EDGAR 10-K Filing

Company CIK: 40704
Filing Year: 2024
Filename: 40704_10-K_2024_0001193125-24-168943.json

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ITEM 1. BUSINESS
ITEM 1 - Business
COMPANY OVERVIEW
For more than
150 years, General
Mills has been making
food the world
loves. We
are a leading
global manufacturer and
marketer of
branded consumer
foods with more
than 100 brands
in 100 countries
across six continents.
In addition to
our consolidated operations,
we
have
percent
interests
in
two
strategic
joint
ventures
that
manufacture
and
market
food
products
sold
in
approximately
countries worldwide.
We
manage and
review the
financial results
of our
business under
four operating
segments: North
America Retail;
International; Pet;
and
North
America
Foodservice.
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 human and pet 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;
●
wholesome natural pet food;
●
refrigerated and frozen dough;
●
baking mixes and ingredients;
●
yogurt; and
●
super-premium ice cream.
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 17
to the Consolidated Financial
Statements in Item
8 of this report.
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.
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 and certain markets. For further information
on our customer
credit
and
product
return practices,
please
refer
to Note
to the
Consolidated
Financial Statements
in
Item 8
of this
report.
During
fiscal 2024, Walmart
Inc. and its affiliates (Walmart)
accounted for 22 percent of our consolidated
net sales and 30 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 8 to the Consolidated
Financial Statements in Item 8 of this report.
Competition
The
human
and
pet
food
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 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,
meat,
vegetable
oils,
sugar,
vegetables,
fruits,
nuts,
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,
climate
change,
product
scarcity,
limited
sources
of
supply,
commodity
market
fluctuations,
currency
fluctuations,
trade
tariffs,
pandemics,
war,
and
changes
in
governmental
agricultural
and
energy
policies
and
regulations.
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.
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
,
Bugles
,
Cascadian
Farm
,
Cheerios
,
Chex
,
Cinnamon
Toast
Crunch
,
Cocoa Puffs
,
Cookie Crisp
,
Dunkaroos,
Edgard
& Cooper,
Fiber One
,
Fruit by
the Foot
,
Fruit
Gushers
,
Fruit
Roll-Ups
,
Gardetto’s
,
Gold
Medal
,
Golden
Grahams
,
Häagen-Dazs
,
Kitano
,
Kix
,
Lärabar
,
Latina
,
Lucky
Charms
,
Muir Glen
,
Nature Valley
,
Nudges, Oatmeal
Crisp
,
Old El
Paso
,
Pillsbury
,
Progresso
,
Tastefuls,
Total
,
Totino’s
,
Trix
,
True
Chews,
True
Solutions,
Wanchai
Ferry
,
Wheaties
,
Wilderness
,
and
Yoki
.
We
protect
these
trademarks
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
Yoplait
and related
brands for
fresh dairy
in the
United States
and Canada),
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
and
authorized
sublicensees
for
ice
cream
and
other
frozen dessert
products
in
the
United
States and
Canada.
The
Häagen-Dazs
trademark is
also licensed
to HDJ
in Japan.
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
shelf-stable
baking
categories
in
the
United States and under limited circumstances in Canada and Mexico.
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. Within
our International
segment, demand
for
Häagen-Dazs
ice cream is
higher during
the summer
months and
demand for
baking mix
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
segment’s
net
sales are
generally evenly balanced throughout the year.
QUALITY AND SAFETY REGULATION
The
manufacture
and
sale
of
human
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,
Occupational
Safety
and
Health
Administration,
and
Environmental
Protection
Agency,
as
well
as
various
federal,
state,
and
local
agencies
relating
to
the
production,
packaging,
labelling,
marketing,
storage,
distribution, quality,
and safety of food
and pet products and
the health and safety
of our employees.
Our business is also
regulated by
similar agencies outside of the United States.
ENVIRONMENTAL
MATTERS
As
of
May
26,
2024,
we
were
involved
with
two
response
actions
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.
HUMAN CAPITAL MANAGEMENT
Recruiting, developing, engaging, and protecting our
workforce is critical to executing our strategy and achieving
business success. As
of
May
26,
2024,
we
had
approximately
34,000
employees
around
the
globe,
with
approximately
16,000
in
the
U.S.
and
approximately 18,000
located in our
markets outside
of the U.S.
Our workforce
is divided
between approximately
13,000 employees
dedicated to the production of our products and approximately 21,
000 non-production employees.
The
efficient
production
of
high-quality
products
and
successful
execution
of
our
strategy
requires
a
talented,
skilled,
and
engaged
team of employees. We
work to equip our employees with
critical skills and expand their contributions
over time by providing a range
of training and career
development opportunities, including
hands-on experiences via
challenging work assignments and
job rotations,
coaching
and mentoring
opportunities, and
training programs.
To
foster employee
engagement and
commitment, we
follow a
robust
process
to
listen
to
employees,
take
action,
and
measure
our
progress
with
on-going
employee
conversations,
transparent
communications, and employee engagement surveys.
We
believe that
fostering a culture
of inclusion and
belonging strengthens
our ability to
recruit talent and
allows all of
our employees
to thrive
and succeed.
We
actively cultivate
a culture
that acknowledges,
respects, and
values all
dimensions of
diversity -
including
gender, race,
sexual orientation, ability,
backgrounds, and
beliefs. Ensuring
diversity of input
and perspectives
is core to
our business
strategy,
and
we
are
committed
to
recruiting,
retaining,
developing,
and
advancing
a
workforce
that
reflects
the
diversity
of
the
consumers we
serve. This
commitment starts
with our
company leadership
where women
represent approximately
49 percent
of our
officer
and
director
population,
and
approximately
percent
of
our
officers
and
directors
are
racially
or
ethnically
diverse.
We
embed our culture of inclusion and
belonging into our day-to-day ways
of working through a number of programs
to foster discussion,
build empathy, and
increase understanding.
We
are
committed
to
maintaining
a
safe
and
secure
workplace
for
our
employees.
We
set
specific
safety
standards
to
identify
and
manage critical risks.
We
use global safety
management systems and
employee training to
ensure consistent implementation
of safety
protocols and
accurate measurement
and tracking of
incidents. To
provide a safe
and secure working
environment for our
employees,
we prohibit workplace
discrimination, and
we do not
tolerate abusive conduct
or harassment. Our
attention to the
health and safety
of
our workforce extends to the workers and communities in our supply chain.
We believe that respect
for human rights is fundamental to
our strategy and to our commitment to ethical business conduct.
INFORMATION ABOUT
OUR EXECUTIVE OFFICERS
The section below provides information regarding our executive officers
as of June 26, 2024.
Kofi A. Bruce
, age 54, is Chief Financial
Officer. 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
when
he
was
named Vice
President, Finance for
Yoplait.
Mr. Bruce
reassumed his role
as Vice
President, Treasurer
from 2012 until
2014 when
he
was named
Vice
President, Finance
for Convenience
Stores &
Foodservice. He
was named
Vice
President, Controller
in 2017,
Vice
President, Financial Operations in September 2019, and to his present position
in February 2020.
Ricardo
Fernandez
,
age
51,
is
Segment
President,
International.
Mr.
Fernandez
joined
General
Mills
in
as
an
Associate
Marketing Manager and held various marketing roles of increasing
responsibility until being named Vice
President, Marketing, Frozen
Frontier
in
2012,
Vice
President,
CPW
Marketing
in
2014,
President,
Latin
America
in
2016,
and
President,
Morning
Foods
in
January 2020. He was named to his present position in December 2023.
Paul J. Gallagher
,
age
56, is Chief
Supply Chain Officer.
Mr.
Gallagher joined General
Mills in April
2019 as Vice
President, North
America Supply Chain from Diageo plc. He began
his career at Diageo where he spent 25 years serving in a variety
of leadership roles
in manufacturing,
procurement, planning,
customer service,
and engineering
before becoming
President, North
America Supply
from
2013 to March 2019. He was named to his current position in July 2021.
Jeffrey L.
Harmening
, age
57, 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
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 2016.
He
was named
Chief
Executive
Officer
in
and
Chairman
of the
Board
in
2018. Mr. Harmening is a director of
The Toro Company.
Dana M. McNabb
,
age 48,
is Group President, North America
Retail. Ms. McNabb joined General
Mills in 1999 and held a
variety of
marketing roles
in Cereal,
Snacks, Meals,
and New
Products before
becoming Vice
President, Marketing
for CPW
in 2011
and Vice
President, Marketing
for the Circle
of Champions
Business Unit
in 2015. She
became President,
U.S. Cereal
Operating Unit
in 2016,
Group President,
Europe &
Australia in
January 2020,
Chief Strategy
& Growth
Officer in
July 2021,
and was
named to
her present
position in January 2024.
Jaime
Montemayor
,
age
60,
is
Chief
Digital
and
Technology
Officer.
He
spent
years
at
PepsiCo,
Inc.,
serving
in
roles
of
increasing
responsibility,
including
most
recently
as
Senior
Vice
President
and
Chief
Information
Officer
of
PepsiCo’s
Americas
Foods segment
from 2013
to 2015, and
Senior Vice
President and
Chief Information
Officer,
Digital Innovation,
Data and Analytics,
PepsiCo from
2015 to
2016. Mr.
Montemayor served
as Chief
Technology
Officer of
7-Eleven Inc.
in 2017.
He assumed
his current
role in February 2020 after founding and operating a digital technology
consulting company from 2017 until January 2020.
Jon J. Nudi
, age 54, is Group President,
Pet, International, and North America
Foodservice. 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,
Senior
Vice
President;
President,
U.S.
Retail
in
and
Group
President,
North
America Retail in 2017. He was named to his present position in January
2024.
Mark A. Pallot,
age 51,
is Vice
President, Chief
Accounting Officer.
Mr.
Pallot joined
General Mills in
2007 and
served as
Director,
Financial
Reporting
until
2017,
when
he was
named
Vice
President,
Assistant
Controller.
He
was elected
to
his
present
position
in
February
2020.
Prior
to
joining
General
Mills,
Mr.
Pallot
held
accounting
and
financial
reporting
positions
at
Residential
Capital,
LLC, Metris, Inc., CIT Group Inc., and Ernst & Young,
LLP.
Lanette Shaffer Werner
, age 53, is Chief Innovation, Technical
and Quality Officer.
Ms. Shaffer Werner
joined General Mills in 1995
and held various R&D roles
in Frozen Desserts and
Pillsbury before serving
as Director of One Global
Dairy and Sr.
Director for One
Global
Cereal.
In
July
2021,
Ms.
Shaffer
Werner
was
named
as
Vice
President,
Innovation,
Technical
and
Quality,
U.S.
Meals
&
Baking Solutions.
She was named to her present position in June 2023.
Pankaj Sharma,
age 51, is Segment
President, North America Foodservice.
Mr. Sharma
joined General Mills in
2014 and served as
a
Marketing
Director until
2017, when
he was
named Vice
President,
Marketing,
Europe &
Australia.
He was
promoted to
President,
U.S.
Yogurt
in
May
and
President,
U.S.
Meals
&
Baking
Solutions
in
July
2019.
He
was
named
to
his
current
position
in
February 2024.
Jacqueline
Williams-Roll
,
age
55,
is
Chief
Human
Resources
Officer.
In
this
capacity,
she
also
has
responsibility
for
Corporate
Communications.
Ms.
Williams-Roll
joined
General
Mills
in
1995.
She
held
human
resources
leadership
roles
in
Supply
Chain,
Finance, Marketing,
and Organization
Effectiveness and
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
2014.
Prior
to
joining
General
Mills,
she
held
sales
and
management roles with Jenny Craig International.
Karen Wilson
Thissen
, age
57, is
General Counsel
and Secretary.
Ms. Wilson
Thissen joined
General Mills
in June
2022.
Prior to
joining
General
Mills, she
spent
17 years
at Ameriprise
Financial,
Inc.,
serving in
roles of
increasing
responsibility,
including
most
recently as Executive Vice
President and General Counsel
from 2017 to June
2022, and Executive Vice
President and Deputy General
Counsel from
2014 to
2017.
Before
joining Ameriprise
Financial,
Inc., she
was a
partner at
the law
firm of
Faegre &
Benson LLP
(now Faegre Drinker Biddle & Reath LLP).
WEBSITE ACCESS
Our
website
is
https://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).
All
such
filings
are
available
on the
SEC’s
website
at https://www.sec.gov.
Reports
of beneficial
ownership filed
pursuant
to Section
16(a) of
the 1934
Act are also available on our website.

---

ITEM 1A. RISK FACTORS
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.
Business and Industry Risks
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
human
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 2024,
Walmart
accounted for 22
percent
of our
consolidated net
sales and
30 percent
of net
sales of
our North
America Retail
segment.
For more
information on
significant
customers, please see Note 8 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,
climate
change,
product
scarcity,
limited
sources
of
supply,
commodity
market
fluctuations,
currency
fluctuations,
trade
tariffs, pandemics, war (including international
sanctions imposed on Russia for its invasion of Ukraine),
and changes in governmental
agricultural and
energy policies
and regulations.
Commodity prices
have become,
and may continue
to be, more
volatile. Commodity
price
changes
may
result
in
unexpected
increases
in
raw
material,
packaging,
energy,
and
transportation
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.
Concerns with the safety and quality of our products could cause consumers
to
avoid certain products or ingredients.
We
could
be
adversely
affected
if
consumers
in
our
principal
markets
lose
confidence
in
the
safety
and
quality
of
certain
of
our
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.
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, grain-free
or legume-rich pet
food, 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.
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.
Operating Risks
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,
climate
change,
natural
disaster,
fire,
terrorism,
cyber-attack,
pandemics,
war,
governmental
restrictions
or
mandates,
labor
shortages,
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
or sourced
from a
single
supplier.
The
failure
of
third
parties
on
which
we
rely,
including
those
third
parties
who
supply
our
ingredients,
packaging,
capital
equipment
and
other
necessary
operating
materials,
contract
manufacturers,
commercial
transport,
distributors,
contractors,
and
external business partners, to meet
their obligations to us, or significant
disruptions in their ability to do
so, may negatively impact our
operations. Our
suppliers’ policies
and practices
can damage
our reputation
and the quality
and safety
of our
products. Disputes
with
significant suppliers,
including disputes regarding
pricing or performance,
could adversely affect
our ability to
supply products to
our
customers and
could materially
and adversely
affect our
sales, financial
condition, and
results of
operations. 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
location or
supplier,
could adversely
affect our
business and
results of
operations, as
well as
require additional resources to restore our supply chain.
Short term or
sustained increases in
consumer demand at
our retail customers
may exceed our
production capacity or
otherwise strain
our supply chain. Our failure to meet the demand for our products could
adversely affect our business and results of operations.
Our international operations are subject to political and economic
risks.
In fiscal
2024, 19
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 or government control of operations;
●
compliance with anti-corruption regulations;
●
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.
A
strengthening
in
the
U.S.
dollar
relative
to
other
currencies
in
the
countries
in
which
we
operate
would
negatively
affect
our
reported results of operations and financial results due to currency translation losses and
currency transaction losses.
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.
Our failure to successfully integrate 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.
Legal and Regulatory Risks
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.
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.
Climate change and other sustainability matters could adversely affect
our business.
There is
growing concern
that carbon
dioxide and
other greenhouse
gases in
the earth’s
atmosphere may
have an
adverse impact
on
global temperatures, weather patterns, and the frequency
and severity of extreme weather and natural disasters.
If such climate change
has a negative effect on agricultural productivity,
we may experience decreased availability and higher pricing for certain commodities
that are necessary
for our
products. Increased
frequency or
severity of
extreme weather
could also impair
our production
capabilities,
disrupt our
supply chain,
impact demand
for our
products, and
increase our
insurance and
other operating
costs.
Increasing concern
over
climate
change
or
other
sustainability
issues
also
may
adversely
impact
demand
for
our
products
due
to
changes
in
consumer
preferences or
negative consumer
reaction to
our commitments
and actions
to address
these issues.
We
may also
become subject
to
additional
legal
and
regulatory
requirements
relating
to
climate
change
or
other
sustainability
issues,
including
greenhouse
gas
emission
regulations
(e.g.,
carbon
taxes),
energy
policies,
sustainability
initiatives
(e.g.,
single-use
plastic
limits),
and
disclosure
obligations.
If additional legal
and regulatory
requirements are
enacted and
are more aggressive
than the sustainability
measures that
we are currently
undertaking to reduce
our emissions and
improve our energy
efficiency and
other sustainability goals,
or if we
chose
to take actions to achieve more aggressive goals, we may experience significant
increases in our costs of operations.
We
have announced goals
and commitments to
reduce our carbon footprint.
If we fail to
achieve or improperly
report on our progress
toward
achieving
our
carbon
emissions
reduction
goals
and
commitments,
then
the
resulting
negative
publicity
could
harm
our
reputation and adversely affect demand for our products.
Financial and Economic Risks
Volatility
in
the
market
value
of
derivatives
we
use
to
manage
exposures
to
fluctuations
in
commodity
prices
may
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,
which may result 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.
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
North America
Foodservice segment.
Any of
these events
could have
an adverse
effect on
our 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,
2024,
we
had
total
debt
and
noncontrolling
interests
of
$13.2
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.
We
depend
on stable,
liquid
and
well-functioning
capital and
credit markets
to fund
our operations.
Our financial
performance,
our
credit ratings,
interest rates,
the stability
of financial
institutions with
which we
partner, and
the liquidity
of the
overall global
capital
markets could affect our access to, and the availability,
terms and conditions, and cost of capital.
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.
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, 2024,
we had $21.
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.
If
current
expectations
for
growth
rates
for
sales
and
profits
are
not
met,
or
other
market
factors
and
macroeconomic
conditions were to change,
then our reporting units could
become significantly impaired. 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
,
Old El
Paso
,
Progresso
,
Annie’s
,
Nudges
,
and
Häagen-Dazs
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 impairment
may have
occurred.
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.
If current expectations
for growth
rates for sales
and margins
are not met,
or other market
factors and
macroeconomic
conditions
were
to
change,
then
our
indefinite-lived
intangible
assets
could
become
significantly
impaired.
Our
Progresso
,
Nudges
,
Uncle
Toby’s
,
and
True
Chews
brands
had
risk
of
decreasing
coverage
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.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B - Unresolved Staff Comments
None.

---

ITEM 2. PROPERTIES
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,
2024, we operated
42 facilities for
the production of
a wide variety
of food products.
Of these facilities,
26 are located
in the United
States, 4 in Latin
America and Mexico,
5 in Europe/Australia,
4 in the Greater
China region, 2
in Canada (1 of
which is
leased),
and
in
the
Asia/Middle
East/Africa
Region.
The
following
is
a
list
of
the
locations
of
our
principal
production
facilities,
which primarily support the segment noted:
North America Retail
• St. Hyacinthe, Canada
• Irapuato, Mexico
• Buffalo, New York
• Covington, Georgia
• Reed City, Michigan
• Cincinnati, Ohio
• Belvidere, Illinois
• Fridley, Minnesota
• Wellston, Ohio
• Geneva, Illinois
• Hannibal, Missouri
• Murfreesboro, Tennessee
• Cedar Rapids, Iowa
• Albuquerque, New Mexico
• Milwaukee, Wisconsin
International
• Rooty Hill, Australia
• Nanjing, China
• Inofita, Greece
• Campo Novo do Pareceis, Brazil
• Sanhe, China
• Nashik, India
• Paranavai, Brazil
• Shanghai, China
• San Adrian, Spain
• Pouso Alegre, Brazil
• Arras, France
• Guangzhou, China
• Labatut, France
Pet
• Richmond, Indiana
• Joplin, Missouri
North America Foodservice
• Chanhassen, Minnesota
• Joplin, Missouri
• St. Charles, Missouri
• Green Bay, Wisconsin
We
operate
numerous
grain
elevators
in
the
United
States
in
support
of
our
domestic
manufacturing
activities.
We
also
utilize
approximately
17 million
square
feet
of warehouse
and
distribution
space, nearly
all of
which
is leased,
that
primarily
supports
our
North America
Retail and
Pet segments.
We
own and
lease a
number of
dedicated sales
and administrative
offices around
the world,
totaling approximately 2 million square feet. We
have additional warehouse, distribution, and office space in
our plant locations.
As part
of our
Häagen-Dazs
business in
our International
segment
we operate
385 (all
leased) and
franchise 389
branded ice
cream
parlors in various countries around the world, all outside of the United States and Canada.

---

ITEM 3. LEGAL PROCEEDINGS
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,
2024,
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 DISCLOSURE
ITEM 4 - Mine Safety Disclosures
None.
PART
II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
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, 2024,
there were
approximately
22,800 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, 2024:
Period
Total
Number
of Shares
Purchased (a)
Average Price
Paid Per Share
Total
Number of Shares
Purchased as Part of a
Publicly Announced
Program (b)
Maximum Number of
Shares that may yet
be Purchased
Under the Plans or Program
(b)
February 26, 2024 -
March 31, 2024
-
$
-
-
61,383,817
April 1, 2024 -
April 28, 2024
2,405,113
70.46
2,405,113
58,978,704
April 29, 2024 -
May 26, 2024
3,319,707
70.83
3,319,707
55,658,997
Total
5,724,820
$
70.67
5,724,820
55,658,997
(a)
The total
number of
shares purchased
includes shares
of common
stock withheld
for the
payment of
withholding taxes
upon the
distribution of deferred option units.
(b)
On
June
27, 2022,
our
Board of
Directors
approved
a new
authorization
for
the repurchase
of
up to
100,000,000
shares of
our
common
stock
and
terminated
the
prior
authorization.
