	2017).

10.22* 2017	Stock	Compensation	Plan	(incorporated	herein	by	reference	to	Exhibit	10.2	to	the	Company's	Quarterly Report	on	Form	10-Q	for	the	fiscal	quarter	ended	November	26,	2017).

10.23* Supplemental	Retirement	Plan	I	(Grandfathered)	(incorporated	herein	by	reference	to	Exhibit	10.23	to	the Company's	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	May	27,	2018).

10.31+ Addendum	No.	11	to	the	Protocol	of	Cereal	Partners	Worldwide,	effective	July		17,	2012,	among	the	Company, Nestle	S.A.,	and	CPW	S.A.	(incorporated	herein	by	reference	to	Exhibit	10.1	to	the	Company's	Quarterly	Report	on Form	10-Q	for	the	fiscal	quarter	ended	August	26,	2012).

10.32 Five-Year	Credit	Agreement,	dated	as	of	May		18,	2016,	among	the	Company,	the	several	financial	institutions	from time	to	time	party	to	the	agreement,	and	Bank	of	America,	N.A.,	as	Administrative	Agent	(incorporated	herein	by reference	to	Exhibit		10.1	to	the	Company's	Current	Report	on	Form	8-K	filed	May	18,	2016).

* Management	contract	or	compensatory	plan	or	arrangement	required	to	be	filed	as	an	exhibit	pursuant	to	Item	15	of	Form	10-K.

+ Confidential	information	has	been	omitted	from	the	exhibit	and	filed	separately	with	the	SEC	pursuant	to	Rule	24b-2	of	the	Securities	Exchange	Act	of 1934.

Pursuant	to	Item	601(b)(4)(iii)	of	Regulation	S-K,	copies	of	certain	instruments	defining	the	rights	of	holders	of	our	long-term	debt	are	not	filed	and, in	lieu	thereof,	we	agree	to	furnish	copies	to	the	SEC	upon	request.

Not	Applicable.

# Signatures

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized.

	 Name:	Kofi	A.	Bruce

	 Title:			Vice	President,	Controller

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant and	in	the	capacities	and	on	the	dates	indicated.

# Schedule	II	-	Valuation	of	Qualifying	Accounts

| In	Millions | 2019 | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Allowance\tfor\tdoubtful\taccounts: |  |  |  |
| Balance\tat\tbeginning\tof\tyear | $28.4 | $24.3 | $29.6 |
| Additions\tcharged\tto\texpense | 23.9 | 26.7 | 16.6 |
| Bad\tdebt\twrite-offs | (22.7) | (26.9) | (23.2) |
| Other\tadjustments\tand\treclassifications | (0.8) | 4.3 | 1.3 |
| Balance\tat\tend\tof\tyear | $28.8 | $28.4 | $24.3 |
| Valuation\tallowance\tfor\tdeferred\ttax\tassets: |  |  |  |
| Balance\tat\tbeginning\tof\tyear | $\t\t\t\t\t\t\t\t176.0 | $\t\t\t\t231.8 | $\t\t\t\t227.0 |
| Additions\tcharged\tto\texpense | (5.2) | 2.4 | 5.2 |
| Adjustments\tdue\tto\tacquisitions,\ttranslation\tof\tamounts,\tand\tother | 42.9 | (58.2) | (0.4) |
| Balance\tat\tend\tof\tyear | $213.7 | $176.0 | $231.8 |
| Reserve\tfor\trestructuring\tand\tother\texit\tcharges: |  |  |  |
| Balance\tat\tbeginning\tof\tyear | $66.8 | $85.0 | $76.6 |
| Additions\tcharged\tto\texpense,\tincluding\ttranslation\tamounts | 11.6 | 40.3 | 104.0 |
| Net\tamounts\tutilized\tfor\trestructuring\tactivities | (41.9) | (58.5) | (95.6) |
| Balance\tat\tend\tof\tyear | $36.5 | $66.8 | $85.0 |
| Reserve\tfor\tLIFO\tvaluation: |  |  |  |
| Balance\tat\tbeginning\tof\tyear | $213.2 | $209.1 | $219.3 |
| Increase\t(decrease) | 0.3 | 4.1 | (10.2) |
| Balance\tat\tend\tof\tyear | $213.5 | $213.2 | $209.1 |



Question: what is the total value of issued guarantees and comfort letters for consolidated subsidiaries and non-consolidated affiliates , ( in millions ) ?
Calculation:   total_obligations = 540.8 + 167.3
 answer = total_obligations
Answer: 708.1