Purchases
can
be
made
in
the
open
market
or
in
privately
negotiated
transactions,
including
the
use
of
call
options
and
other
derivative
instruments,
Rule
10b5-1
trading
plans,
and
accelerated
repurchase programs. The Board did not specify an expiration date for the
authorization.

---

ITEM 6. SELECTED FINANCIAL DATA

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
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
approach
is
the
key
to
winning
and
sustaining
leading
share
positions in markets around the globe.
Our fundamental
financial goal is
to generate competitively
differentiated returns
for our shareholders
over the long
term. We
believe
achieving
that
goal
requires
us
to
generate
a
consistent
balance
of
net
sales
growth,
margin
expansion,
cash
conversion,
and
cash
return to shareholders over time.
Our long-term growth objectives are to deliver the following performance
on average over time:
●
2 to 3 percent annual growth in organic net sales;
●
mid-single-digit annual growth in adjusted operating profit;
●
mid- to high-single-digit annual growth in adjusted diluted earnings per share (EPS);
●
free cash flow conversion of at least 95 percent of adjusted net earnings after
tax; and
●
cash return to shareholders of 80 to 90 percent of free cash flow,
including an attractive dividend yield.
Guided by our
purpose to make
food the world
loves, we are
executing our Accelerate
strategy to drive
sustainable, profitable growth
and
top-tier
shareholder
returns
over
the
long
term.
The
strategy
focuses
on
four
pillars
to
create
competitive
advantages
and
win:
boldly
building
brands,
relentlessly
innovating,
unleashing
our
scale,
and
standing
for
good.
We
are
prioritizing
our
core
markets,
global
platforms,
and
local
gem
brands
that
have
the
best
prospects
for
profitable
growth
and
we
are
committed
to
reshaping
our
portfolio with strategic acquisitions and divestitures to further enhance
our growth profile.
In
fiscal
2024,
we
experienced
a
more
challenging
category
and
competitive
backdrop
than
we
initially
expected.
As
a
result,
we
pivoted our plans and enhanced our
efficiency to generate adjusted operating
profit and adjusted diluted EPS that
were in line with our
original targeted
ranges, even
in a
slower-than-anticipated
topline growth
environment. We
delivered mixed
performance against
the
three priorities we established at the beginning of the year:
On our
priority of
competing effectively,
we did
not achieve
our objective
of holding
or growing
market share
in more
than
percent
of
our
global
priority
businesses.
Our
fiscal
performance
was
hindered
by
an
uncertain
macroeconomic
environment, which
resulted in
greater-than-expected value
-seeking behaviors
by consumers.
Our organic
net sales
declined
1 percent
for the
year,
with a
decrease
in contributions
from organic
volume growth,
partially offset
by favorable
net price
realization and mix in response to 4 percent input cost inflation.
We
successfully
improved
our supply
chain efficiency,
including generating
industry-leading
Holistic Margin
Management
(HMM)
cost
savings
and
removing
significant
disruption-related
costs
from
the
supply
chain.
These
efforts
allowed
us
to
continue to invest in our
brands and in leading capabilities, such
as digital and technology capabilities,
that will be critical for
driving future growth.
We
maintained our disciplined
approach to capital allocation,
driving increased
operating cash flow that
we used to grow our
capital
investment
level,
raise
our
dividend,
and
increase
our
share
repurchase
activity.
We
also
continued
to
reshape
our
portfolio, including closing on acquisitions
that further improved our portfolio’s
ability to generate profitable growth
over the
long term.
Our consolidated
net sales
for fiscal
decreased 1
percent to
$19,857 million. On
an organic
basis, net
sales decreased
1 percent
compared to
year-ago levels.
Operating profit
of $3,432 million
essentially matched
fiscal 2023.
Adjusted operating
profit of
$3,603
million increased
4 percent
on a
constant-currency basis.
Diluted EPS
of $4.31
matched fiscal
2023 results.
Adjusted diluted
EPS of
$4.52 increased
6 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
$3,303 million in
fiscal 2024,
representing a
conversion rate
of 131
percent of
net earnings,
including earnings attributable
to redeemable and noncontrolling
interests. This cash generation
supported capital investments
totaling
$774
million, and our resulting free cash flow was $2,528
million at a conversion rate of 96 percent of adjusted
net earnings, including
earnings attributable
to redeemable
and noncontrolling
interests. We
returned cash
to shareholders
through dividends
totaling $1,363
million and
net share
repurchases totaling
$1,977 million
(See the
“Non-GAAP Measures”
section below
for a description
of our use
of measures not defined by GAAP).
A
detailed
review
of
our
fiscal
performance
compared
to
fiscal
appears
below
in
the
section
titled
“Fiscal
Consolidated Results of Operations.” A detailed review of
our fiscal 2023
performance compared to our fiscal 2022
performance is set
forth
in Part
II, Item
7 of
our Form
10-K for
the fiscal
year
ended
May 28, 2023
under the
caption
“Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations
- Fiscal
Results of
Consolidated Operations,”
which is incorporated
herein by reference.
In fiscal 2025, we plan to continue advancing our Accelerate
strategy. Our key
priorities are to accelerate our organic net sales growth,
create fuel for
investment, and drive
strong cash generation. Amid
a continued uncertain
macroeconomic backdrop
for consumers, we
expect volume
trends in
our categories
will gradually
improve over
the course
of the
year, though
full-year category
dollar growth
is
expected to
be below our
long-term growth
projections. We
expect to
increase our
organic net
sales growth
by delivering
remarkable
experiences across
our leading
food brands,
resulting in
improved household
penetration and
stronger market
share trends
versus the
prior year. Our fiscal 2025
plan calls for product news and innovation focused
on taste, health, convenience, and value, supported with
strong
brand
campaigns
and
omnichannel
visibility.
We
expect
to
generate
HMM
cost
savings
of
roughly
to
percent
of
cost
of
goods sold,
which we
expect to
exceed our
forecast for
3 to 4
percent input
cost inflation
in fiscal 2025.
We
expect to
reinvest in
the
business, including plans for increased brand-building investment in
fiscal 2025 to drive improved volume performance.
Based on these assumptions, our key full-year fiscal 2025 targets are
summarized below:
●
Organic net sales are expected to range between flat and up 1 percent.
●
Adjusted operating
profit is expected
to range between
down 2 percent
and flat in
constant-currency from
the base of $3,603
million reported in fiscal 2024.
●
Adjusted diluted
EPS is
expected to
range between
down 1
percent and
up 1
percent in
constant-currency
from the
base of
$4.52 earned in fiscal 2024.
●
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.
Certain terms used throughout this report are defined in a glossary in Item 8 of
this report.
FISCAL 2024 CONSOLIDATED
RESULTS
OF OPERATIONS
In
fiscal
2024,
net
sales
and
organic
net
sales
decreased
percent
compared
to
fiscal
2023.
Operating
profit
of
$3,432
million
essentially
matched
fiscal
2023,
primarily
driven
by
a
net
gain
on
divestitures
in
fiscal
2023,
higher
impairment
and
restructuring
charges, a decrease
in contributions from volume
growth, and higher
input costs, partially offset
by favorable net price
realization and
mix,
a
favorable
change
in
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories,
and
lower
selling,
general, and
administrative
(SG&A) expenses,
including
a decrease
in certain
compensation and
benefits
expenses. Operating
profit
margin
of
17.3
percent
increased
basis
points.
Adjusted
operating
profit
of
$3,603
million
increased
percent
on
a
constant-
currency
basis,
primarily
driven
by
favorable
net
price
realization
and
mix
and
a
decrease
in
SG&A
expenses,
including
certain
compensation
and
benefits
expenses,
partially
offset
by
a
decrease
in
contributions
from
volume
growth
and
higher
input
costs.
Adjusted operating
profit margin
increased 90
basis points
to 18.1
percent. Diluted
earnings per
share of
$4.31 matched
fiscal 2023.
Adjusted diluted earnings per
share of $4.52 increased
6 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 2024 follows:
Fiscal 2024
In millions,
except per
share
Fiscal 2024 vs.
Fiscal 2023
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
19,857.2
(1)
%
Operating profit
3,431.7
Flat
17.3
%
Net earnings attributable to General Mills
2,496.6
(4)
%
Diluted earnings per share
$
4.31
Flat
Organic net sales growth rate (a)
(1)
%
Adjusted operating profit (a)
3,602.7
%
18.1
%
%
Adjusted diluted earnings per share (a)
$
4.52
%
%
(a)
See the “Non-GAAP Measures” section below for our use of measures not defined by
GAAP.
Consolidated
net sales
were as follows:
Fiscal 2024
Fiscal 2024 vs.
Fiscal 2023
Fiscal 2023
Net sales (in millions)
$
19,857.2
(1)
%
$
20,094.2
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Net
sales
in
fiscal
decreased
percent
compared
to
fiscal
2023,
driven
by
a
decrease
in
contributions
from
volume
growth,
partially offset by favorable net price realization and mix.
Components of organic net sales growth are shown in the following
table:
Fiscal 2024 vs. Fiscal 2023
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Acquisitions and divestitures
Flat
Net sales growth
(1)
pt
Note: Table may
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Organic
net
sales
in
fiscal
decreased
percent
compared
to
fiscal
2023,
driven
by
a
decrease
in
contributions
from
organic
volume growth, partially offset by favorable organic
net price realization and mix.
Cost of sales
decreased $623 million in
fiscal 2024 to $12,925
million. The decrease
was primarily driven
by a $360 million
decrease
due to
lower volume,
partially offset
by an
$80 million
increase attributable
to product
rate and
mix. We
recorded a
$39 million
net
decrease
in
cost
of
sales
related
to
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
fiscal
2024,
compared to a net increase
of $292 million in fiscal
(please see Note 8 to the
Consolidated Financial Statements
in Item 8 of this
report
for
additional
information).
In
fiscal
2023,
we
recorded
a
$25
million
charge
related
to
a
voluntary
recall
on
certain
international
Häagen-Dazs
ice cream
products. We
also recorded
$18 million
of restructuring
charges and
$2 million
of restructuring
initiative
project-related
costs
in
cost
of
sales
in
fiscal
compared
to
$5
million
of
restructuring
charges
and
$2
million
of
restructuring initiative
project-related costs in
cost of sales
in fiscal 2023
(please see Note
4 to the
Consolidated Financial
Statements
in Item 8 of this report for additional information).
Gross
margin
increased
percent
in
fiscal
compared
to
fiscal
2023.
Gross
margin
as
a
percent
of
net
sales
of
34.9
percent
increased 230 basis points compared to fiscal 2023.
SG&A expenses
decreased $241
million to
$3,259 million in
fiscal 2024
compared to
fiscal 2023
primarily
driven by
a decrease
in
certain compensation
and benefits expenses,
favorable net corporate
investment activity,
a legal recovery,
and net recoveries
from the
fiscal
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products.
SG&A
expenses
as
a
percent
of
net
sales
in
fiscal 2024 decreased 100 basis points compared to fiscal 2023.
Divestitures
gain, net
totaled $445
million in
fiscal 2023
primarily related
to the
sale of our
Helper main
meals and
Suddenly Salad
side dishes business (please refer to Note 3 to the Consolidated Financial Statements
in Item 8 of this report).
Restructuring, impairment, and other exit costs
totaled $241 million in fiscal 2024
compared to $56 million in fiscal 2023. In fiscal
2024, we recorded
a $117
million non-cash goodwill
impairment charge
related to our
Latin America reporting
unit and $103
million
of non-cash impairment charges
related to our
Top
Chews
,
True Chews
, and
EPIC
brand intangible assets. In fiscal 2024,
we approved
restructuring actions to
enhance the go-to-market
commercial strategy and
associated organizational
structure of our
Pet segment, and
as
a
result,
we
recorded
$17
million
of
charges
in
fiscal
2024.
In
fiscal
2023,
we
approved
restructuring
actions
to
enhance
the
efficiency
of
our
global
supply
chain
structure
and
to
optimize
our
Häagen-Dazs
shops
network,
and
as
a
result,
we
recorded
$41
million
of charges
in fiscal
2023.
Please see
Note 4
to the
Consolidated
Financial
Statements
in Item
8 of
this report
for
additional
information.
Benefit
plan
non-service
income
totaled
$76
million
in
fiscal
compared
to
$89 million
in
fiscal
2023,
primarily
reflecting
higher interest
costs, partially
offset by
lower amortization
of losses
(please see
Note 14
to the
Consolidated Financial
Statements in
Item 8 of this report for additional information).
Interest,
net
for
fiscal
totaled
$479 million,
$97 million
higher
than
fiscal
2023,
primarily
driven
by higher
interest rates
and
higher average long-term debt levels.
Our
effective tax rate
for fiscal 2024 was 19.6 percent compared
to 19.5 percent in fiscal 2023.
The 0.1 percentage point increase was
primarily driven
by certain nonrecurring
tax benefits in
fiscal 2023, partially
offset by favorable
earnings mix by
jurisdiction in fiscal
2024.
Our adjusted
effective
tax rate
was 20.1
percent in
fiscal 2024
compared
to 20.4
percent in
fiscal 2023
(see the
“Non-GAAP
Measures”
section
below
for
a
description
of
our
use
of
measures
not
defined
by
GAAP).
The
0.3
percentage
point
decrease
was
primarily due to favorable earnings mix by jurisdiction in fiscal 2024.
After-tax
earnings
from
joint
ventures
increased
to
$85 million
in
fiscal
compared
to
$81
million
in
fiscal
2023,
primarily
driven by
higher net
sales due
to favorable
net price
realization
and mix
at CPW,
partially
offset
by higher
input costs
at CPW
and
HDJ.
On
a
constant-currency
basis,
after-tax
earnings
from
joint
ventures
increased
percent
(see
the
“Non-GAAP
Measures”
section below for a
description of our use
of measures not defined
by GAAP). The components
of our joint ventures’
net sales growth
are shown in the following table:
Fiscal 2024 vs. Fiscal 2023
CPW
HDJ
Total
Contributions from volume growth (a)
(7)
pts
(6)
pts
Net price realization and mix
pts
pts
Net sales growth in constant currency
pts
pt
pts
Foreign currency exchange
(2)
pts
(7)
pts
(3)
pts
Net sales growth
pts
(6)
pts
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
Net
earnings
attributable
to
redeemable
and
noncontrolling
interests
increased
to
$22
million
in
fiscal
compared
to
$16
million in fiscal 2023.
Average diluted shares
outstanding
decreased by 22 million in fiscal 2024 from fiscal 2023 primarily due to share repurchase
s.
RESULTS
OF SEGMENT OPERATIONS
Our businesses are organized into four operating segments: North
America Retail, International, Pet, and North America Foodservice
.
The following tables provide
the dollar amount and percentage
of net sales and operating
profit from each segment for
fiscal 2024 and
fiscal 2023:
Fiscal Year
In Millions
Dollars
Percent of Total
Dollars
Percent of Total
Net Sales
North America Retail
$
12,473.4
%
$
12,659.9
%
International
2,746.5
2,769.5
Pet
2,375.8
2,473.3
North America Foodservice
2,258.7
2,191.5
Total
$
19,854.4
%
$
20,094.2
%
Segment Operating Profit
North America Retail
$
3,080.4
%
$
3,181.3
%
International
125.2
161.8
Pet
485.9
445.5
North America Foodservice
315.5
290.0
Total
$
4,007.0
%
$
4,078.6
%
Segment
operating
profit
as
reviewed
by
our
executive
management
excludes
unallocated
corporate
items,
net
gain
or
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,
convenience
stores,
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,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks and snack bars.
North America Retail net sales were as follows:
Fiscal 2024
Fiscal 2024 vs. 2023
Percentage Change
Fiscal 2023
Net sales (in millions)
$
12,473.4
(1)
%
$
12,659.9
Contributions from volume growth (a)
(5)
pts
Net price realization and mix
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The
percent
decrease
in
North
America
Retail
net
sales
for
fiscal
was
driven
by
a
decrease
in
contributions
from
volume
growth,
partially offset by favorable net price realization and mix.
The components of North America Retail organic net
sales growth are shown in the following table:
Fiscal 2024 vs. 2023
Percentage Change
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Net sales growth
(1)
pt
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North
America
Retail
organic
net
sales
decreased
percent
in
fiscal
compared
to
fiscal
2023,
driven
by
a
decrease
in
contributions from organic volume growth, partially
offset by an increase in organic net price realization and
mix.
Net sales for our North America Retail operating units are shown in the following table:
In Millions
Fiscal 2024
Fiscal 2024 vs. 2023
Percentage Change
Fiscal 2023
U.S. Meals & Baking Solutions
$
4,324.3
(2)
%
$
4,426.3
U.S. Morning Foods
3,561.8
(2)
%
3,620.1
U.S. Snacks
3,538.9
(2)
%
3,611.0
Canada (a)
1,048.4
%
1,002.5
Total
$
12,473.4
(1)
%
$
12,659.9
(a)
On a constant
currency basis, Canada
operating unit net
sales increased 6
percent in fiscal
2024. See the
“Non-GAAP Measures”
section below for our use of this measure not defined by GAAP.
Segment
operating
profit
decreased
percent
to $3,080
million
in
fiscal
compared
to
$3,181
million
in
fiscal
2023,
primarily
driven by
higher input
costs, a
decrease in
contributions from
volume growth,
and an increase
in SG&A
expenses, partially
offset by
favorable
net
price
realization
and
mix.
Segment
operating
profit
decreased
percent
on
a
constant-currency
basis
in
fiscal
compared to fiscal 2023 (see the “Non-GAAP Measures” section below
for our use of this measure not defined by GAAP).
INTERNATIONAL SEGMENT
Our International
operating segment
reflects retail
and foodservice
businesses outside
of the
United States
and Canada.
Our product
categories include
super-premium ice
cream and
frozen desserts,
meal kits,
salty snacks,
snack bars,
dessert and
baking mixes,
shelf-
stable
vegetables,
and
pet
food
products.
Our
International
segment
also
includes
products
manufactured
in
the
United
States
for
export,
mainly
to
Caribbean
and
Latin
American
markets,
as
well
as
products
we
manufacture
for
sale
to
our
international
joint
ventures. Revenues from export activities are reported in the region or
country where the end customer is located.
International net sales were as follows:
Fiscal 2024
Fiscal 2024 vs. 2023
Percentage Change
Fiscal 2023
Net sales (in millions)
$
2,746.5
(1)
%
$
2,769.5
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
pt
Foreign currency exchange
pt
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The
percent
decrease
in
International
net
sales
in
fiscal
was
driven
by
a
decrease
in
contributions
from
volume
growth,
partially offset by favorable net price realization and mix
and favorable foreign currency exchange.
The components of International organic net sales growth
are shown in the following table:
Fiscal 2024 vs. 2023
Percentage Change
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
pt
Organic net sales growth
(2)
pts
Foreign currency exchange
pt
Net sales growth
(1)
pt
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The 2
percent decrease
in International
organic net
sales growth
in fiscal
2024 compared
to fiscal
2023 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
23 percent
to $125 million
in fiscal
2024 compared
to $162
million in
2023, primarily
driven by
higher input
costs and a
decrease in contributions
from volume growth
,
partially offset
by favorable net
price realization
and mix, the
voluntary recall
on certain international
Häagen-Dazs
ice cream products
in fiscal 2023,
and a decrease
in SG&A expenses.
Segment
operating
profit
decreased
percent
on
a
constant-currency
basis
in
fiscal
compared
to
fiscal
(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 and Canada in national
pet superstore chains,
e-commerce retailers,
grocery stores,
regional pet
store chains,
mass merchandisers,
and veterinary
clinics and
hospitals. Our
product
categories include
dog and
cat food
(dry foods,
wet foods,
and treats)
made with
whole meats,
fruits, 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.
Pet net sales were as follows:
Fiscal 2024
Fiscal 2024 vs. 2023
Percentage Change
Fiscal 2023
Net sales (in millions)
$
2,375.8
(4)
%
$
2,473.3
Contributions from volume growth (a)
(7)
pts
Net price realization and mix
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Pet net
sales decreased
4 percent
in fiscal
2024 compared
to fiscal
2023, driven
by a
decrease in
contributions from
volume growth,
partially offset by favorable net price realization and mix.
The components of Pet organic net sales growth are shown in the following
table:
Fiscal 2024 vs. 2023
Percentage Change
Contributions from organic volume growth (a)
(7)
pts
Organic net price realization and mix
pts
Organic net sales growth
(4)
pts
Foreign currency exchange
Flat
Net sales growth
(4)
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The 4
percent decrease
in Pet organic
net sales
growth in
fiscal 2024
was driven
by a
decrease in
contributions from
organic volume
growth, partially offset by favorable organic net
price realization and mix.
Pet operating
profit increased
9 percent
to $486 million
in fiscal
2024, compared
to $446 million
in fiscal
2023, primarily
driven by
favorable net
price realization
and mix
and lower
input costs, partially
offset by
a decrease
in contributions
from volume
growth and
an increase in
SG&A expenses. Segment
operating profit increased
9 percent on
a constant-currency basis
in fiscal 2024
compared to
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
NORTH AMERICA FOODSERVICE SEGMENT
Our
North
America
Foodservice
segment
consists
of
foodservice
businesses
in
the
United
States
and
Canada.
Our
major
product
categories
in
our
North
America
Foodservice
operating
segment
are
ready-to-eat
cereals,
snacks,
refrigerated
yogurt,
frozen
meals,
unbaked and
fully baked
frozen dough products,
baking mixes,
and bakery
flour.
Many products we
sell are branded
to the consumer
and nearly
all are
branded to
our customers.
We
sell to
distributors and
operators in
many customer
channels including
foodservice,
vending, and supermarket bakeries.
North America Foodservice net sales were as follows:
Fiscal 2024
Fiscal 2024 vs. 2023
Percentage Change
Fiscal 2023
Net sales (in millions)
$
2,258.7
%
$
2,191.5
Contributions from volume growth (a)
pts
Net price realization and mix
pt
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North America
Foodservice net
sales increased
3 percent
in fiscal
2024,
driven by
an increase
in contributions
from volume
growth
and favorable net price realization and mix.
The components of North America Foodservice organic
net sales growth are shown in the following table:
Fiscal 2024 vs. 2023
Percentage Change
Contributions from organic volume growth (a)
pts
Organic net price realization and mix
pt
Organic net sales growth
pts
Foreign currency exchange
Flat
Acquisition (b)
pt
Net sales growth
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the standard weight of our product shipments.
(b)
Acquisition
of
TNT
Crust
in
fiscal
2023.
Please
see
Note
to
the
Consolidated
Financial
Statements
in
Part
II,
Item
of
this
report.
The
percent
increase
in
North
America
Foodservice
organic
net
sales
growth
in
fiscal
was
driven
by
an
increase
in
contributions from organic volume growth and favorable
organic net price realization and mix.
Segment operating profit
increased 9 percent to $316
million in fiscal 2024,
compared to $290 million
in fiscal 2023, primarily
driven
by favorable
net price realization
and mix
and an increase
in contributions
from volume growth
,
partially offset
by higher
input costs
and
an
increase
in
SG&A
expenses.
Segment
operating
profit
increased
percent
on
a
constant-currency
basis
in
fiscal
compared to fiscal 2023 (see the “Non-GAAP Measures” section below
for our use of this measure not defined by GAAP).
UNALLOCATED CORPORATE
ITEMS
Unallocated
corporate
items
include
corporate
overhead
expenses,
variances
to
planned
domestic
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative project-related
costs,
gains and
losses on
corporate
investments,
results
from
certain
businesses
managed
by
our
Gold
Medal
Ventures
entity,
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.
Unallocated corporate
expense totaled
$334 million
in fiscal
2024, compared
to $1,033
million last
year.
We
recorded a
$39 million
net decrease
in expense
related to
the mark-to-market
valuation of
certain commodity
positions and
grain inventories
in fiscal
2024,
compared
to
a
$292
million
net
increase
in
expense
last
year.
In
fiscal
2024,
certain
compensation
and
benefits
expenses
and
charitable contributions decreased compared to fiscal 2023.
We recorded
$18 million of net losses related to valuation adjustments and
the sale of
corporate investments in
fiscal 2024, compared
to $84 million
of net losses
in fiscal 2023.
In fiscal 2024,
we recorded $30
million
of
net
recoveries
related
to
a
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products
in
fiscal
2023,
compared to a
$22 million charge
in fiscal 2023.
We
recorded a $53 million
legal recovery in
fiscal 2024. In
fiscal 2024, we
recorded
$14
million
of
transaction
costs,
primarily
related
to
our
acquisition
of
a
pet
food
business
in
Europe.
We
recorded
$6
million
of
integration costs primarily related
to our acquisition of TNT
Crust in fiscal 2023. In
addition, we recorded $18 million
of restructuring
charges
and
$2
million
of
restructuring
initiative
project-related
costs
in
cost
of
sales
in
fiscal
2024,
compared
to
$5
million
of
restructuring charges and $2 million of restructuring
initiative project-related costs in cost of sales in fiscal 2023.
IMPACT OF INFLATION
We
experienced
broad-based
global
input
cost
inflation
of
percent
in
fiscal
and
percent
in
fiscal
2023.
We
expect
approximately
to
percent
input
cost
inflation
in
fiscal
2025.
We
attempt
to
minimize
the
effects
of
inflation
through
HMM,
Strategic
Revenue
Management
(SRM),
planning,
and
operating
practices.
Our
market
risk
management
practices
are
discussed
in
Item 7A of this report.
LIQUIDITY AND CAPITAL
RESOURCES
The primary source of our
liquidity is cash flow from
operations. Over the most recent
two-year period, our operations have
generated
$6.1 billion
in cash.
A substantial
portion of
this operating
cash flow
has been
returned to
shareholders through
dividends and
share
repurchases.
We
also
use
cash
from
operations
to
fund
our
capital
expenditures,
acquisitions,
and
debt
service.
We
typically
use
a
combination
of
cash,
notes
payable,
and
long-term
debt,
and
occasionally
issue
shares
of
common
stock,
to
finance
significant
acquisitions.
As of
May
26,
2024,
we had
$330
million
of cash
and
cash equivalents
held
in foreign
jurisdictions.
In
anticipation
of
repatriating
funds
from
foreign
jurisdictions,
we
record
local
country
withholding
taxes
on
our
international
earnings,
as
applicable.
We
may
repatriate our
cash and
cash equivalents
held by
our foreign
subsidiaries without
such funds
being subject
to further
U.S. income
tax
liability. Earnings
prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in
those jurisdictions.
Cash Flows from Operations
Fiscal Year
In Millions
Net earnings, including earnings attributable to redeemable and noncontrolling
interests
$
2,518.6
$
2,609.6
Depreciation and amortization
552.7
546.6
After-tax earnings from joint ventures
(84.8)
(81.3)
Distributions of earnings from joint ventures
50.4
69.9
Stock-based compensation
95.3
111.7
Deferred income taxes
(48.5)
(22.2)
Pension and other postretirement benefit plan contributions
(30.1)
(30.1)
Pension and other postretirement benefit plan costs
(27.0)
(27.6)
Divestitures gain, net
-
(444.6)
Restructuring, impairment, and other exit costs
223.5
24.4
Changes in current assets and liabilities, excluding the effects of
acquisitions and divestitures
10.6
(48.9)
Other, net
41.9
71.1
Net cash provided by operating activities
$
3,302.6
$
2,778.6
During
fiscal
2024,
cash
provided
by
operations
was
$3,303
million
compared
to
$2,779 million
in
the
same
period
last
year.
The
$524 million increase was primarily
driven by a $354 million increase in
net earnings, excluding the $445
million net divestitures gain
in fiscal 2023 and a $199 million change in restructuring, impairment, and other
exit costs.
We
strive
to
grow
core
working
capital
at
or
below
the
rate
of
growth
in
our
net
sales.
For
fiscal
2024,
core
working
capital
net
liability
increased
percent,
compared
to
a
net
sales
increase
of
percent.
The
core
working
capital
net
liability
increased
$54
million from a
net liability of
$339 million in
fiscal 2023 to
a net liability of
$393
million in fiscal
2024. The $54
million net liability
increase was primarily due to a decrease in inventory,
partially offset by a decrease in accounts payable in fiscal 2024.
Cash Flows from Investing Activities
Fiscal Year
In Millions
Purchases of land, buildings, and equipment
$
(774.1)
$
(689.5)
Acquisitions, net of cash acquired
(451.9)
(251.5)
Investments in affiliates, net
(2.7)
(32.2)
Proceeds from disposal of land, buildings, and equipment
0.8
1.3
Proceeds from divestitures, net of cash divested
-
633.1
Other, net
30.5
(7.6)
Net cash used by investing activities
$
(1,197.4)
$
(346.4)
In
fiscal
2024,
we
used
$1,197 million
of
cash
through
investing
activities
compared
to
$346 million
in
fiscal
2023.
We
invested
$774 million in land, buildings, and equipment in fiscal 2024, an
increase of $85 million from fiscal 2023.
During
fiscal
2024,
we
acquired
a
pet
food
business
in
Europe
for
$426
million
cash,
net
of
cash
acquired.
We
expect
to
pay
an
additional amount of
approximately $8 million related
to a holdback in
the first quarter of
fiscal 2025, contingent
upon certain closing
requirements.
During
fiscal
2023,
we
acquired
TNT
Crust
for
$252
million
cash,
net
of
cash
acquired.
During
fiscal
2023,
we
completed the sale of our Helper main meals and Suddenly Salad side dishes business
es for cash proceeds of $607 million.
We
expect
capital
expenditures
to
be
approximately
3.5
percent
of
reported
net
sales
in
fiscal
2025.
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 Millions
Change in notes payable
$
(20.5)
$
(769.3)
Issuance of long-term debt
2,065.2
2,324.4
Payment of long-term debt
(901.5)
(1,421.7)
Proceeds from common stock issued on exercised options
25.5
232.3
Purchases of common stock for treasury
(2,002.4)
(1,403.6)
Dividends paid
(1,363.4)
(1,287.9)
Distributions to noncontrolling and redeemable interest holders
(21.3)
(15.7)
Other, net
(53.9)
(62.6)
Net cash used by financing activities
$
(2,272.3)
$
(2,404.1)
Financing activities used
$2.3 billion of cash in
fiscal 2024 compared to
$2.4 billion in fiscal 2023.
We
had $1,143 million of net
debt
issuances in
fiscal 202
compared to
$133 million
of net
debt issuances
in fiscal
2023.
For more
information
on our
debt
issuances
and payments, please refer to Note 9 to the Consolidated Financial Statements in
Item 8 of this report.
During
fiscal
2024,
we
received
$26 million
of
net
proceeds
from
common
stock
issued
on
exercised
options
compared
to
$232 million in fiscal 2023.
During fiscal 2024, we
repurchased 29 million shares
of our common stock for
$2,002 million. During fiscal 2023,
we repurchased 18
million shares of our common stock for $1,404 million.
Dividends paid in fiscal 2024 totaled
$1,363 million, or $2.36 per share.
Dividends paid in fiscal 2023
totaled $1,288 million, or $2.16
per share.
Selected Cash Flows from Joint Ventures
Selected cash flows from our joint ventures are set forth in the following table:
Fiscal Year
Inflow (Outflow), in Millions
Investments in affiliates, net
$
(2.7)
$
(32.2)
Dividends received
50.4
69.9
The following table details the fee-paid committed and uncommitted credit
lines we had available as of May 26, 2024:
In Billions
Facility Amount
Borrowed Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committed
and uncommitted credit facilities
$
3.4
$
-
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
We
have material
contractual obligations
that arise
in the
normal course
of business
and we
believe that
cash flows
from operations
will be adequate to meet our liquidity and capital needs for at least the next 12
months.
Certain
of
our
long-term
debt
agreements,
our
credit
facilities,
and
our
noncontrolling
interests
contain
restrictive
covenants.
As
of
May 26, 2024, we were in compliance with all of these covenants.
We
have $1,614
million of
long-term debt
maturing in
the next
12 months
that is
classified as
current, including
$800 million
of 4.0
percent fixed-rate notes due April 17, 2025, and
€750 million of floating-rate notes due November 8,
2024. We believe
that cash flows
from operations,
together with
available short-
and long-term
debt financing,
will be
adequate to meet
our liquidity
and capital
needs
for at least the next 12 months.
As of May
26, 2024,
our total debt,
including the
impact of derivative
instruments designated
as hedges, was
85 percent
in fixed-rate
and 15
percent in
floating-rate instruments,
compared to
80 percent
in fixed-rate
and 20
percent in
floating-rate instruments
on May
28, 2023.
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most recent
mark-to-market valuation
(currently $252 million). The
floating preferred return
rate on GMC’s
Class A Interests
was
the
sum
of
three-month
Term
SOFR
plus
basis
points.
On
June
1,
2024,
the
floating
preferred
return
rate
on
GMC’s
Class
A
Interests was
reset to
the sum
of the
three-month Term
SOFR plus
261 basis
points. The
preferred return
rate is
adjusted every
three
years through a negotiated agreement with the Class A Interests
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.
CRITICAL 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 critical 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
revenue recognition, valuation
of long-lived assets,
intangible assets,
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
reductions
to
the
transaction
price,
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
the estimated and
actual reduction to
the transaction
price
are recognized
as a
change
in estimate
in a
subsequent
period.
Our accrued
trade and
coupon promotion
liabilities
were
$425
million
as
of
May
26,
2024,
and
$394
million
as
of
May
28,
2023.
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
finite
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,
2024,
we
had
$22 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
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
2024 assessment of
our intangible assets
as of the first
day of
the second
quarter of
fiscal 2024.
As a result
of lower
future profitability
projections for
our Latin
America reporting
unit, we
determined
that
the
fair
value
of
the
reporting
unit
was
less
than
its
book
value
and
recorded
a
$117
million
non-cash
goodwill
impairment charge.
In addition, during the fourth
quarter of fiscal 2024, we executed
our fiscal 2025 planning process and
preliminary
long-range planning
process, which
resulted in
lower future
sales and
profitability
projections for
the businesses
supporting
our
Top
Chews
,
True
Chews,
and
EPIC
brand
intangible
assets.
As
a
result
of
this
triggering
event,
we
performed
an
interim
impairment
assessment of
these assets as
of May 26,
2024, and determined
that the fair
value of these
brand intangible
assets no longer
exceeded
the
carrying
values
of
the
respective
assets,
resulting
in
$103
million
of
non-cash
impairment
charges.
We
recorded
impairment
charges in restructuring,
impairment, and other
exit costs in our
Consolidated Statements of
Earnings. Our estimates
of the fair
values
were
determined
based
on
a
discounted
cash
flow
model
using
inputs
which
included
our
long-range
cash
flow
projections
for
the
businesses,
royalty
rates,
weighted-average
cost
of capital
rates,
and
tax rates.
These
fair value
s
are Level
3 assets
in
the
fair value
hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
Uncle Toby’s
brand intangible
asset. In
addition,
while having
significant coverage
as of
our fiscal
assessment date,
the
Progresso
,
Nudges
,
and True
Chews
brand intangible assets had risk of decreasing coverage. We
will continue to monitor applicable businesses for potential impairment
.
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
period of
such change.
For
more information on income taxes, please see Note 15 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, 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
to
the
Consolidated
Financial
Statements
in
Item
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 0.6
percent in
the 1-year
period ended
May 26,
2024, and
returns of
2.3 percent,
4.5 percent,
7.5 percent, and 6.8 percent for the 5, 10, 15, and 20-year periods ended
May 26, 2024.
On a weighted-average basis, the
expected rate of return for all
defined benefit plans was 7.13
percent for fiscal 2024, 6.70
percent for
fiscal 2023, and 5.85 percent for fiscal 2022. For
fiscal 2025,
we increased 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
7.70 percent due
to higher prospective
long-term asset returns primarily on fixed income investments.
Lowering
the
expected
long-term
rate
of
return
on
assets
by
basis
points
would
increase
our
net
pension
and
postretirement
expense by $58 million for
fiscal 2025. 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
Pension Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Effective rate for fiscal 2025 service costs
5.58
%
5.48
%
5.37
%
Effective rate for fiscal 2025 interest costs
5.40
%
5.28
%
5.05
%
Obligations as of May 31, 2024
5.52
%
5.52
%
5.05
%
Effective rate for fiscal 2024 service costs
5.27
%
5.15
%
5.00
%
Effective rate for fiscal 2024 interest costs
5.06
%
4.96
%
4.61
%
Obligations as of May 31, 2023
5.18
%
5.19
%
4.55
%
Effective rate for fiscal 2023 service costs
4.57
%
4.41
%
3.69
%
Effective rate for fiscal 2023 interest costs
4.03
%
3.80
%
3.35
%
Lowering
the
discount
rates
by
basis
points
would
increase
our
net
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment benefit plan expense
for fiscal 2025 by approximately
$29 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 7.3
percent for
retirees age
65 and
over and
7.3 percent
for retirees
under age
65 at
the end
of fiscal
2024. Rates
are graded
down
annually until
the ultimate
trend rate
of 4.5
percent is
reached in
2033 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.
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
2024,
we
recorded
net
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plan
income
of
$11 million
compared to
$6 million of
income in
fiscal 2023
and $26 million
of income
in fiscal
2022. As
of May
26, 2024,
we had
cumulative unrecognized
actuarial net losses of
$2 billion on our
defined benefit pension plans
and cumulative unrecognized
actuarial
net gains of
$185 million on our
postretirement and postemployment
benefit plans. These
net unrecognized actuarial
losses will result
in
increases
in
our
future
net
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 March
2024,
the SEC
issued final
rules on
the enhancement
and
standardization
of climate-related
disclosures.
The rules
require
disclosure
of,
among
other
things:
material
climate-related
risks;
activities
to
mitigate
or
adapt
to
such
risks;
governance
and
management
of
such
risks;
and
material
greenhouse
gas
(GHG)
emissions
from
operations
owned
or
controlled
(Scope
1)
and/or
indirect emissions
from purchased
energy consumed
in operations (Scope
2). Additionally,
the rules require
disclosure in
the notes
to
the financial
statements of
the effects
of severe
weather events
and other
natural conditions,
subject to
certain materiality
thresholds.
The SEC
has issued
a stay
on the
final rules
due to
litigation and
the effective
date is
delayed indefinitely.
We
are in
the process
of
analyzing the impact of the rules on our disclosures.
In December 2023, the
Financial Accounting Standards Board
(FASB) issued
Accounting Standards Update (ASU)
2023-09 requiring
enhanced
income
tax
disclosures.
The
ASU
requires
disclosure
of
specific
categories
and
disaggregation
of
information
in
the
rate
reconciliation table. The
ASU also requires
disclosure of disaggregated
information related to
income taxes paid,
income or loss
from
continuing
operations
before
income
tax
expense
or
benefit,
and
income
tax
expense
or
benefit
from
continuing
operations.
The
requirements
of
the
ASU
are
effective
for
annual
periods
beginning
after
December
15,
2024,
which
for
us
is
fiscal
2026.
Early
adoption is permitted
and the amendments
should be applied
on a prospective
basis. Retrospective application
is permitted. We
are in
the process of analyzing the impact of the ASU on our related disclosures.
In
November
2023,
the
FASB
issued
ASU
2023-07
requiring
enhanced
segment
disclosures.
The
ASU
requires
disclosure
of
significant
segment
expenses
regularly
provided
to
the
chief
operating
decision
maker
(CODM)
included
within
segment
operating
profit
or
loss.
Additionally,
the
ASU
requires
a
description
of
how
the
CODM
utilizes
segment
operating
profit
or
loss
to
assess
segment performance.
The requirements
of the
ASU are effective
for annual
periods beginning
after December
15, 2023,
and interim
periods within
fiscal years
beginning after
December 15,
2024. For
us, annual
reporting requirements
will be
effective for
our fiscal
2025 and
interim reporting
requirements will
be effective
beginning with
our first
quarter of
fiscal 2026.
Early adoption
is permitted
and retrospective
application is
required
for all
periods presented.
We
are in
the process
of analyzing
the impact
of the
ASU on
our
related disclosures.
In December of 2021, the Organization for Economic Cooperation
and Development (OECD) established a framework, referred to as
Pillar 2, designed to ensure large multinational enterprises pay
a minimum 15 percent level of tax on the income arising in each
jurisdiction in which they operate. The earliest effective date is for
taxable years beginning after December 31, 2023, which for us is
fiscal 2025.
Numerous countries have already enacted the OECD model rules, and several other
countries have drafted legislation.
We do not
expect this legislation to have a material impact on our consolidated financial statements. We
will continue to monitor and
evaluate new legislation and guidance, which could change our current
assessment.
NON-GAAP MEASURES
We
have
included
in
this
report
measures
of
financial
performance
that
are not
defined
by
GAAP.
We
believe
that
these
measures
provide useful information to investors and include these measures in other
communications to investors.
For each
of these
non-GAAP financial
measures, we
are providing
below a
reconciliation of
the differences
between the
non-GAAP
measure and the most
directly comparable GAAP measure,
an explanation of
why we believe the non-GAAP
measure provides useful
information to
investors, and
any additional
material purposes
for which
our management
or Board
of Directors
uses the
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several
measures
below
are
presented
on
an
adjusted
basis.
The
adjustments
are
either
items
resulting
from
infrequently
occurring
events or items that, in management’s
judgment, significantly affect the year-to-year
assessment of operating results.
The following are descriptions of significant items impacting comparability
of our results.
Goodwill and other intangible assets impairments
Non-cash
goodwill
and
other intangible
assets impairment
charges
related
to
our
Latin America
reporting
unit
and
our
Top
Chews
,
True Chews
, and
EPIC
brand intangible
assets in fiscal 2024.
Please see Note
6 to the Consolidated
Financial Statements in
Item 8 of
this report.
Legal recovery
Legal recovery recorded in fiscal 2024.
Mark-to-market effects
Net
mark-to-market
valuation
of
certain
commodity
positions
recognized
in
unallocated
corporate
items.
Please
see
Note
to
the
Consolidated Financial Statements in Item 8 of this report.
Restructuring charges and project-related costs
Restructuring
charges
and
project-related
costs
related
to
commercial
strategy
restructuring
actions
and
previously
announced
restructuring
actions
in
fiscal
2024.
Restructuring
charges
and
project-related
costs
for
global
supply
chain
actions,
network
optimization
actions, and
previously announced
restructuring actions
in fiscal
2023. Please
see Note
4 to
the Consolidated
Financial
Statements in Item 8 of this report.
Product recall, net
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
ice cream products, net of recoveries.
Investment activity, net
Valuation
adjustments and the
gain on sale
of certain corporate
investments in fiscal
2024. Valuation
adjustments and the
loss on sale
of certain corporate investments in fiscal 2023.
Transaction costs
Transaction
costs
primarily
related
to
the
acquisition
of
a
pet
food
business
in
Europe
in
fiscal
2024.
Transaction
costs
primarily
related
to
the
sale
of
our
Helper
main
meals
and
Suddenly
Salad
side
dish
business
in
fiscal
2023.
Please
see
Note
to
the
Consolidated Financial Statements in Item 8 of this report.
Acquisition integration costs
Integration
costs
primarily
resulting
from
the
acquisition
of
TNT
Crust
in
fiscal
and
fiscal
2023.
Please
see
Note
to
the
Consolidated Financial Statements in Item 8 of this report.
Divestitures gain, net
Net divestitures
gain primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
fiscal 2023.
Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.
CPW restructuring charges
CPW restructuring charges related to previously announced restructuring
actions.
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
rd
week,
when
applicable,
have
on
year-to-year
comparability.
A
reconciliation
of
these
measures to reported
net sales growth
rates, the relevant
GAAP measures, are
included in our
Consolidated Results of
Operations and
Results of Segment Operations discussions in the MD&A above.
Adjusted Operating Profit 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
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:
Fiscal Year
Change
Operating profit as reported
$
3,431.7
$
3,433.8
Flat
Goodwill and other intangible assets impairments
220.2
-
Legal recovery
(53.2)
-
Mark-to-market effects
(39.1)
291.9
Restructuring charges
38.8
61.0
Product recall, net
(30.3)
22.5
Investment activity, net
18.5
84.0
Transaction costs
14.0
0.4
Project-related costs
2.0
2.4
Acquisition integration costs
0.2
5.9
Divestitures gain, net
-
(444.6)
Adjusted operating profit
$
3,602.7
$
3,457.3
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rate
This measure
is used in
reporting to
our Board of
Directors and executive
management. We
believe that
this measure provides
useful
information to
investors because it
is the profitability
measure we use
to evaluate earnings
performance on
a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
EPS and the related constant-currency growth rate follows:
Fiscal Year
Per Share Data
Change
Diluted earnings per share, as reported
$
4.31
$
4.31
Flat
Goodwill and other intangible assets impairments
0.28
-
Legal recovery
(0.07)
-
Mark-to-market effects
(0.05)
0.37
Restructuring charges
0.05
0.08
Product recall, net
(0.04)
0.03
Investment activity, net
0.02
0.11
Transaction costs
0.02
-
Acquisition integration costs
-
0.01
Divestitures gain, net
-
(0.62)
Adjusted diluted earnings per share
$
4.52
$
4.30
%
Foreign currency exchange impact
Flat
Adjusted diluted earnings per share growth, on a constant-currency basis
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
below of the effective
income tax rate as
reported to the adjusted
effective income tax
rate for the tax
impact of
each item affecting comparability.
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 2024
Net earnings, including earnings attributable to redeemable and noncontrolling
interests, as reported
$
2,518.6
Goodwill and other intangible assets impairments, net of tax
161.8
Legal recovery, net of
tax
(40.3)
Mark-to-market effects, net of tax
(30.1)
Restructuring charges, net of tax
28.4
Product recall, net, net of tax
(23.3)
Investment activity, net,
net of tax
12.6
Transaction costs, net of tax
11.9
CPW restructuring charges, net of tax
2.0
Project-related costs, net of tax
1.3
Acquisition integration costs, net of tax
0.2
Adjusted net earnings, including earnings attributable to redeemable and
noncontrolling interests
$
2,643.0
Net cash provided by operating activities
3,302.6
Purchases of land, buildings, and equipment
(774.1)
Free cash flow
$
2,528.5
Net cash provided by operating activities conversion rate
131%
Free cash flow conversion rate
96%
Note: Table may not foot due rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
below of the effective
income tax rate as
reported to the
adjusted effective income
tax rate for the
tax impact of
each item affecting comparability.
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:
Fiscal Year
Percent of Net Sales
Operating profit as reported
$
3,431.7
17.3
%
$
3,433.8
17.1
%
Goodwill and other intangible assets impairments
220.2
1.1
%
-
-
%
Legal recovery
(53.2)
(0.3)
%
-
-
%
Mark-to-market effects
(39.1)
(0.2)
%
291.9
1.5
%
Restructuring charges
38.8
0.2
%
61.0
0.3
%
Product recall, net
(30.3)
(0.2)
%
22.5
0.1
%
Investment activity, net
18.5
0.1
%
84.0
0.4
%
Transaction costs
14.0
0.1
%
0.4
-
%
Project-related costs
2.0
-
%
2.4
-
%
Acquisition integration costs
0.2
-
%
5.9
-
%
Divestitures gain, net
-
-
%
(444.6)
(2.2)
%
Adjusted operating profit
$
3,602.7
18.1
%
$
3,457.3
17.2
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
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:
Fiscal Year
Ended
In Millions
(Except Per Share Data)
Pretax
Earnings (a)
Income
Taxes
Pretax
Earnings (a)
Income
Taxes
As reported
$
3,028.3
$
594.5
$
3,140.5
$
612.2
Goodwill and other intangible assets impairments
220.2
58.4
-
-
Legal recovery
(53.2)
(12.9)
-
-
Mark-to-market effects
(39.1)
(9.0)
291.9
67.1
Restructuring charges
38.8
10.4
61.0
12.6
Product recall, net
(30.3)
(7.0)
22.5
5.2
Investment activity, net
18.5
5.9
84.0
18.0
Transaction costs
14.0
2.1
0.4
0.2
Project-related costs
2.0
0.7
2.4
0.8
Acquisition integration costs
0.2
0.1
5.9
1.3
Divestitures gain, net
-
-
(444.6)
(73.2)
As adjusted
$
3,199.4
$
643.1
$
3,164.0
$
644.1
Effective tax rate:
As reported
19.6%
19.5%
As adjusted
20.1%
20.4%
Sum of adjustments to income taxes
$
48.6
$
32.0
Average number
of common shares - diluted EPS
579.5
601.2
Impact of income tax adjustments on adjusted diluted EPS
$
(0.08)
$
(0.05)
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
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 rate on
a constant-currency basis are calculated as follows:
Fiscal 2024
Percentage change in after-tax earnings from joint ventures as reported
%
Impact of foreign currency exchange
(10)
pts
Percentage change in after-tax earnings from joint ventures on
a constant-currency basis
%
Note: Table may not foot due to rounding.
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 rate for our Canada operating unit on a constant-currency
basis is calculated as follows:
Fiscal 2024
Percentage change in net sales as reported
%
Impact of foreign currency exchange
(1)
pt
Percentage change in net sales on a constant-currency basis
%
Note: Table may not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our
segments
by
excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility in foreign currency exchange markets.
Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:
Fiscal 2024
Percentage Change
in Operating Profit
as Reported
Impact of Foreign
Currency Exchange
Percentage Change
in Operating Profit
on Constant-
Currency Basis
North America Retail
(3)
%
Flat
(3)
%
International
(23)
%
(3)
pts
(20)
%
Pet
%
Flat
%
North America Foodservice
%
Flat
%
Note: Table may not foot due to rounding.
Forward-Looking Financial Measures
Our fiscal 2025
outlook for organic
net sales growth,
constant-currency adjusted
operating profit,
adjusted diluted
EPS, and free
cash
flow conversion
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, acquisition transaction
and integration costs,
acquisitions,
divestitures,
and
mark-to-market
effects.
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
or
impact
of
acquisitions,
divestitures,
and
restructuring
actions
throughout
fiscal
2025.
The
unavailable
information could have a significant impact on our fiscal 2025 GAAP financial results.
For
fiscal
2025,
we
currently expect:
foreign
currency
exchange
rates
(based
on
a blend
of
forward
and
forecasted
rates and
hedge
positions)
and
acquisitions
and
divestitures
completed
prior
to
fiscal
will
have
no
material
impact
to
net
sales
growth
and
restructuring charges to be immaterial.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 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
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,
2024.
In Millions
May 26, 2024
Average During
Fiscal 2024
May 28, 2023
Analysis of Change
Interest rate instruments
$
53.5
$
56.0
$
65.3
Lower Market Volatility
Foreign currency instruments
29.8
30.1
36.7
Exchange Rate Volatility
Commodity instruments
4.5
5.1
7.6
Lower Market Volatility
Equity instruments
1.8
2.1
2.8
Lower Market Volatility
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,” “may 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:
disruptions
or
inefficiencies
in
the
supply
chain;
competitive
dynamics in the consumer foods
industry and the markets for
our products, including new product
introductions, advertising activities,
pricing actions, and promotional
activities of our competitors;
economic conditions, including
changes in inflation rates,
interest rates,
tax
rates,
or
the
availability
of
capital;
product
development
and
innovation;
consumer
acceptance
of
new
products
and
product
improvements;
consumer
reaction
to
pricing
actions
and
changes
in
promotion
levels;
acquisitions
or
dispositions
of
businesses
or
assets; changes in capital structure;
changes in the legal and regulatory
environment, including tax legislation, labeling
and advertising
regulations, and litigation; impairments in the carrying
value of goodwill, other intangible assets, or other long
-lived assets, or changes
in
the
useful
lives
of
other
intangible
assets;
changes
in
accounting
standards
and
the
impact
of
significant
accounting
estimates;
product quality
and safety
issues, including
recalls and product
liability; changes
in consumer
demand for our
products; effectiveness
of advertising,
marketing,
and promotional
programs;
changes
in consumer
behavior,
trends, and
preferences,
including
weight
loss
trends; consumer perception
of health-related issues,
including obesity; consolidation
in the retail environment;
changes in purchasing
and
inventory
levels
of
significant
customers;
fluctuations
in
the
cost
and
availability
of
supply
chain
resources,
including
raw
materials,
packaging,
energy,
and
transportation;
effectiveness
of
restructuring
and
cost
saving
initiatives;
volatility
in
the
market
value of
derivatives used to
manage price
risk for certain
commodities; benefit
plan expenses due
to changes
in plan asset
values and
discount rates used to determine plan liabilities; failure or
breach of our information technology systems; foreign
economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
and economic uncertainty due to terrorism or war.
You
should also consider the risk factors that we identify in Item 1A of 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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
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 2025.
/s/ J. L. Harmening
/s/ K. A. Bruce
J. L. Harmening
K. A. Bruce
Chief Executive Officer
Chief Financial Officer
June 26, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders
and Board of Directors
General Mills, Inc.:
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, 2024, and May 28, 2023,
the related consolidated statements of
earnings, comprehensive income, total equity
and redeemable
interest,
and
cash
flows
for
each
of
the
years
in
the
three-year
period
ended
May 26, 2024,
and
the
related
notes
and
financial
statement schedule
II (collectively,
the consolidated
financial statements).
We
also have
audited the
Company’s
internal control
over
financial reporting as
of May 26, 2024, 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, 2024, and
May 28,
2023, and
the results
of its
operations and
its cash
flows for
each of
the years
in the
three-year
period
ended
May 26, 2024,
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, 2024, 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 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.
Critical Audit Matter
The critical audit matter
communicated below is a
matter arising from the
current period audit of the
consolidated financial statements
that was communicated
or required to
be communicated to
the audit committee
and that: (1) relates
to accounts or
disclosures that are
material to
the consolidated
financial statements
and (2)
involved our
especially challenging,
subjective, or
complex judgments.
The
communication
of
a
critical
audit matter
does
not
alter
in any
way
our
opinion
on the
consolidated
financial
statements, taken
as a
whole, and
we are
not, by
communicating the
critical audit
matter below,
providing a
separate opinion
on the
critical audit
matter or
on the accounts or disclosures to which it relates.
Valuation
of goodwill and brand intangible assets
As discussed in Note 6 to the consolidated financial statements, the goodwill
and brands and other indefinite-lived intangibles
balances
as
of
May
26,
2024,
were
$14,750.7
million
and
$6,728.6
million,
respectively.
The
impairment
tests
for
these
assets, which
are performed
annually and
whenever
events or
changes in
circumstances
indicate that
impairment may
have
occurred, require
the Company
to estimate
the fair
value of
the reporting
units to
which goodwill
is assigned
as well
as the
brands and
other indefinite
-lived intangible
assets. The
fair value
estimates are
derived
from discounted
cash flow
analyses
that
require
the
Company
to make
judgments
about
highly subjective
matters,
including
future
operating
results,
including
revenue growth rates and operating margins,
and an estimate of the discount rates and royalty rates.
We
identified the
assessment of the
valuation of certain
goodwill and
brand intangible assets
as a critical
audit matter.
There
was
a
significant
degree
of
judgment
required
in
evaluating
audit
evidence,
which
consists
primarily
of
forward-looking
assumptions
about
future
operating
results,
specifically
the
revenue
growth
rates
and
operating
margins,
royalty
rates
and
subjective inputs used to estimate the discount rates.
The
following
are
the
primary
procedures
we
performed
to address
this critical
audit
matter.
We
evaluated
the
design
and
tested
the
operating
effectiveness
of
internal
controls
related
to
the valuation
of goodwill
and
brand
intangible
assets. This
included controls related
to the assumptions
about future operating
results and the discount
and royalty rates
used to measure
the fair value
of the reporting
units and brands
intangible assets.
We
performed sensitivity
analyses over
the revenue
growth
rates, operating margins, brand
royalty rates and discount rates
to assess the impact of
other points within a range
of potential
assumptions.
We
evaluated
the
revenue
growth
rates
and
operating
margin
assumptions
by
comparing
them
to
recent
financial performance
and external
market and
industry data.
We
evaluated whether
these assumptions
were consistent
with
evidence obtained
in other areas
of the audit.
We
involved professionals with
specialized skills and
knowledge, who assisted
in the evaluation
of the Company’s
discount rates by
comparing them
against rate ranges
that were independently
developed
using publicly available market data
for comparable entities and the royalty
rates by evaluating the methods, assumptions
and
market data used to estimate the royalty rates.
/s/
KPMG
LLP
We have served
as the Company’s auditor since 1928.
Minneapolis, Minnesota
June 26, 2024
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
Net sales
$
19,857.2
$
20,094.2
$
18,992.8
Cost of sales
12,925.1
13,548.4
12,590.6
Selling, general, and administrative expenses
3,259.0
3,500.4
3,147.0
Divestitures gain, net
-
(444.6)
(194.1)
Restructuring, impairment, and other exit costs (recoveries)
241.4
56.2
(26.5)
Operating profit
3,431.7
3,433.8
3,475.8
Benefit plan non-service income
(75.8)
(88.8)
(113.4)
Interest, net
479.2
382.1
379.6
Earnings before income taxes and after-tax earnings
from joint ventures
3,028.3
3,140.5
3,209.6
Income taxes
594.5
612.2
586.3
After-tax earnings from joint ventures
84.8
81.3
111.7
Net earnings, including earnings attributable to redeemable and
noncontrolling interests
2,518.6
2,609.6
2,735.0
Net earnings attributable to redeemable and noncontrolling interests
22.0
15.7
27.7
Net earnings attributable to General Mills
$
2,496.6
$
2,593.9
$
2,707.3
Earnings per share - basic
$
4.34
$
4.36
$
4.46
Earnings per share - diluted
$
4.31
$
4.31
$
4.42
Dividends per share
$
2.36
$
2.16
$
2.04
See accompanying notes to consolidated financial statements.
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$
2,518.6
$
2,609.6
$
2,735.0
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(86.6)
(110.8)
(175.9)
Net actuarial (loss) income
(187.1)
(228.0)
101.6
Other fair value changes:
Hedge derivatives
(3.2)
1.3
7.0
Reclassification to earnings:
Foreign currency translation
-
(7.4)
342.2
Hedge derivatives
(2.5)
(18.7)
35.1
Amortization of losses and prior service costs
36.7
56.9
75.8
Other comprehensive (loss) income, net of tax
(242.7)
(306.7)
385.8
Total comprehensive
income
2,275.9
2,302.9
3,120.8
Comprehensive income (loss) attributable to
redeemable and noncontrolling interests
22.1
15.4
(45.2)
Comprehensive income attributable to General Mills
$
2,253.8
$
2,287.5
$
3,166.0
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
May 26, 2024
May 28, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
418.0
$
585.5
Receivables
1,696.2
1,683.2
Inventories
1,898.2
2,172.0
Prepaid expenses and other current assets
568.5
735.7
Total current
assets
4,580.9
5,176.4
Land, buildings, and equipment
3,863.9
3,636.2
Goodwill
14,750.7
14,511.2
Other intangible assets
6,979.9
6,967.6
Other assets
1,294.5
1,160.3
Total assets
$
31,469.9
$
31,451.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,987.8
$
4,194.2
Current portion of long-term debt
1,614.1
1,709.1
Notes payable
11.8
31.7
Other current liabilities
1,419.4
1,600.7
Total current
liabilities
7,033.1
7,535.7
Long-term debt
11,304.2
9,965.1
Deferred income taxes
2,200.6
2,110.9
Other liabilities
1,283.5
1,140.0
Total liabilities
21,821.4
20,751.7
Stockholders’ equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,227.0
1,222.4
Retained earnings
20,971.8
19,838.6
Common stock in treasury,
at cost, shares of
195.5
and
168.0
(10,357.9)
(8,410.0)
Accumulated other comprehensive loss
(2,519.7)
(2,276.9)
Total stockholders’
equity
9,396.7
10,449.6
Noncontrolling interests
251.8
250.4
Total equity
9,648.5
10,700.0
Total liabilities and equity
$
31,469.9
$
31,451.7
See accompanying notes to consolidated financial statements.
Consolidated Statements of Total
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
Shares
Amount
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
10,700.0
$
10,788.0
$
9,773.2
Common stock,
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,222.4
1,182.9
1,365.5
Stock compensation plans
(11.7)
34.5
17.9
Unearned compensation related to stock unit awards
(78.1)
(104.7)
(92.2)
Earned compensation
94.4
109.7
104.5
Decrease in redemption value of
redeemable interest
-
-
14.1
Reversal of cumulative redeemable interest
value adjustments
-
-
(207.4)
Acquisition of noncontrolling interest
-
-
(19.5)
Ending balance
1,227.0
1,222.4
1,182.9
Retained earnings:
Beginning balance
19,838.6
18,532.6
17,069.8
Net earnings attributable to General Mills
2,496.6
2,593.9
2,707.3
Cash dividends declared ($
2.36
, $
2.16
, and $
2.04
per share)
(1,363.4)
(1,287.9)
(1,244.5)
Ending balance
20,971.8
19,838.6
18,532.6
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Shares purchased, including excise tax of $
18.8
million, $-,
N/A
(29.2)
(2,021.2)
(18.0)
(1,403.6)
(13.5)
(876.8)
Stock compensation plans
1.7
73.3
5.7
271.7
4.7
209.9
Ending balance
(195.5)
(10,357.9)
(168.0)
(8,410.0)
(155.7)
(7,278.1)
Accumulated other comprehensive loss:
Beginning balance
(2,276.9)
(1,970.5)
(2,429.2)
Comprehensive (loss) income
(242.8)
(306.4)
458.7
Ending balance
(2,519.7)
(2,276.9)
(1,970.5)
Noncontrolling interests:
Beginning balance
250.4
245.6
302.8
Comprehensive income (loss)
22.1
15.4
(16.0)
Distributions to noncontrolling interest holders
(21.3)
(15.7)
(129.8)
Reclassification from redeemable interest
-
-
561.6
Reversal of cumulative redeemable interest
value adjustments
-
-
207.4
Change in ownership interest
0.6
-
-
Divestiture
-
5.1
(680.4)
Ending balance
251.8
250.4
245.6
Total equity,
ending balance
$
9,648.5
$
10,700.0
$
10,788.0
Redeemable interest:
Beginning balance
$
-
$
-
$
604.9
Comprehensive loss
-
-
(29.2)
Decrease in redemption value of
redeemable interest
-
-
(14.1)
Reclassification to noncontrolling interest
-
-
(561.6)
Ending balance
$
-
$
-
$
-
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling interests
$
2,518.6
$
2,609.6
$
2,735.0
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
552.7
546.6
570.3
After-tax earnings from joint ventures
(84.8)
(81.3)
(111.7)
Distributions of earnings from joint ventures
50.4
69.9
107.5
Stock-based compensation
95.3
111.7
98.7
Deferred income taxes
(48.5)
(22.2)
62.2
Pension and other postretirement benefit plan contributions
(30.1)
(30.1)
(31.3)
Pension and other postretirement benefit plan costs
(27.0)
(27.6)
(30.1)
Divestitures gain, net
-
(444.6)
(194.1)
Restructuring, impairment, and other exit costs (recoveries)
223.5
24.4
(117.1)
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures
10.6
(48.9)
277.4
Other, net
41.9
71.1
(50.7)
Net cash provided by operating activities
3,302.6
2,778.6
3,316.1
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(774.1)
(689.5)
(568.7)
Acquisitions, net of cash acquired
(451.9)
(251.5)
(1,201.3)
Investments in affiliates, net
(2.7)
(32.2)
15.4
Proceeds from disposal of land, buildings, and equipment
0.8
1.3
3.3
Proceeds from divestitures, net of cash divested
-
633.1
74.1
Other, net
30.5
(7.6)
(13.5)
Net cash used by investing activities
(1,197.4)
(346.4)
(1,690.7)
Cash Flows - Financing Activities
Change in notes payable
(20.5)
(769.3)
551.4
Issuance of long-term debt
2,065.2
2,324.4
2,203.7
Payment of long-term debt
(901.5)
(1,421.7)
(3,140.9)
Proceeds from common stock issued on exercised options
25.5
232.3
161.7
Purchases of common stock for treasury
(2,002.4)
(1,403.6)
(876.8)
Dividends paid
(1,363.4)
(1,287.9)
(1,244.5)
Distributions to redeemable and noncontrolling interest holders
(21.3)
(15.7)
(129.8)
Other, net
(53.9)
(62.6)
(28.0)
Net cash used by financing activities
(2,272.3)
(2,404.1)
(2,503.2)
Effect of exchange rate changes on cash and cash equivalents
(0.4)
(12.0)
(58.0)
(Decrease) increase in cash and cash equivalents
(167.5)
16.1
(935.8)
Cash and cash equivalents - beginning of year
585.5
569.4
1,505.2
Cash and cash equivalents - end of year
$
418.0
$
585.5
$
569.4
Cash flow from changes in current assets and liabilities, excluding the effects of acquisitions and
divestitures:
Receivables
$
(1.8)
$
(41.2)
$
(166.3)
Inventories
287.6
(319.0)
(85.8)
Prepaid expenses and other current assets
167.0
61.6
(35.3)
Accounts payable
(251.2)
199.8
456.7
Other current liabilities
(191.0)
49.9
108.1
Changes in current assets and liabilities
$
10.6
$
(48.9)
$
277.4
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
GENERAL MILLS, INC. AND SUBSIDIARIES
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.
Our India business is on an April fiscal year end.
Certain
reclassifications
to
our
previously
reported
financial
information
have
been
made
to
conform
to
the
current
period
presentation.
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
years,
and
equipment,
furniture,
and
software
are
usually
depreciated over
to
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.
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
finite
lives
are
amortized on a straight-line basis, over their useful lives, generally ranging
from
to
years.
Our indefinite-lived
intangible assets,
mainly intangible
assets primarily
associated with
the
Blue Buffalo
,
Pillsbury
,
Totino’s
,
Old El
Paso
,
Progresso
,
Annie’s
,
Nudges
, and
Häagen-Dazs
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
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.
Leases
We
determine whether
an arrangement
is a lease
at inception.
When our
lease arrangements
include lease and
non-lease components,
we account for lease and non-lease components (e.g. common area maintenance)
separately based on their relative standalone prices.
Any
lease
arrangements
with
an
initial
term
of
months
or
less
are
not
recorded
on
our
Consolidated
Balance
Sheets,
and
we
recognize lease costs for these
lease arrangements on a straight-line
basis over the lease term. Many
of our lease arrangements provide
us with
options to
exercise one
or more
renewal terms
or to
terminate the
lease arrangement.
We
include these
options when
we are
reasonably certain
to exercise them
in the lease
term used to
establish our
right of use
assets and lease
liabilities. Generally,
our lease
agreements do not include an option to purchase the leased asset, residual value guarantees,
or material restrictive covenants.
We
have
certain
lease
arrangements
with
variable
rental
payments.
Our
lease
arrangements
for
our
Häagen-Dazs
retail
shops
often
include rental payments
that are based
on a percentage
of retail sales. We
have other lease
arrangements that are
adjusted periodically
based on
an inflation
index or rate.
The future
variability of these
payments and
adjustments are
unknown, and
therefore they
are not
included
as
minimum
lease
payments
used
to
determine
our
right
of
use
assets
and
lease
liabilities.
Variable
rental
payments
are
recognized in the period in which the obligation is incurred.
As
most
of
our
lease
arrangements
do
not
provide
an
implicit
interest
rate,
we
apply
an
incremental
borrowing
rate
based
on
the
information available at the commencement date of the lease arrangement
to determine the present value of lease payments.
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.
Revenue Recognition
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
reductions
to
the
transaction
price,
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 and
actual reductions
to
the
transaction
price
are
recognized
as
a
change
in
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 vary around
the world and by
channel, and are short-term,
and as such, we do
not have
any significant financing components.
Our allowance for doubtful
accounts represents our estimate of
expected credit losses related
to
our
trade
receivables.
We
pool
our
trade
receivables
based
on
similar
risk
characteristics,
such
as
geographic
location,
business
channel, and other
account data. To
estimate our allowance
for doubtful
accounts, we leverage
information on historical
losses, asset-
specific
risk
characteristics,
current
conditions,
and reasonable
and
supportable
forecasts of
future
conditions.
Account
balances
are
written off
against the
allowance when
we deem
the amount
is uncollectible.
Please see
Note 17
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.
Research and Development
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. Cash
flows from
derivative
instruments are
primarily
reported in cash flows from operating activities in our Consolidated
Statements of Cash Flows.
Stock-based Compensation
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
or
director’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.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
Benefit Plans
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.
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
revenue
recognition,
valuation
of
long-lived
assets, intangible
assets,
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 2024, we
adopted optional accounting guidance
to ease the burden
in accounting for reference
rate reform.
The new
standard provides
temporary expedients
and exceptions
to existing
accounting requirements
for contract
modifications
and
hedge
accounting
related
to transitioning
from
discounted
reference
rates. This
resulted
in
modifying
contracts,
where necessary,
to
apply a new reference rate,
primarily SOFR. The adoption of
this accounting guidance did not
have a material impact on our results
of
operations and financial position.
In the
first quarter
of fiscal
2024, we adopted
new requirements
for enhanced
disclosures related
to supplier
financing programs.
The
new standard requires
disclosure of the
key terms of
the program and
a rollforward of
the related obligation
during the annual
period,
including
the
amount
of
obligations
confirmed
and
obligations
subsequently
paid.
We
have
historically
presented
the
key
terms
of
these
programs
and
the
associated
obligation
outstanding.
The
rollforward
requirement
is
effective
for
fiscal
years
beginning
after
December 15,
2023, which
for us
is the
first quarter
of fiscal
2025. The
adoption of
this guidance
did not
have a
material impact
on
our financial statements and related disclosures.
NOTE 3. ACQUISITIONS AND DIVESTITURES
During the fourth quarter
of fiscal 2024, we acquired
a pet food business in Europe,
for a purchase price of $
434.5
million, net of cash
acquired. The
purchase price
includes approximately
$
million related
to a
holdback, which
we expect
to pay
in the
first quarter
of
fiscal
2025,
contingent
upon
certain
closing
requirements.
We
financed
the
transaction
with
cash
on
hand.
We
consolidated
the
business into
our Consolidated
Balance Sheets
and recorded
goodwill of
$
318.1
million, an
indefinite-lived brand
intangible asset
of
$
118.4
million and
a finite-lived
customer relationship
asset of
$
14.2
million. The
goodwill is
included
in the
International segment
and is
not deductible
for tax
purposes. The
pro forma
effects of
this acquisition
were not
material. We
have conducted
a preliminary
assessment
of
the fair
value
of the
acquired
assets and
liabilities of
the business
and
will continue
to review
these
items during
the
measurement period.
If new information
is obtained
about facts
and circumstances
that existed
at the
acquisition date, the
acquisition
accounting
will
be
revised
to
reflect
the
resulting
adjustments
to
current
estimates
of
these
items.
The
consolidated
results
will
be
reported
as
part
of
our
International
operating
segment
in
future
periods
on
a
one-month
lag.
Accordingly,
in
fiscal
2024,
our
Consolidated Statements of Earnings do not include results of this business.
During
the first
quarter
of fiscal
2023,
we
acquired
TNT Crust,
a
manufacturer
of high-quality
frozen pizza
crusts
for
regional
and
national pizza
chains, foodservice
distributors, and
retail outlets,
for a
purchase price
of $
253.0
million. We
financed the
transaction
with U.S. commercial paper.
We consolidated
the TNT Crust business into
our Consolidated Balance Sheets
and recorded goodwill of
$
156.7
million. The
goodwill is
included in
the North
America Foodservice
segment and
is not
deductible for
tax purposes.
The pro
forma effects of this acquisition were not material.
During the
first quarter
of fiscal
2023,
we completed
the sale
of our
Helper main
meals and
Suddenly
Salad side
dishes business
to
Eagle Family Foods Group for $
606.8
million and recorded a pre-tax gain of $
442.2
million.
In fiscal 2022, we sold our European dough businesses and recorded
a net pre-tax gain on sale of $
30.4
million.
During
the
third
quarter
of
fiscal
2022,
we
sold
our
interests
in
Yoplait
SAS,
Yoplait
Marques
SNC,
and
Liberté
Marques
Sàrl
to
Sodiaal International (Sodiaal) in
exchange for Sodiaal’s
interest in our Canadian yogurt business, a
modified agreement for the
use of
Yoplait
and
Liberté
brands in the
United States and
Canada, and cash.
We
recorded a net
pre-tax gain of
$
163.7
million on the
sale of
these businesses.
During
the
first
quarter
of
fiscal
2022,
we
acquired
Tyson
Foods’
pet
treats
business
for
$
1.2
billion
in
cash.
We
financed
the
transaction
with
a
combination
of
cash
on
hand
and
short-term
debt.
We
consolidated
Tyson
Foods’
pet
treats
business
into
our
Consolidated
Balance
Sheets
and
recorded
goodwill
of
$
762.3
million,
indefinite-lived
intangible
assets
for
the
Nudges
,
Top
Chews
, and
True
Chews
brands
totaling
$
330.0
million
in
aggregate,
and
a
finite-lived
customer
relationship
asset
of
$
40.0
million.
The goodwill is included in
the Pet reporting unit and is
deductible for tax purposes. The
pro forma effects of
this acquisition were not
material.
NOTE 4. RESTRUCTURING, IMPAIRMENT,
AND OTHER EXIT COSTS
INTANGIBLE ASSET
IMPAIRMENTS
In fiscal 2024, we
recorded a $
117.1
million non-cash goodwill impairment
charge related to
our Latin America reporting
unit. Please
see Note 6 for additional information.
In fiscal
2024, we
recorded $
103.1
million of
non-cash impairment
charges related
to our
Top
Chews
,
True
Chews
,
and
EPIC
brand
intangible assets. Please see Note 6 for additional information.
RESTRUCTURING INITIATIVES
We view
our restructuring activities as actions
that help us meet our long-term
growth targets and are evaluated
against 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.
Restructuring charges recorded in fiscal 2024 were
as follows:
In Millions
Commercial strategy actions
$
18.6
Charges associated with restructuring actions previously
announced
20.2
Total restructuring
charges
$
38.8
In fiscal 2024, we approved
restructuring actions to enhance the
go-to-market commercial strategy and related
organizational structure
of our
Pet segment.
We
expect to
incur approximately
$
million of
restructuring charges
and project-related
costs related
to these
actions,
of
which
approximately
$
million
will
be
cash.
These
charges
are
expected
to
consist
of
approximately
$
million
of
accelerated depreciation
and $
million of
other costs,
including severance.
We
recognized $
13.7
million of
accelerated depreciation
and $
4.9
million of other costs in fiscal 2024. We
expect these actions to be completed by the end of fiscal 2026.
In fiscal
2024, we
increased the
estimate of
restructuring charges
that we
expect to
incur related
to our previously
announced actions
in
the
International
segment
to drive
efficiencies
in manufacturing
and
logistics operations.
As a
result,
we
recorded a
$
3.4
million
long-lived
asset
impairment
charge.
We
have
incurred
approximately
$
million
of
restructuring
charges
and
project-related
costs
related
to
these
actions,
of
which
approximately
$
million
was
cash.
These
charges
consisted
of
approximately
$
million
of
severance
and
$
million
of
other
costs,
primarily
asset
write-offs.
We
expect
to
pay
approximately
$
million
in
cash
related
to
these actions and record immaterial charges in fiscal 2025.
Certain actions are subject to union negotiations and works counsel consultations,
where required.
We paid net
$
35.5
million of cash related to restructuring actions in fiscal 2024. We
paid net $
36.6
million of cash in fiscal 2023.
Restructuring charges recorded in fiscal 2023 were
as follows:
In Millions
Global supply chain actions
$
36.2
Network optimization actions
6.4
Charges associated with restructuring actions previously
announced
18.4
Total restructuring
charges
$
61.0
Restructuring charges recorded in fiscal 2022 were
as follows:
In Millions
International manufacturing and logistics operations
$
15.0
Net recoveries associated with restructuring actions previously announced
(38.2)
Total net restructuring
recoveries
$
(23.2)
Restructuring and impairment charges and project-related
costs are classified in our Consolidated Statements of Earnings as follows:
Fiscal Year
In Millions
Restructuring, impairment, and other exit costs (recoveries)
$
241.4
$
56.2
$
(26.5)
Cost of sales
17.6
4.8
3.3
Total restructuring
and impairment charges (recoveries)
259.0
61.0
(23.2)
Project-related costs classified in cost of sales
$
2.0
$
2.4
$
-
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:
In Millions
Severance
Other Exit
Costs
Total
Reserve balance as of May 30, 2021
$
147.3
$
1.5
$
148.8
Fiscal 2022 charges, including foreign currency translation
2.2
1.2
3.4
Reserve adjustment
(34.0)
-
(34.0)
Utilized in fiscal 2022
(80.1)
(1.3)
(81.4)
Reserve balance as of May 29, 2022
35.4
1.4
36.8
Fiscal 2023 charges, including foreign currency translation
41.6
0.1
41.7
Utilized in fiscal 2023
(29.4)
(1.4)
(30.8)
Reserve balance as of May 28, 2023
47.6
0.1
47.7
Fiscal 2024 charges, including foreign currency translation
-
0.1
0.1
Utilized in fiscal 2024
(32.8)
(0.2)
(33.0)
Reserve balance as of May 26, 2024
$
14.8
$
-
$
14.8
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
percent interest
in Cereal
Partners Worldwide
(CPW), which
manufactures and
markets ready-to-eat
cereal products
in
approximately
countries
outside
the
United
States
and
Canada.
CPW
also
markets
cereal
bars
in
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
percent 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:
In Millions
May 26, 2024
May 28, 2023
Cumulative investments
$
368.9
$
401.5
Goodwill and other intangible assets
448.9
444.1
Aggregate advances included in cumulative investments
280.8
275.6
Joint venture earnings and cash flow activity is as follows:
Fiscal Year
In Millions
Sales to joint ventures
$
4.8
$
5.8
$
6.3
Net advances (repayments)
2.7
32.2
(15.4)
Dividends received
50.4
69.9
107.5
Summary combined financial information for the joint ventures on
a 100 percent basis is as follows:
Fiscal Year
In Millions
Net sales:
CPW
$
1,718.5
$
1,618.9
$
1,706.5
HDJ
319.3
338.5
427.8
Total net sales
2,037.8
1,957.4
2,134.3
Gross margin
672.2
667.7
803.1
Earnings before income taxes
145.2
169.3
249.9
Earnings after income taxes
119.9
126.9
201.0
In Millions
May 26, 2024
May 28, 2023
Current assets
$
777.4
$
817.7
Noncurrent assets
784.0
772.7
Current liabilities
1,310.6
1,300.0
Noncurrent liabilities
88.2
100.3
NOTE 6. GOODWILL AND OTHER INTANGIBLE
ASSETS
The components of goodwill and other intangible assets are as follows:
In Millions
May 26, 2024
May 28, 2023
Goodwill
$
14,750.7
$
14,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,728.6
6,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
402.2
386.3
Less accumulated amortization
(150.9)
(131.1)
Intangible assets subject to amortization
251.3
255.2
Other intangible assets
6,979.9
6,967.6
Total
$
21,730.6
$
21,478.8
Based on
the carrying
value of
finite-lived intangible
assets as of
May 26,
2024, amortization
expense for
each of
the next five
fiscal
years is estimated to be approximately $
million.
The changes in the carrying amount of goodwill for fiscal 2022, 2023, and 2024
are as follows:
In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Corporate
and Joint
Ventures
Total
Balance as of May 30, 2021
$
6,689.3
$
5,300.5
$
648.8
$
978.2
$
445.6
$
14,062.4
Acquisition
-
762.3
-
-
-
762.3
Divestitures
-
-
-
(201.8)
-
(201.8)
Reclassified to assets held for sale
(130.0)
-
-
-
-
(130.0)
Other activity, primarily
foreign
currency translation
(6.4)
-
-
(54.8)
(53.2)
(114.4)
Balance as of May 29, 2022
6,552.9
6,062.8
648.8
721.6
392.4
14,378.5
Acquisition
-
-
156.8
-
-
156.8
Divestitures
(2.0)
-
-
(0.4)
-
(2.4)
Other activity, primarily
foreign
currency translation
(8.5)
-
-
(12.8)
(0.4)
(21.7)
Balance as of May 28, 2023
6,542.4
6,062.8
805.6
708.4
392.0
14,511.2
Acquisitions
-
-
-
318.1
26.9
345.0
Impairment charge
-
-
-
(117.1)
-
(117.1)
Other activity, primarily
foreign
currency translation
(0.5)
-
(0.1)
7.7
4.5
11.6
Balance as of May 26, 2024
$
6,541.9
$
6,062.8
$
805.5
$
917.1
$
423.4
$
14,750.7
The changes in the carrying amount of other intangible assets for fiscal 2022, 2023, and
2024 are as follows:
In Millions
Total
Balance as of May 30, 2021
$
7,150.6
Acquisition
370.0
Divestitures
(621.8)
Intellectual property intangible asset
210.4
Other activity, primarily
amortization and foreign currency translation
(109.3)
Balance as of May 29, 2022
6,999.9
Acquisition
3.8
Divestiture
(3.6)
Other activity, primarily
amortization and foreign currency translation
(32.5)
Balance as of May 28, 2023
6,967.6
Acquisition
132.6
Impairment charges
(103.1)
Other activity, primarily
amortization and foreign currency translation
(17.2)
Balance as of May 26, 2024
$
6,979.9
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2024. As a
result of lower future profitability
projections for our Latin
America reporting unit, we
determined that the fair
value
of the
reporting
unit was
less than
its book
value
and
recorded a
$
117.1
million non-cash
goodwill
impairment
charge.
In addition,
during the
fourth quarter
of fiscal
2024, we
executed our
fiscal 2025
planning process
and preliminary
long-range planning
process,
which resulted in
lower future sales and
profitability projections for
the businesses supporting
our
Top
Chews
,
True Chews
, and
EPIC
brand intangible assets.
As a result of
this triggering event,
we performed an
interim impairment assessment
of these assets
as of May
26, 2024,
and determined
that the
fair value
of these
brand intangible
assets no
longer exceeded
the carrying
values of
the respective
assets, resulting in $
103.1
million of non-cash impairment charges.
We recorded
impairment charges in restructuring,
impairment, and
other exit
costs in
our Consolidated
Statements
of Earnings.
Our estimates
of the
fair values
were determined
based on
a discounted
cash flow model
using inputs which
included our long-range
cash flow projections
for the businesses,
royalty rates, weighted
-average
cost of capital rates, and tax rates. These fair values are Level 3 assets in the fair value
hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
Uncle Toby’s
brand intangible
asset. In
addition,
while having
significant
coverage as
of our
fiscal 2024
assessment date,
the
Progresso
,
Nudges
,
and
True
Chews
brand intangible assets had risk of decreasing coverage. We
will continue to monitor applicable businesses for potential impairment.
We did not
identify any indicators of impairment for all other goodwill and indefinite-lived
intangible assets as of May 26, 2024.
NOTE 7. LEASES
Our lease portfolio primarily
consists of operating lease
arrangements for certain
warehouse and distribution space,
office space, retail
shops,
production
facilities,
rail
cars,
production
and
distribution
equipment,
automobiles,
and
office
equipment.
Our
lease
costs
associated with finance
leases and
sale-leaseback transactions
and our
lease income associated
with lessor and
sublease arrangements
are not material to our Consolidated Financial Statements.
Components of our lease cost are as follows:
Fiscal Year
In Millions
Operating lease cost
$
128.9
$
127.6
$
129.7
Variable
lease cost
8.9
6.1
8.5
Short-term lease cost
32.2
30.0
29.1
Maturities of our operating and finance lease obligations by fiscal year are
as follows:
In Millions
Operating Leases
Finance Leases
Fiscal 2025
$
118.2
$
0.7
Fiscal 2026
96.7
0.6
Fiscal 2027
66.2
0.4
Fiscal 2028
42.2
-
Fiscal 2029
29.7
-
After fiscal 2029
87.2
-
Total noncancelable
future lease obligations
$
440.2
$
1.7
Less: Interest
(55.2)
(0.1)
Present value of lease obligations
$
385.0
$
1.6
The
lease
payments
presented
in
the
table
above
exclude
$
126.2
million
of
minimum
lease
payments
for
operating
leases
we
have
committed to but have not yet commenced as of May 26, 2024.
The weighted-average remaining lease term and weighted-average
discount rate for our operating leases are as follows:
May 26, 2024
May 28, 2023
Weighted-average
remaining lease term
5.4
years
5.2
years
Weighted-average
discount rate
4.9
%
4.4
%
Supplemental operating cash flow information and non-cash activity
related to our operating leases are as follows:
Fiscal Year
In Millions
Cash paid for amounts included in the measurement of lease liabilities
$
129.7
$
129.9
Right of use assets obtained in exchange for new lease liabilities
$
139.8
$
124.4
NOTE 8. 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,
2024, and
May 28,
2023, a
comparison of
cost
and market values of our marketable debt and equity securities is as follows:
Cost
Fair Value
Gross Unrealized Gains
Gross Unrealized Losses
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
Available for
sale
debt securities
$
2.3
$
2.3
$
2.3
$
2.3
$
-
$
-
$
-
$
-
Equity securities
0.3
117.5
4.6
122.7
4.3
5.2
-
10.0
Total
$
2.6
$
119.8
$
6.9
$
125.0
$
4.3
$
5.2
$
-
$
10.0
Net realized losses from sales of
marketable securities were $
7.6
million in fiscal 2024 and immaterial
in fiscal 2023. 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:
Marketable Securities
In Millions
Cost
Fair Value
Under 1 year (current)
$
2.3
$
2.3
Equity securities
0.3
4.6
Total
$
2.6
$
6.9
As of May 26, 2024, we had $
2.3
million of marketable debt securities pledged as collateral for derivative contracts.
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 as possible to or below our planned cost.
We
use derivatives
to manage
our exposure
to changes
in commodity
prices. We
do not
perform the
assessments required
to achieve
hedge
accounting
for
commodity
derivative
positions.
Accordingly,
the
changes
in
the
values
of
these
derivatives
are
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
not meet the
criteria for
cash flow hedge
accounting, we believe
that these instruments
are effective
in achieving our
objective of providing certainty
in the future price of commodities purchased
for use in our supply chain.
Accordingly, for
purposes of
measuring
segment
operating
performance
these
gains
and
losses
are
reported
in
unallocated
corporate
items
outside
of
segment
operating results
until such
time that
the exposure
we are
managing affects
earnings. At
that time
we reclassify
the gain
or loss
from
unallocated
corporate
items
to
segment
operating
profit,
allowing
our
operating
segments
to
realize
the
economic
effects
of
the
derivative without experiencing any resulting mark-to-market volatility,
which remains in unallocated corporate items.
Unallocated corporate items for fiscal 2024, 2023, and 2022 included:
Fiscal Year
In Millions
Net (loss) gain on mark-to-market valuation of commodity positions
$
(15.4)
$
(154.4)
$
303.3
Net loss (gain) on commodity positions reclassified from unallocated corporate
items to segment operating profit
40.0
(89.5)
(188.0)
Net mark-to-market revaluation of certain grain inventories
14.5
(48.0)
17.8
Net mark-to-market valuation of certain commodity positions recognized
in
unallocated corporate items
$
39.1
$
(291.9)
$
133.1
As
of
May
26,
2024,
the
net
notional
value
of
commodity
derivatives
was
$
319.6
million,
of
which
$
171.3
million
related
to
agricultural inputs and $
148.3
million related to energy inputs. These contracts relate to
inputs that generally will be utilized within the
next
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, SOFR, 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.
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.
During the
third quarter
of fiscal 2024,
in advance
of our
$
500.0
million debt
issuance, we
entered into
and settled
$
250.0
million of
treasury locks, resulting in a gain of $
0.3
million.
During
the
fourth
quarter
of
fiscal
2023,
in
advance
of
planned
debt
financing,
we
entered
into
€
750.0
million
of
forward-starting
swaps.
The
forward-starting
swap
agreements
were
terminated
during
the
fourth
quarter
of
fiscal
2023,
in
conjunction
with
the
Company’s
issuance of a
€
750.0
million
-year fixed-rate note.
Upon termination, a
loss of $
5.0
million was recognized
in AOCI and
will be amortized through interest expense over the respective term of
the debt.
During the
fourth quarter
of fiscal
2023, in
advance of
planned debt
financing, we
entered into
$
500.0
million of
treasury locks.
The
treasury
locks
were
terminated
during
the
fourth
quarter
of
fiscal
2023,
in
conjunction
with
the
Company’s
issuance
of
a
$
1,000.0
million
-year
fixed-rate
note.
Upon
termination,
a
loss
of
$
1.4
million
was
recognized
in
AOCI
and
will
be
amortized
through
interest expense over the respective term of the debt.
During the second quarter of fiscal 2023, we entered
into a $
500.0
million notional amount interest swap to convert our $
500.0
million
fixed rate notes due
November 18, 2025
, to a floating rate.
As of May 26,
2024,
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)
4.0
% notes due
April 17, 2025
$
(0.5)
3.2
% notes due
February 10, 2027
4.6
1.5
% notes due
April 27, 2027
(1.0)
4.2
% notes due
April 17, 2028
(4.0)
3.907
% notes due
April 13, 2029
(4.1)
2.25
% notes due
October 14, 2031
14.5
4.95
% notes due
March 29, 2033
(1.2)
4.55
% notes due
April 17, 2038
(7.6)
5.4
% notes due
June 15, 2040
(9.0)
4.15
% notes due
February 15, 2043
7.4
4.7
% notes due
April 17, 2048
(11.3)
Net pre-tax hedge loss in AOCI
$
(12.2)
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.
In Millions
May 26, 2024
May 28, 2023
Pay-floating swaps - notional amount
$
1,150.8
$
1,143.4
Average
receive rate
2.5
%
2.6
%
Average pay rate
4.9
%
2.5
%
The floating-rate swap contracts outstanding as of May 26, 2024,
mature in fiscal 2026.
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, 2024, the net notional value of foreign exchange derivatives
was $
941.4
million.
We
also have
net investments
in foreign
subsidiaries that
are denominated
in euros.
We
hedged a portion
of these net
investments by
issuing
euro-denominated
commercial
paper
and
foreign
exchange
forward
contracts.
As of
May
26,
2024,
we
hedged
a
portion
of
these net
investments
with €
3,970.4
million of
euro denominated
bonds.
As of
May 26,
2024,
we had
deferred
net foreign
currency
transaction gains of $
32.8
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, 2024, the
net notional amount
of our equity
swaps was $
197.3
million. The equity swaps outstanding as of May 26, 2024, mature in fiscal 2025.
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, 2024, and May 28, 2023, were as follows:
May 26, 2024
May 26, 2024
Fair Values
of Assets
Fair Values
of Liabilities
In Millions
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)
$
-
$
-
$
-
$
-
$
-
$
(39.8)
$
-
$
(39.8)
Foreign exchange contracts (a) (c)
-
5.7
-
5.7
-
(5.1)
-
(5.1)
Total
-
5.7
-
5.7
-
(44.9)
-
(44.9)
Derivatives not designated as hedging
instruments:
Foreign exchange contracts (a) (c)
-
-
-
-
-
(5.2)
-
(5.2)
Commodity contracts (a) (d)
2.1
1.1
-
3.2
-
(12.1)
-
(12.1)
Grain contracts (a) (d)
-
7.9
-
7.9
-
(6.5)
-
(6.5)
Total
2.1
9.0
-
11.1
-
(23.8)
-
(23.8)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e)
4.6
2.3
-
6.9
-
-
-
-
Indefinite-lived intangible asset (f)
-
-
25.0
25.0
-
-
-
-
Total
4.6
2.3
25.0
31.9
-
-
-
-
Total assets, liabilities, and
derivative positions
recorded at fair value
$
6.7
$
17.0
$
25.0
$
48.7
$
-
$
(68.7)
$
-
$
(68.7)
(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
EURIBOR,
SOFR, and
swap rates.
As of
May 26, 2024,
the carrying
amount of
hedged debt
designated as
the hedged
item in a
fair value hedge
was $
1,116.6
million and was
classified on the
Consolidated Balance Sheets
within long-term
debt. As
of May 26, 2024, the cumulative amount of fair value hedging basis adjustments
was $
34.2
million.
(c)
Based on observable market transactions of spot currency rates and forward
currency prices.
(d)
Based on prices of futures exchanges and recently reported transactions in the
marketplace.
(e)
Based on prices of common stock, mutual fund net asset values, and bond matrix pricing.
(f)
See Note 6.
May 28, 2023
May 28, 2023
Fair Values
of Assets
Fair Values
of Liabilities
In Millions
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)
$
-
$
-
$
-
$
-
$
-
$
(62.2)
$
-
$
(62.2)
Foreign exchange contracts (a) (c)
-
10.3
-
10.3
-
(2.5)
-
(2.5)
Total
-
10.3
-
10.3
-
(64.7)
-
(64.7)
Derivatives not designated as hedging
instruments:
Foreign exchange contracts (a) (c)
-
0.2
-
0.2
-
(5.6)
-
(5.6)
Commodity contracts (a) (d)
-
0.5
-
0.5
-
(29.3)
-
(29.3)
Grain contracts (a) (d)
-
2.3
-
2.3
-
(11.8)
-
(11.8)
Total
-
3.0
-
3.0
-
(46.7)
-
(46.7)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e) (f)
122.7
2.3
34.8
159.8
-
-
-
-
Long-lived assets (g)
-
1.0
-
1.0
-
-
-
-
Total
122.7
3.3
34.8
160.8
-
-
-
-
Total assets, liabilities, and
derivative positions
recorded at fair value
$
122.7
$
16.6
$
34.8
$
174.1
$
-
$
(111.4)
$
-
$
(111.4)
(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 EURIBOR and
swap rates. As of
May 28, 2023, the
carrying amount of hedged
debt designated as
the hedged item in
a
fair value
hedge was $
589.7
million and
was classified
on the Consolidated
Balance Sheet
within long-term
debt. As of
May 28,
2023, the cumulative amount of fair value hedging basis adjustments was $
53.7
million.
(c)
Based on observable market transactions of spot currency rates and forward
currency prices.
(d)
Based on prices of futures exchanges and recently reported transactions in the
marketplace.
(e)
Based on prices of common stock, mutual fund net asset values, and bond matrix
pricing.
(f)
The level 3 marketable investment represents an equity security without a readily determinable
fair value. During fiscal 2023, we
recorded an impairment charge of $
32.4
million resulting from the determination of fair value utilizing level 3 inputs including
revised projections of future operating results and observable transaction data for
similar instruments.
(g)
We recorded
$
8.6
million in non-cash impairment charges
in fiscal 2023 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
$
9.6
million and were associated with the restructuring actions described in Note 4
We did not
significantly change our valuation techniques from prior periods.
The
fair value
of our
long-term
debt
is estimated
using
Level 2
inputs based
on quoted
prices
for
those
instruments. Where
quoted
prices are not available, fair value is estimated using
discounted cash flows and market-based expectations
for interest rates, credit risk
and
the
contractual
terms
of
the
debt
instruments.
As
of
May
26,
2024,
the
fair
value
and
carrying
amount
of
our
long-term
debt,
including the
current portion,
were $
12,148.7
million and
$
12,918.3
million, respectively.
As of
May 28,
2023, the
carrying amount
and fair value of our long-term debt, including the current portion, were
$
10,929.6
million and $
11,674.2
million, respectively.
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, 2024, and May 28, 2023, follows:
Interest Rate
Contracts
Foreign
Exchange
Contracts
Equity
Contracts
Commodity
Contracts
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
Derivatives in Cash Flow Hedging
Relationships:
Amount of (loss) gain recognized in
other comprehensive income (OCI)
$
-
$
(6.4)
$
(4.3)
$
9.4
$
-
$
-
$
-
$
-
$
(4.3)
$
3.0
Amount of net gain reclassified from
AOCI into earnings (a)
0.9
2.2
3.2
22.0
-
-
-
-
4.1
24.2
Amount of net gain recognized in
earnings (b)
0.3
-
-
-
-
-
-
-
0.3
-
Derivatives in Fair Value
Hedging
Relationships:
Amount of net loss recognized
in earnings (b)
(0.2)
(4.9)
-
-
-
-
-
-
(0.2)
(4.9)
Derivatives Not Designated as
Hedging Instruments:
Amount of net (loss) gain recognized
in earnings (c)
-
-
(8.5)
(46.2)
21.6
(3.4)
15.1
(152.6)
28.2
(202.2)
(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. For the
fiscal year ended May 26,
2024, the amount of
gain reclassified from AOCI
into
cost of
sales was
$
7.0
million
and
the amount
of
loss reclassified
from
AOCI into
SG&A
was $
3.8
million.
For the
fiscal year
ended
May 28,
2023,
the
amount
of
gain
reclassified
from
AOCI
into
cost
of
sales
was
$
21.1
million
and
the
amount
of
gain
reclassified from AOCI into SG&A was $
0.9
million.
(b)
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.
(c)
(Loss) gain recognized in earnings
is related to the ineffective
portion of the hedging relationship, reported
in 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.
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:
May 26, 2024
Assets
Liabilities
Gross Amounts Not Offset
in the
Balance Sheet (e)
Gross Amounts Not Offset
in the
Balance Sheet (e)
In Millions
Gross
Amounts of
Recognized
Assets
Gross
Liabilities
Offset in the
Balance Sheet
(a)
Net Amounts
of Assets
(b)
Financial
Instruments
Cash
Collateral
Received
Net Amount
(c)
Gross
Amounts of
Recognized
Liabilities
Gross Assets
Offset in the
Balance Sheet
(a)
Net Amounts
of Liabilities
(b)
Financial
Instruments
Cash
Collateral
Pledged
Net Amount
(d)
Commodity contracts
$
3.2
$
-
$
3.2
$
(3.2)
$
-
$
-
$
(12.1)
$
-
$
(12.1)
$
3.2
$
3.5
$
(5.4)
Interest rate contracts
-
-
-
-
-
-
(49.4)
-
(49.4)
-
26.3
(23.1)
Foreign exchange contracts
5.7
-
5.7
(3.9)
-
1.8
(10.3)
-
(10.3)
3.9
-
(6.4)
Equity contracts
4.4
-
4.4
-
-
4.4
(0.2)
-
(0.2)
-
-
(0.2)
Total
$
13.3
$
-
$
13.3
$
(7.1)
$
-
$
6.2
$
(72.0)
$
-
$
(72.0)
$
7.1
$
29.8
$
(35.1)
(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.
May 28, 2023
Assets
Liabilities
Gross Amounts Not Offset
in the Balance Sheet (e)
Gross Amounts Not Offset
in the Balance Sheet (e)
In Millions
Gross
Amounts of
Recognized
Assets
Gross
Liabilities
Offset in the
Balance
Sheet (a)
Net
Amounts of
Assets
(b)
Financial
Instruments
Cash
Collateral
Received
Net Amount
(c)
Gross
Amounts of
Recognized
Liabilities
Gross
Assets
Offset in the
Balance
Sheet (a)
Net
Amounts of
Liabilities
(b)
Financial
Instruments
Cash
Collateral
Pledged
Net Amount
(d)
Commodity contracts
$
0.5
$
-
$
0.5
$
(0.5)
$
-
$
-
$
(29.3)
$
-
$
(29.3)
$
0.5
$
16.2
$
(12.6)
Interest rate contracts
-
-
-
-
-
-
(69.2)
-
(69.2)
-
44.3
(24.9)
Foreign exchange contracts
10.4
-
10.4
(4.2)
-
6.2
(8.2)
-
(8.2)
4.2
-
(4.0)
Equity contracts
2.8
-
2.8
(1.0)
-
1.8
(1.5)
-
(1.5)
1.0
-
(0.5)
Total
$
13.7
$
-
$
13.7
$
(5.7)
$
-
$
8.0
$
(108.2)
$
-
$
(108.2)
$
5.7
$
60.5
$
(42.0)
(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, 2024, the after-tax amounts of unrealized
gains in AOCI related to hedge derivatives follows:
In Millions
After-Tax
Gain/(Loss)
Unrealized losses from interest rate cash flow hedges
$
(7.3)
Unrealized gains from foreign currency cash flow hedges
7.5
After-tax gains in AOCI related to hedge derivatives
$
0.2
The net amount
of pre-tax gains and
losses in AOCI as
of May 26,
2024, that we expect
to be reclassified
into net earnings
within the
next 12 months is a $
10.3
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, 2024, was $
82.4
million.
We have posted
$
29.9
million of collateral under these contracts.
CONCENTRATIONS OF
CREDIT AND COUNTERPARTY
CREDIT RISK
During fiscal 2024, customer concentration was as follows:
Percent of total
Consolidated
North America
Retail
North America
Foodservice
International
Pet
Walmart (a):
Net sales
%
%
%
%
%
Accounts receivable
%
%
%
%
Five largest customers:
Net sales
%
%
%
%
(a)
Includes Walmart Inc.
and its affiliates.
No customer other than Walmart
accounted for
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 $
9.8
million. We
have
no
collateral
held against
these contracts.
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 these
services, including
not providing
any form
of guarantee
and not
pledging assets
as security
to
the third
parties or
financial institutions.
All of
our accounts
payable remain
as obligations
to our
suppliers as
stated in
our supplier
agreements.
As
of
May
26,
2024,
$
1,404.4
million
of
our
total
accounts
payable
were
payable
to
suppliers
who
utilize
these
third-
party services.
As of
May 28,
2023, $
1,430.1
million of
our total
accounts payable
were payable
to suppliers
who utilize
these third-
party services.
NOTE 9. 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, 2024
May 28, 2023
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
Financial institutions
$
11.8
8.8
%
$
31.7
10.5
%
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
The following table details the fee-paid committed and uncommitted credit
lines we had available as of May 26, 2024:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committed
and uncommitted credit facilities
$
3.4
$
-
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, 2024.
LONG-TERM DEBT
In the
fourth quarter
of fiscal 2024,
we issued €
500.0
million of
3.65
percent fixed-rate
notes due
October 23, 2030
. We
used the
net
proceeds for general corporate purposes.
In
the fourth
quarter
of fiscal
2024,
we issued
€
500.0
million
of
3.85
percent
fixed-rate notes
due
April 23, 2034
.
We
used
the net
proceeds for general corporate purposes.
In
the
third
quarter of
fiscal
2024,
we
issued
$
500.0
million
of
4.7
percent
fixed-rate
notes due
January 30, 2027
. We
used
the
net
proceeds to repay $
500.0
million of
3.65
percent fixed-rate notes due
February 15, 2024
.
In the second
quarter of fiscal 2024,
we issued €
250.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
November 10, 2023
.
In the
second quarter
of fiscal
2024, we
issued $
500.0
million of
5.5
percent fixed-rate
notes due
October 17, 2028
. We
used the
net
proceeds to repay $
400.0
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
In the first
quarter of fiscal
2024, we issued
€
500.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to
repay €
500.0
million of floating-rate notes due
July 27, 2023
.
In the fourth quarter
of fiscal 2023, we
issued €
250.0
million of floating-rate notes
due
November 10, 2023
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
May 16, 2023
.
In the
fourth quarter
of fiscal
2023, we
issued €
750.0
million of
3.907
percent fixed-rate
notes due
April 13, 2029
. We
used the
net
proceeds to repay
€
500.0
million of
1.0
percent fixed-rate notes
due
April 27, 2023
and €
250.0
million of floating-rate
notes due
May
16, 2023
.
In the fourth
quarter of fiscal
2023, we
issued $
1,000.0
million of
4.95
percent fixed-rate
notes due
March 29, 2033
. We
used the net
proceeds to repay our outstanding commercial paper and for general
corporate purposes.
In the second
quarter of fiscal
2023, we issued
$
500.0
million of
5.241
percent fixed-rate notes
due
November 18, 2025
. We
used the
net proceeds to repay a portion of our outstanding commercial paper and for general
corporate purposes.
In the
second quarter
of fiscal
2023, we
issued €
250.0
million of
floating-rate notes
due
May 16, 2023
. We
used the
net proceeds
to
repay €
250.0
million of
0.0
percent fixed-rate notes due
November 11, 2022
.
In the
second quarter
of fiscal
2023,
we repaid
$
500.0
million of
2.6
percent fixed-rate
notes due
October 12, 2022
, using
proceeds
from the issuance of commercial paper.
A summary of our long-term debt is as follows:
In Millions
May 26, 2024
May 28, 2023
4.2
% notes due
April 17, 2028
$
1,400.0
$
1,400.0
4.95
% notes due
March 29, 2033
1,000.0
1,000.0
Euro-denominated
3.907
% notes due
April 13, 2029
813.4
804.2
4.0
% notes due
April 17, 2025
800.0
800.0
3.2
% notes due
February 10, 2027
750.0
750.0
2.875
% notes due
April 15, 2030
750.0
750.0
Euro-denominated
0.45
% notes due
January 15, 2026
650.8
643.4
3.0
% notes due
February 1, 2051
605.2
605.2
Euro-denominated
0.125
% notes due
November 15, 2025
542.4
536.2
Euro-denominated floating rate notes due
November 8, 2024
542.4
-
Euro-denominated
3.65
% notes due
October 23, 2030
542.4
-
Euro-denominated
3.85
% notes due
April 23, 2034
542.4
-
5.241
% notes due
November 18, 2025
500.0
500.0
4.7
% notes due
January 30, 2027
500.0
-
5.5
% notes due
October 17, 2028
500.0
-
2.25
% notes due
October 14, 2031
500.0
500.0
4.7
% notes due
April 17, 2048
446.2
446.2
4.15
% notes due
February 15, 2043
434.9
434.9
Euro-denominated
1.5
% notes due
April 27, 2027
433.9
428.9
5.4
% notes due
June 15, 2040
382.5
382.5
4.55
% notes due
April 17, 2038
282.4
282.4
Euro-denominated floating rate notes due
November 8, 2024
271.2
-
Medium-term notes,
0.56
% to
6.41
%, due fiscal
or later
4.0
4.0
Euro-denominated floating rate notes due
July 27, 2023
-
536.2
3.65
% notes due
February 15, 2024
-
500.0
Floating rate notes due
October 17, 2023
-
400.0
Euro-denominated floating rate notes due
November 10, 2023
-
268.1
Other
(275.8)
(298.0)
12,918.3
11,674.2
Less amount due within one year
(1,614.1)
(1,709.1)
Total long-term debt
$
11,304.2
$
9,965.1
Principal payments
due on
long-term debt
and finance
leases in
the next
five fiscal
years based
on stated
contractual maturities,
our
intent to redeem, or put rights of certain note holders are as follows:
In Millions
Fiscal 2025
$
1,614.1
Fiscal 2026
1,693.8
Fiscal 2027
1,688.2
Fiscal 2028
1,400.0
Fiscal 2029
1,313.5
Certain of our
long-term debt agreements
contain restrictive
covenants.
As of May 26, 2024, we were in compliance with all of these
covenants.
As of
May 26,
2024,
the $
12.2
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 2025 is a $
0.4
million pre-tax loss.
NOTE 10. REDEEMABLE AND NONCONTROLLING INTERESTS
Our principal noncontrolling interest relates to our General Mills Cereals, LLC (GMC) subsidiar
y.
The third-party 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). The floating preferred
return rate on
GMC’s Class
A Interests
was the sum
of
three-month Term
SOFR
plus
basis points. On June 1, 2024, the floating preferred return rate on GMC’s
Class A Interests was reset to the sum of the
three-month Term SOFR
plus
basis points. The
preferred return rate
is adjusted every
three years
through a negotiated
agreement
with the Class A Interest holder or through a remarketing auction.
During
the
third
quarter
of
fiscal
2022,
we
completed
the
sale
of
our
interests
in
Yoplait
SAS,
Yoplait
Marques
SNC
and
Liberté
Marques
Sàrl
to
Sodiaal
in
exchange
for
Sodiaal’s
interest
in
our
Canadian
yogurt
business,
a
modified
agreement
for
the
use
of
Yoplait
and
Liberté
brands in the United States and Canada, and cash. Please see Note 3 to the Consolidated
Financial Statements.
Up to
the date
of the
divestiture, Sodiaal
held the remaining
interests in
each of
the entities.
On the
acquisition date,
we recorded
the
fair
value
of
Sodiaal’s
percent
euro-denominated
interest
in
Yoplait
SAS
as
a
redeemable
interest
on
our
Consolidated
Balance
Sheets. Sodiaal had
the right to
put all or
a portion of
its redeemable interest
to us at
fair value until
the divestiture closed
in the third
quarter of
fiscal 2022.
In connection
with the
divestiture, cumulative
adjustments made
to the
redeemable
interest related
to the
fair
value put feature were
reversed against additional paid-in
capital, where changes in the
redemption amount were historically recorded,
and the resulting carrying value of the noncontrolling interests were included
in the calculation of the gain on divestiture.
We
paid dividends of $
105.1
million in fiscal 2022
to Sodiaal under the
terms of the Yoplait
SAS, Yoplait
Marques SNC, and Liberté
Marques Sàrl shareholder agreements.
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, 2024, we were in compliance with all of these covenants.
NOTE 11. STOCKHOLDERS’
EQUITY
Cumulative preference stock of
5.0
million shares, without par value, is authorized but unissued.
On June 27, 2022, our Board of Directors authorized the
repurchase of up to
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.
Share repurchases were as follows:
Fiscal Year
In Millions
Shares of common stock
29.2
18.0
13.5
Aggregate purchase price
$
2,021.2
$
1,403.6
$
876.8
The following tables provide details of total comprehensive income:
Fiscal 2024
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Net earnings, including earnings attributable to
noncontrolling interests
$
2,496.6
$
22.0
Other comprehensive (loss) income:
Foreign currency translation
$
(98.4)
$
11.7
(86.7)
0.1
Net actuarial loss
(239.4)
52.3
(187.1)
-
Other fair value changes:
Hedge derivatives
(4.4)
1.2
(3.2)
-
Reclassification to earnings:
Hedge derivatives (a)
(4.1)
1.6
(2.5)
-
Amortization of losses and prior service costs (b)
46.5
(9.8)
36.7
-
Other comprehensive (loss) income
(299.8)
57.0
(242.8)
0.1
Total comprehensive
income
$
2,253.8
$
22.1
(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.
Fiscal 2023
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Net earnings, including earnings attributable to
noncontrolling interests
$
2,593.9
$
15.7
Other comprehensive (loss) income:
Foreign currency translation
$
(110.2)
$
(0.3)
(110.5)
(0.3)
Net actuarial loss
(295.5)
67.5
(228.0)
-
Other fair value changes:
Hedge derivatives
3.8
(2.5)
1.3
-
Reclassification to earnings:
Foreign currency translation (a)
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(24.7)
6.0
(18.7)
-
Amortization of losses and prior service costs (c)
72.9
(16.0)
56.9
-
Other comprehensive loss
(361.1)
54.7
(306.4)
(0.3)
Total comprehensive
income
$
2,287.5
$
15.4
(a)
Gain reclassified from AOCI into earnings is reported in the divestitures gain.
(b)
Gain reclassified
from AOCI
into earnings
is reported
in interest,
net for
interest rate
swaps and
in cost
of sales
and SG&A
expenses for foreign exchange contracts.
(c)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
income.
Fiscal 2022
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Net
Net earnings, including earnings attributable to
redeemable and noncontrolling interests
$
2,707.3
$
10.2
$
17.5
Other comprehensive income (loss):
Foreign currency translation
$
(188.5)
$
85.8
(102.7)
(26.2)
(47.0)
Net actuarial gain
132.4
(30.8)
101.6
-
-
Other fair value changes:
Hedge derivatives
30.1
(23.6)
6.5
-
0.5
Reclassification to earnings:
Foreign currency translation (a)
342.2
-
342.2
-
Hedge derivatives (b)
23.7
11.6
35.3
-
(0.2)
Amortization of losses and prior service costs (c)
97.4
(21.6)
75.8
-
-
Other comprehensive income (loss)
437.3
21.4
458.7
(26.2)
(46.7)
Total comprehensive
income (loss)
$
3,166.0
$
(16.0)
$
(29.2)
(a)
Loss reclassified from
AOCI into earnings
is reported in
divestitures gain related
to the divestiture
of our interests
in Yoplait
SAS, Yoplait
Marques SNC, and Liberte Marques Sarl to Sodiaal in the third quarter
of fiscal 2022.
(b)
Loss (gain)
reclassified from
AOCI into
earnings is
reported in
interest, net
for interest
rate swaps
and
in cost
of sales
and
SG&A expenses for foreign exchange contracts.
(c)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
income.
In
fiscal
2024,
2023,
and
2022,
except
for
certain
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, 2024
May 28, 2023
Foreign currency translation adjustments
$
(795.3)
$
(708.6)
Unrealized gain from hedge derivatives
0.2
5.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,806.3)
(1,670.6)
Prior service credits
81.7
96.4
Accumulated other comprehensive loss
$
(2,519.7)
$
(2,276.9)
NOTE 12. 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,
2024,
a total
of
32.6
million shares
were available
for grant
in the
form of
stock options,
restricted
stock, restricted
stock units,
and
shares
of unrestricted
stock under
the 2022
Stock Compensation
Plan
(2022
Plan). The
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
Stock
Compensation
Plan,
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
The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Fiscal Year
Estimated fair values of stock options granted
$
17.47
$
14.16
$
8.77
Assumptions:
Risk-free interest rate
4.0
%
3.3
%
1.5
%
Expected term
8.5
years
8.5
years
8.5
years
Expected volatility
21.5
%
20.9
%
20.2
%
Dividend yield
2.8
%
3.1
%
3.4
%
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 Statements
of Earnings.
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings were as follows:
Fiscal Year
In Millions
Windfall tax benefits from stock-based payments
$
10.2
$
32.3
$
18.4
Under the 2022 Plan,
options may be priced
at
percent or more of the
fair market value on the
date of grant, generally issued
with
four-year graded
vesting or four-year
cliff vesting. Options
generally expire within
10 years and one month
after the date of
grant. As
of May 26, 2024, stock option awards outstanding include some granted under
the 2017 Stock Compensation Plan.
Information on stock option activity follows:
Options
Outstanding
(Thousands)
Weighted-Average
Exercise Price Per
Share
Weighted-Average
Remaining
Contractual Term
(Years)
Aggregate Intrinsic
Value (Millions)
Balance as of May 28, 2023
11,575.2
$
57.43
5.59
$
309.5
Granted
1,064.8
76.70
Exercised
(471.7)
53.30
Forfeited or expired
(123.9)
68.30
Outstanding as of May 26, 2024
12,044.4
$
59.19
5.05
$
120.5
Exercisable as of May 26, 2024
7,448.3
$
54.62
3.47
$
101.9
Stock-based compensation expense related to stock option awards was as follows:
Fiscal Year
In Millions
Compensation expense related to stock option awards
$
13.9
$
12.3
$
12.1
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 Millions
Net cash proceeds
$
25.5
$
232.3
$
161.7
Intrinsic value of options exercised
$
7.6
$
118.7
$
74.0
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
2022 Plan.
Under the
2022 Plan,
restricted stock
and
restricted
stock
units
are
generally
issued
with
four-year
graded
vesting
or
four-year
cliff
vesting.
Performance
share
units
are
earned primarily
based on
our future
achievement of
three-year goals
for average
organic net
sales growth
and cumulative
operating
cash
flow
and
a
relative
total
shareholder
return
modifier.
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.
As of
May 26,
2024,
restricted stock
units and
performance share
units include
some granted
under the
2017 Stock Compensation Plan
Information on restricted stock unit and performance share unit activity
follows:
Equity Classified
Liability Classified
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Non-vested as of May 28, 2023
5,036.2
$
62.60
69.4
$
62.32
Granted
1,495.8
73.35
22.1
75.50
Vested
(1,571.8)
58.38
(18.4)
60.59
Forfeited
(370.1)
70.11
(4.0)
53.64
Non-vested as of May 26, 2024
4,590.1
$
66.94
69.1
$
67.49
Fiscal Year
Number of units granted (thousands)
1,517.8
2,066.4
1,989.0
Weighted-average
price per unit
$
73.38
$
69.77
$
60.02
The
total
grant-date
fair
value
of
restricted
stock
unit
awards
that
vested
was
$
92.9
million
in
fiscal
2024,
$
107.4
million
in
fiscal
2023, and $
82.7
million in fiscal 2022.
As of May
26, 2024, unrecognized
compensation expense
related to non-vested
stock options, restricted
stock units, and
performance
share units was $
113.3
million. This expense will be recognized over
19 months
, on average.
Stock-based compensation expense related to restricted stock units
and performance share units was as follows:
Fiscal Year
In Millions
Compensation expense related to restricted stock units and performance
share units
$
81.4
$
99.4
$
94.2
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 year
2022.
NOTE 13. EARNINGS PER SHARE
Basic and diluted EPS were calculated using the following:
Fiscal Year
In Millions, Except per Share Data
Net earnings attributable to General Mills
$
2,496.6
$
2,593.9
$
2,707.3
Average number
of common shares - basic EPS
575.5
594.8
607.5
Incremental share effect from: (a)
Stock options
1.8
3.6
2.5
Restricted stock units and performance share units
2.2
2.8
2.6
Average number
of common shares - diluted EPS
579.5
601.2
612.6
Earnings per share - basic
$
4.34
$
4.36
$
4.46
Earnings per share - diluted
$
4.31
$
4.31
$
4.42
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:
Fiscal Year
In Millions
Anti-dilutive stock options, restricted stock units,
and performance share units
2.1
0.8
4.4
NOTE 14. RETIREMENT BENEFITS AND POSTEMPLOYMENT BENEFITS
Defined Benefit Pension Plans
We have
defined benefit pension plans covering
many employees in the United
States, Canada, Switzerland, 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
2024 or fiscal 2023.
We do
not expect to be required
to make
any
contributions
to
our
principal
U.S.
plans
in
fiscal
2025.
Our
principal
U.S.
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.
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
U.S.
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
or fiscal 2023. We
do not expect to be required to make any contributions to these plans in fiscal 2025.
Health Care Cost Trend
Rates
Assumed health care cost trends are as follows:
Fiscal Year
Health care cost trend rate for next year
7.3
% and
7.3
%
6.6
% and
6.6
%
Rate to which the cost trend rate is assumed to decline (ultimate rate)
4.5
%
4.5
%
Year
that the rate reaches the ultimate trend rate
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
7.3
percent for retirees age
65 and over and for
retirees under age 65 at
the end of fiscal 2024.
Rates are graded down annually
until
the
ultimate
trend
rate
of
4.5
percent
is
reached
in
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.
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 Pension
Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
Change in Plan Assets:
Fair value at beginning of year
$
5,778.6
$
6,510.3
$
456.0
$
479.2
Actual return on assets
(23.2)
(413.5)
45.6
(6.6)
Employer contributions
30.0
30.0
0.1
0.1
Plan participant contributions
2.0
1.3
6.4
5.7
Benefits payments
(349.5)
(344.6)
(44.9)
(22.4)
Foreign currency
1.8
(4.9)
-
-
Fair value at end of year (a)
$
5,439.7
$
5,778.6
$
463.2
$
456.0
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year
$
5,970.7
$
6,528.3
$
430.6
$
469.6
$
131.0
$
138.5
Service cost
56.8
70.3
4.7
5.1
7.4
8.4
Interest cost
296.5
258.5
21.3
17.9
4.0
3.1
Plan amendment
1.2
-
-
-
(9.6)
-
Curtailment/other
(13.9)
(8.5)
-
-
10.2
10.4
Plan participant contributions
2.0
1.3
6.4
5.7
-
-
Medicare Part D reimbursements
-
-
-
0.7
-
-
Actuarial gain
(174.4)
(538.1)
(14.1)
(22.5)
10.3
(10.7)
Benefits payments
(339.1)
(336.1)
(45.7)
(45.5)
(24.3)
(18.5)
Foreign currency
1.9
(5.0)
(0.2)
(0.4)
-
(0.2)
Projected benefit obligation at end of year (a)
$
5,801.7
$
5,970.7
$
403.0
$
430.6
$
129.0
$
131.0
Plan assets (less) more than benefit obligation as of
fiscal year end
$
(362.0)
$
(192.1)
$
60.2
$
25.4
$
(129.0)
$
(131.0)
(a)
Plan assets and obligations are measured as of
May 31, 2024
, and
May 31, 2023
.
During
fiscal
and
fiscal
2023,
the
decreases
in
defined
benefit
pension
obligations
and
other
postretirement
obligations
were
primarily driven by actuarial gains due to an increase in the discount
rate in each respective year.
As
of
May
26,
2024,
other
postretirement
benefit
plans
had
benefit
obligations
of
$
11.5
million
that
are
unfunded.
As
of
May
28,
2023,
other
postretirement
benefit
plans
had
benefit
obligations
of
$
308.0
million
that
exceeded
plan
assets
of
$
274.2
million.
Postemployment
benefit plans
are not
funded and
had benefit
obligations
of $
129.0
million
and $
131.0
million as
of May
26, 2024,
and May 28, 2023, respectively.
The
accumulated
benefit
obligation
for
all
defined
benefit
pension
plans
was
$
5,684.1
million
as
of
May 26,
2024,
and
$
5,807.9
million as of May 28, 2023.
Amounts recognized in AOCI as of May 26, 2024, and May 28, 2023, are as follows:
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
Net actuarial (loss) gain
$
(1,991.1)
$
(1,859.7)
$
190.4
$
186.9
$
(5.6)
$
2.2
$
(1,806.3)
$
(1,670.6)
Prior service (costs) credits
(9.8)
(4.8)
84.7
102.3
6.8
(1.1)
81.7
96.4
Amounts recorded in accumulated
other comprehensive loss
$
(2,000.9)
$
(1,864.5)
$
275.1
$
289.2
$
1.2
$
1.1
$
(1,724.6)
$
(1,574.2)
Plans with accumulated benefit obligations in excess of plan assets as of May
26, 2024, and May 28, 2023 are as follows:
Defined Benefit Pension Plans
Fiscal Year
In Millions
Projected benefit obligation
$
449.4
$
466.2
Accumulated benefit obligation
438.8
453.4
Plan assets at fair value
12.0
18.7
Components of net periodic benefit expense are as follows:
Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
Service cost
$
56.8
$
70.3
$
93.5
$
4.7
$
5.1
$
7.6
$
7.4
$
8.4
$
10.0
Interest cost
296.5
258.5
184.3
21.3
17.9
12.6
4.0
3.1
1.5
Expected return on
plan assets
(417.7)
(420.5)
(411.1)
(34.7)
(31.1)
(26.7)
-
-
-
Amortization of losses
(gains)
86.5
113.2
140.5
(20.4)
(19.3)
(10.9)
0.1
0.4
3.0
Amortization of prior
service costs
(credits)
1.8
1.5
1.0
(21.8)
(23.2)
(20.9)
0.3
0.3
0.4
Other adjustments
-
-
0.1
-
-
(0.1)
8.3
10.4
12.9
Settlement or
curtailment gains
(4.0)
(0.7)
(18.4)
-
-
(5.5)
-
-
-
Net expense (income)
$
19.9
$
22.3
$
(10.1)
$
(50.9)
$
(50.6)
$
(43.9)
$
20.1
$
22.6
$
27.8
Assumptions
Weighted-average
assumptions used to determine fiscal year-end benefit obligations are
as follows:
Defined Benefit Pension
Plans
Other Postretirement
Benefit Plans
Postemployment Benefit
Plans
Fiscal Year
Fiscal Year
Fiscal Year
Discount rate
5.52
%
5.18
%
5.52
%
5.19
%
5.05
%
4.55
%
Rate of salary increases
4.23
4.20
-
-
4.46
4.46
Weighted-average
assumptions used to determine fiscal year net periodic benefit expense are as follows:
Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
Discount rate
5.18
%
4.39
%
3.17
%
5.19
%
4.36
%
3.03
%
4.55
%
3.62
%
2.04
%
Service cost
effective rate
5.27
4.57
3.56
5.15
4.41
3.34
5.00
3.69
2.46
Interest cost
effective rate
5.06
4.03
2.42
4.96
3.80
2.08
4.61
3.35
1.48
Rate of
salary increases
4.20
4.18
4.39
-
-
-
4.46
4.46
4.46
Expected long-term
rate of return on
plan assets
7.13
6.70
5.85
7.34
6.76
6.09
-
-
-
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
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:
May 31, 2024
May 31, 2023
In Millions
Level 1
Level 2
Level 3
Total
Assets
Level 1
Level 2
Level 3
Total
Assets
Fair value measurement of pension
plan assets:
Equity (a)
$
225.9
$
391.4
$
-
$
617.3
$
278.3
$
484.1
$
34.3
$
796.7
Fixed income (b)
1,497.0
2,014.4
-
3,511.4
1,603.4
1,866.3
-
3,469.7
Real asset investments (c)
82.6
-
-
82.6
92.8
-
-
92.8
Other investments (d)
-
-
0.1
0.1
-
-
0.1
0.1
Cash and accruals
158.3
0.1
-
158.4
295.1
0.2
-
295.3
Fair value measurement of pension
plan assets
$
1,963.8
$
2,405.9
$
0.1
$
4,369.8
$
2,269.6
$
2,350.6
$
34.4
$
4,654.6
Assets measured at net asset value (e)
1,069.9
1,124.0
Total pension plan
assets
$
5,439.7
$
5,778.6
Fair value measurement of
postretirement benefit plan assets:
Fixed income (b)
$
95.1
$
-
$
-
$
95.1
$
113.3
$
-
$
-
$
113.3
Cash and accruals
24.9
-
-
24.9
2.5
-
-
2.5
Fair value measurement of
postretirement benefit
plan assets
$
120.0
$
-
$
-
$
120.0
$
115.8
$
-
$
-
$
115.8
Assets measured at net asset value (e)
343.2
340.2
Total postretirement
benefit
plan assets
$
463.2
$
456.0
(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
public equity
securities, mutual funds,
and equity futures
valued
at closing prices from national exchanges, commingled funds valued
at fair value using the unit values provided by the investment
managers,
and certain
private equity
securities valued
using
a matrix
of pricing
inputs reflecting
assumptions
based on
the best
information available.
(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
stocks
in
energy,
real
estate,
and
infrastructure
for
the
purpose
of
total
return.
Investments
include:
energy,
real
estate,
and
infrastructure
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 limited
partnerships, trust-owned
life insurance,
common collective
trusts, and
certain private
equity securities
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
transfers
into
level
investments
in
fiscal
2024.
During
fiscal
2024,
the
initial
public
offering
of
certain
equity
securities
previously
priced
using
non-observable
inputs
resulted
in
the
transfer
of
$
34.3
million
out
of
level
investments.
There
were
no
transfers into or out of level 3 investments in fiscal 2023.
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.
Weighted-average
asset allocations for our defined benefit pension and other postretirement benefit plans are
as follows:
Defined Benefit Pension Plans
Other Postretirement Benefit Plans
Fiscal Year
Fiscal Year
Asset category:
United States equities
7.2
%
8.3
%
27.8
%
28.6
%
International equities
4.1
4.8
14.4
13.4
Private equities
10.2
10.6
11.2
14.5
Fixed income
68.3
65.1
46.6
43.5
Real assets
10.2
11.2
-
-
Total
100.0
%
100.0
%
100.0
%
100.0
%
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:
percent
to
equities
in
the
United
States;
percent
to
international
equities;
percent to private equities;
percent to fixed income; and
percent to real assets (real estate,
energy,
and infrastructure).
For other U.S. postretirement benefit plans, the long-term investment
policy allocations are:
percent to equities in the United States;
percent to international equities;
percent to total private equities; and
percent to fixed income.
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
no
t
expect
to
be
required
to
make
contributions
to
our
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment benefit
plans in
fiscal 2025.
Actual fiscal
2025 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 2025 to fiscal 2034 as follows:
In Millions
Defined Benefit
Pension Plans
Other
Postretirement
Benefit Plans
Gross Payments
Postemployment
Benefit Plans
Fiscal 2025
$
358.0
$
37.3
$
25.4
Fiscal 2026
365.0
36.2
19.8
Fiscal 2027
372.2
35.2
18.4
Fiscal 2028
379.3
34.8
16.5
Fiscal 2029
386.2
33.8
15.2
Fiscal 2030-2034
2,000.5
154.5
63.3
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 $
19.5
million as of May 26, 2024, and $
19.2
million as of May 28, 2023. We
also sponsor defined contribution plans in many
of
our
foreign
locations.
Our
total
recognized
expense
related
to
defined
contribution
plans
was
$
94.0
million
in
fiscal
2024,
$
97.2
million in fiscal 2023, and $
90.1
million in fiscal 2022.
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
3.5
million as
of May
26, 2024,
and
3.7
million as
of May
28, 2023.
The ESOP’s
only assets
are our
common stock
and temporary
cash
balances.
The Company stock fund and the ESOP collectively held
$
393.0
million and $
498.7
million of Company common stock as of May 26,
2024, and May 28, 2023, respectively.
NOTE 15. 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:
Fiscal Year
In Millions
Earnings before income taxes and after-tax earnings
from joint ventures:
United States
$
2,907.0
$
2,740.5
$
2,652.3
Foreign
121.3
400.0
557.3
Total earnings
before income taxes and after-tax earnings from joint ventures
$
3,028.3
$
3,140.5
$
3,209.6
Income taxes:
Currently payable:
Federal
$
512.8
$
487.1
$
384.2
State and local
72.0
82.2
60.8
Foreign
58.2
65.1
79.1
Total current
643.0
634.4
524.1
Deferred:
Federal
27.4
9.6
75.0
State and local
9.7
(8.1)
18.3
Foreign
(85.6)
(23.7)
(31.1)
Total deferred
(48.5)
(22.2)
62.2
Total income
taxes
$
594.5
$
612.2
$
586.3
The following table reconciles the United States statutory income tax rate
with our effective income tax rate:
Fiscal Year
United States statutory rate
21.0
%
21.0
%
21.0
%
State and local income taxes, net of federal tax benefits
2.1
1.5
2.1
Foreign rate differences
(1.6)
(1.0)
(1.1)
Research and development tax credit
(1.2)
-
-
Stock based compensation
(0.3)
(1.0)
(0.6)
Capital loss (a)
-
-
(1.7)
Divestitures, net
-
(0.8)
(1.2)
Other, net
(0.4)
(0.2)
(0.2)
Effective income tax rate
19.6
%
19.5
%
18.3
%
(a)
During fiscal
2022, we
released a
$
50.7
million valuation
allowance associated
with our capital
loss carryforward
expected to
be
used against divestiture gains.
The tax effects of temporary differences that
give rise to deferred tax assets and liabilities are as follows:
In Millions
May 26, 2024
May 28, 2023
Accrued liabilities
$
43.6
$
51.2
Compensation and employee benefits
147.7
143.7
Pension
83.0
43.7
Tax credit carryforwards
48.6
38.7
Stock, partnership, and miscellaneous investments
3.6
2.4
Capitalized research and development
103.6
83.7
Capital losses
71.7
76.2
Net operating losses
259.6
221.3
Other
92.3
99.4
Gross deferred tax assets
853.7
760.3
Valuation
allowance
255.5
259.2
Net deferred tax assets
598.2
501.1
Brands
1,429.4
1,417.2
Fixed assets
393.2
402.7
Intangible assets
195.8
213.1
Tax lease transactions
3.4
8.5
Inventories
34.2
47.1
Stock, partnership, and miscellaneous investments
439.7
369.0
Unrealized hedges
20.2
34.3
Other
115.4
120.1
Gross deferred tax liabilities
2,631.3
2,612.0
Net deferred tax liability
$
2,033.1
$
2,110.9
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:
In Millions
May 26, 2024
Pillsbury acquisition losses
$
106.6
State and foreign loss carryforwards
21.9
Capital loss carryforwards
71.8
Other
55.2
Total
$
255.5
As of May 26, 2024, 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
:
In Millions
May 26, 2024
Foreign loss carryforwards
$
245.8
Federal operating loss carryforwards
5.6
State operating loss carryforwards
8.2
Total tax loss carryforwards
$
259.6
Our foreign loss carryforwards expire as follows:
In Millions
May 26, 2024
Expire in fiscal 2025 and 2026
$
0.8
Expire in fiscal 2027 and beyond
26.4
Do not expire (a)
218.6
Total foreign loss carryforwards
$
245.8
(a)
Of the total foreign loss carryforwards, $
204.2
million are held in Brazil for which we have not recorded a valuation allowance.
On August
16, 2022,
the Inflation
Reduction Act
(IRA) was
signed into
law.
The IRA
introduces
a Corporate
Alternative Minimum
Tax beginning
in our fiscal 2024 and an excise tax on the repurchase of corporate stock starting after
January 1, 2023. The IRA did not
have a material impact on our financial results, including our annual
estimated effective tax rates and liquidity.
As of
May 26,
2024, we
have
no
t 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. All
earnings prior to fiscal 2018
remain permanently reinvested. Earnings
from fiscal 2018 and later
are
not permanently reinvested and local country withholding taxes are
recorded on earnings each year.
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 jurisdiction
is the
United States
(federal and state). 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
to
years.
The Internal Revenue Service (IRS) is currently auditing
our federal tax returns for fiscal 2018 through 2022.
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 2024,
we received a notice of proposed adjustment
from the IRS associated with a
capital loss from
fiscal 2019.
We
believe that we
have meritorious defense
against this assessment
and will vigorously
defend our position.
We
do not
expect the
resolution of
the proposed
adjustment to
have a material
impact on
our financial
position or
liquidity.
We
have effectively
settled all issues with the IRS for fiscal years 2015 and prior.
The Brazilian
tax authority,
Secretaria da
Receita Federal
do Brasil (RFB),
has concluded
audits of our
2012 through 2018
tax return
years. These
audits included
a review
of our
determinations of
amortization of
certain goodwill
arising from
the acquisition
of Yoki
Alimentos
S.A.
The
RFB
has
proposed
adjustments
that
effectively
eliminate
the
goodwill
amortization
benefits
related
to
this
transaction. We
believe we have meritorious defenses and intend to continue to contest the disallowance
for all years.
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 2024
and
fiscal 2023.
Approximately
$
82.7
million of
this total
in fiscal
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
portions 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 Millions
Balance, beginning of year
$
181.2
$
160.9
Tax positions related
to current year:
Additions
24.6
29.9
Tax positions related
to prior years:
Additions
6.3
2.9
Reductions
(55.2)
(0.9)
Settlements
(0.8)
(4.7)
Lapses in statutes of limitations
(7.1)
(6.9)
Balance, end of year
$
149.0
$
181.2
As of
May 26,
2024, we do
no
t expect
to pay 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. Our unrecognized tax benefit liability was classified in other
liabilities.
We
report
accrued
interest
and
penalties
related
to
unrecognized
tax
benefit
liabilities
in
income
tax
expense.
For
fiscal
2024,
we
recognized a net benefit of $
6.1
million of tax-related net interest and penalties, and had $
24.2
million of accrued interest and penalties
as
of
May
26,
2024.
For
fiscal
2023,
we
recognized
$
4.7
million
of
tax-related
net
interest
and
penalties,
and
had
$
32.4
million
of
accrued interest and penalties as of May 28, 2023.
NOTE 16. COMMITMENTS AND CONTINGENCIES
As
of
May
26,
2024,
we
have
issued
guarantees
and
comfort
letters
of
$
152.9
million
for
the
debt
and
other
obligations
of
non-
consolidated affiliates, mainly CPW.
Off-balance sheet arrangements were not material as of
May 26, 2024.
During
fiscal
2020,
we
received
notice
from
the
tax
authorities of
the
State of
São
Paulo,
Brazil
regarding
our
compliance
with
its
state sales tax requirements.
As a result, we
have been assessed additional
state sales taxes, interest,
and penalties. We
believe that we
have meritorious
defenses against
this claim
and will
vigorously defend
our position.
As of
May 26, 2024
, we
are unable
to estimate
any possible loss and have not recorded a loss contingency for this matter.
NOTE 17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
We
operate
in
the
packaged
foods
industry.
Our
operating
segments
are
as
follows:
North
America
Retail,
International,
Pet,
and
North America Foodservice.
Our North America Retail
operating segment reflects business
with a wide variety of
grocery stores, mass merchandisers, membership
stores,
natural
food
chains,
drug,
dollar
and
discount
chains,
convenience
stores,
and
e-commerce
grocery
providers.
Our
product
categories
in
this
business
segment
include
ready-to-eat
cereals,
refrigerated
yogurt,
soup,
meal
kits,
refrigerated
and
frozen
dough
products,
dessert
and
baking
mixes,
frozen
pizza
and
pizza
snacks,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks and snack bars.
Our
International
operating
segment
consists
of
retail
and
foodservice
businesses
outside
of
the
United
States
and
Canada.
Our
product categories include super-premium
ice cream and frozen desserts, meal kits, salty snacks,
snack bars, dessert and baking mixes,
shelf-stable
vegetables,
and
pet
food
products.
We
also
sell
super-premium
ice
cream
and
frozen
desserts
directly
to
consumers
through owned
retail shops. Our
International segment
also includes products
manufactured in
the United States
for export, mainly
to
Caribbean and Latin American markets, as well as products we
manufacture for sale to our international joint ventures. Revenues
from
export activities are reported in the region or country where the end customer
is located.
Our Pet operating segment includes
pet food products sold primarily in the
United States and Canada in national
pet superstore chains,
e-commerce retailers,
grocery stores,
regional pet
store chains,
mass merchandisers,
and veterinary
clinics and
hospitals. Our
product
categories include dog and cat food (dry
foods, wet foods, and treats) made with
whole meats, fruits, vegetables and other
high-quality
natural
ingredients.
Our
tailored
pet
product
offerings
address
specific
dietary,
lifestyle,
and
life-stage
needs
and
span
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
functions, and textures and cuts for wet foods.
Our
North
America
Foodservice
segment
consists
of
foodservice
businesses
in
the
United
States
and
Canada.
Our
major
product
categories
in
our
North
America
Foodservice
operating
segment
are
ready-to-eat
cereals,
snacks,
refrigerated
yogurt,
frozen
meals,
unbaked and
fully baked
frozen dough products,
baking mixes,
and bakery
flour.
Many products we
sell are branded
to the consumer
and nearly
all are
branded to
our customers.
We
sell to
distributors and
operators in
many customer
channels including
foodservice,
vending, and supermarket bakeries.
Operating profit
for these
segments excludes
unallocated corporate
items, gain
or loss
on divestitures,
and restructuring,
impairment,
and other
exit costs.
Results from
certain businesses
managed by
our Gold
Medal Ventures
entity are
included within
corporate and
other net
sales and
unallocated corporate
items within
operating
profit.
Unallocated corporate
items also
include corporate
overhead
expenses,
variances
to
planned
North
American
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative
project-related
costs,
gains
and
losses
on
corporate
investments,
and
other
items
that
are
not
part
of
our
measurement
of
segment operating performance.
These include gains and
losses arising from the
revaluation of certain grain
inventories and gains
and
losses
from
mark-to-market
valuation
of
certain
commodity
positions
until
passed
back
to
our
operating
segments.
These
items
affecting
operating
profit
are
centrally
managed
at
the
corporate
level
and
are
excluded
from
the
measure
of
segment
profitability
reviewed
by executive
management.
Under our
supply chain
organization,
our manufacturing,
warehouse,
and distribution
activities
are
substantially
integrated
across
our
operations
in
order
to
maximize
efficiency
and
productivity.
As
a
result,
fixed
assets
and
depreciation and amortization expenses are neither maintained nor available
by operating segment.
Our operating segment results were as follows:
Fiscal Year
In Millions
Net sales:
North America Retail
$
12,473.4
$
12,659.9
$
11,572.0
International
2,746.5
2,769.5
3,315.7
Pet
2,375.8
2,473.3
2,259.4
North America Foodservice
2,258.7
2,191.5
1,845.7
Total segment net
sales
$
19,854.4
$
20,094.2
$
18,992.8
Corporate and other
2.8
-
-
Total net sales
$
19,857.2
$
20,094.2
$
18,992.8
Operating profit:
North America Retail
$
3,080.4
$
3,181.3
$
2,699.7
International
125.2
161.8
232.0
Pet
485.9
445.5
470.6
North America Foodservice
315.5
290.0
255.5
Total segment operating
profit
$
4,007.0
$
4,078.6
$
3,657.8
Unallocated corporate items
333.9
1,033.2
402.6
Divestitures gain, net
-
(444.6)
(194.1)
Restructuring, impairment, and other exit costs (recoveries)
241.4
56.2
(26.5)
Operating profit
$
3,431.7
$
3,433.8
$
3,475.8
Net sales for our North America Retail operating units were as follows:
Fiscal Year
In Millions
U.S. Meals & Baking Solutions
$
4,324.3
$
4,426.3
$
4,023.8
U.S. Morning Foods
3,561.8
3,620.1
3,370.9
U.S. Snacks
3,538.9
3,611.0
3,191.4
Canada
1,048.4
1,002.5
985.9
Total
$
12,473.4
$
12,659.9
$
11,572.0
Net sales by class of similar products were as follows:
Fiscal Year
In Millions
Snacks
$
4,327.3
$
4,431.5
$
3,960.9
Cereal
3,187.5
3,209.5
2,998.1
Convenient meals
2,906.5
2,961.6
2,988.5
Dough
2,423.6
2,390.5
1,986.3
Pet
2,382.7
2,476.0
2,260.1
Baking mixes and ingredients
1,996.0
2,037.3
1,843.6
Yogurt
1,482.5
1,472.9
1,714.9
Super-premium ice cream
728.7
703.7
782.2
Other
422.4
411.2
458.2
Total
$
19,857.2
$
20,094.2
$
18,992.8
The following tables provide financial information by geographic area:
Fiscal Year
In Millions
Net sales:
United States
$
16,062.2
$
16,322.2
$
14,691.2
Non-United States
3,795.0
3,772.0
4,301.6
Total
$
19,857.2
$
20,094.2
$
18,992.8
In Millions
May 26, 2024
May 28, 2023
Cash and cash equivalents:
United States
$
87.8
$
204.2
Non-United States
330.2
381.3
Total
$
418.0
$
585.5
In Millions
May 26, 2024
May 28, 2023
Land, buildings, and equipment:
United States
$
3,155.3
$
2,920.5
Non-United States
708.6
715.7
Total
$
3,863.9
$
3,636.2
NOTE 18. SUPPLEMENTAL
INFORMATION
The components of certain Consolidated Balance Sheets accounts are as follows:
In Millions
May 26, 2024
May 28, 2023
Receivables:
Customers
$
1,721.2
$
1,710.1
Less allowance for doubtful accounts
(25.0)
(26.9)
Total
$
1,696.2
$
1,683.2
In Millions
May 26, 2024
May 28, 2023
Inventories:
Finished goods
$
1,827.7
$
2,066.9
Raw materials and packaging
500.5
572.2
Grain
111.1
133.8
Excess of FIFO over LIFO cost (a)
(541.1)
(600.9)
Total
$
1,898.2
$
2,172.0
(a)
Inventories of $
1,135.3
million as of May 26,
2024, and $
1,477.5
million as of May 28,
2023, were valued at LIFO.
During fiscal
2024,
LIFO
inventory
layers
were
reduced.
Results
of
operations
were
not
materially
affected
by
these
liquidations
of
LIFO
inventory.
The
difference
between
replacement
cost
and
the
stated
LIFO
inventory
value
is
not
materially
different
from
the
reserve for the LIFO valuation method.
In Millions
May 26, 2024
May 28, 2023
Prepaid expenses and other current assets:
Prepaid expenses
$
266.1
$
244.4
Other receivables
221.6
285.7
Derivative receivables
20.8
45.1
Grain contracts
7.9
2.3
Marketable investments
-
117.2
Miscellaneous
52.1
41.0
Total
$
568.5
$
735.7
In Millions
May 26, 2024
May 28, 2023
Land, buildings, and equipment:
Equipment
$
6,985.6
$
6,672.2
Buildings
2,640.2
2,569.3
Construction in progress
899.9
746.7
Capitalized software
506.8
514.8
Land
57.3
56.5
Equipment under finance lease
10.3
9.8
Buildings under finance lease
0.3
0.3
Total land, buildings,
and equipment
11,100.4
10,569.6
Less accumulated depreciation
(7,236.5)
(6,933.4)
Total
$
3,863.9
$
3,636.2
In Millions
May 26, 2024
May 28, 2023
Other assets:
Investments in and advances to joint ventures
$
397.9
$
462.0
Right of use operating lease assets
366.1
340.0
Deferred income taxes
167.5
-
Pension assets
89.1
51.8
Life insurance
15.1
15.8
Miscellaneous
258.8
290.7
Total
$
1,294.5
$
1,160.3
In Millions
May 26, 2024
May 28, 2023
Other current liabilities:
Accrued trade and consumer promotions
$
502.3
$
454.3
Accrued payroll
304.7
426.6
Current portion of operating lease liabilities
102.2
101.9
Accrued interest, including interest rate swaps
88.1
83.1
Accrued taxes
82.1
80.9
Dividends payable
20.9
23.1
Derivative payables
20.6
34.0
Restructuring and other exit costs reserve
14.8
47.7
Grain contracts
6.5
11.8
Miscellaneous
277.2
337.3
Total
$
1,419.4
$
1,600.7
In Millions
May 26, 2024
May 28, 2023
Other non-current liabilities:
Accrued compensation and benefits, including obligations for underfunded
other
postretirement benefit and postemployment benefit plans
$
708.6
$
509.6
Non-current portion of operating lease liabilities
282.8
257.0
Accrued taxes
186.8
245.1
Miscellaneous
105.3
128.3
Total
$
1,283.5
$
1,140.0
Certain Consolidated Statements of Earnings amounts are as follows:
Fiscal Year
In Millions
Depreciation and amortization
$
552.7
$
546.6
$
570.3
Research and development expense
257.8
257.6
243.1
Advertising and media expense (including production and
communication costs)
824.6
810.0
690.1
The components of interest, net are as follows:
Fiscal Year
In Millions
Interest expense
$
509.4
$
400.5
$
387.2
Capitalized interest
(11.4)
(4.4)
(3.8)
Interest income
(18.8)
(14.0)
(3.8)
Interest, net
$
479.2
$
382.1
$
379.6
Certain Consolidated Statements of Cash Flows amounts are as follows:
Fiscal Year
In Millions
Cash interest payments
$
464.4
$
337.1
$
357.8
Cash paid for income taxes
660.5
682.6
545.3
NOTE 19. QUARTERLY
DATA
(UNAUDITED)
Summarized quarterly data for fiscal 2024 and fiscal 2023 follows:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions, Except Per
Share Amounts
Net sales
$
4,904.7
$
4,717.6
$
5,139.4
$
5,220.7
$
5,099.2
$
5,125.9
$
4,713.9
$
5,030.0
Gross margin
1,770.5
1,447.7
1,765.9
1,705.1
1,707.4
1,664.8
1,688.3
1,728.2
Net earnings attributable to
General Mills
673.5
820.0
595.5
605.9
670.1
553.1
557.5
614.9
EPS:
Basic
$
1.15
$
1.37
$
1.03
$
1.01
$
1.18
$
0.94
$
0.98
$
1.04
Diluted
$
1.14
$
1.35
$
1.02
$
1.01
$
1.17
$
0.92
$
0.98
$
1.03
In
the
fourth
quarter
of
fiscal
2024,
we
recorded
$
103.1
million
of
non-cash
impairment
charges
related
to
our
Top
Chews
,
True
Chews
, and
EPIC
brand intangible
assets. We
also recorded
a $
53.2
million legal
recovery.
In addition,
we recorded
$
13.4
million of
transaction costs related to our acquisition of a pet food business in Europe
.
In the fourth
quarter fiscal 2023,
we approved restructuring
actions to enhance
the efficiency
of our global
supply chain structure
and
recorded $
36.2
million of
charges. We
also approved
restructuring actions
in our International
segment to
optimize our
Häagen-Dazs
shops network
and recorded
$
6.4
million of
charges.
In addition,
we recorded
a net
recovery of
$
11.8
million related
to a
voluntary
recall of certain international
Häagen-Dazs
ice cream products as a result of an insurance recovery.
Glossary
AOCI.
Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-year
comparability.
Adjusted
operating
profit
margin.
Operating
profit
adjusted
for
certain
items
affecting
year-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.
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 redeemable
and noncontrolling
interests and the related fair values of net assets acquired.
Gross margin.
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
hedges that allows changes in
a hedging instrument’s
fair value to offset
corresponding
changes in
the hedged
item in
the same
reporting period
.
Hedge accounting
is permitted
for certain
hedging instruments
and hedged
items
only
if
the
hedging
relationship
is
highly
effective,
and
only
prospectively
from
the
date
a
hedging
relationship
is
formally
documented.
Holistic Margin Management
(HMM).
Company-wide initiative to
use productivity savings, mix
management,
and price realization
to offset input cost inflation, protect margins
,
and generate funds to reinvest in sales-generating activities.
Interest
bearing
instruments.
Notes
payable,
long-term
debt,
including
current
portion,
cash
and
cash
equivalents,
and
certain
interest bearing investments classified within prepaid expenses and other current
assets and other assets.
Mark-to-market.
The act of determining a value for
financial instruments, commodity contracts, and
related assets or liabilities based
on the current market price for that item.
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
rd
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.
SOFR.
Secured Overnight Financing Rate.
Strategic
Revenue
Management
(SRM).
A
company-wide
capability
focused
on
generating
sustainable
benefits
from
net
price
realization
and
mix
by
identifying
and
executing
against
specific
opportunities
to
apply
tools
including
pricing,
sizing,
mix
management, and promotion optimization across each of our businesses.
Supply chain
input costs.
Costs incurred
to produce
and deliver
product,
including costs
for
ingredients
and
conversion, inventory
management, logistics, and warehousing.
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.
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
ITEM 9 - Changes in and Disagreements With
Accountants on Accounting and Financial Disclosure
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
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,
2024, our disclosure
controls and procedures
were effective
to ensure that information
required to be disclosed
by us in
reports
that
we
file
or
submit
under
the
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, 2024, 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
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, 2024. 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, 2024.
KPMG
LLP,
our
independent
registered
public
accounting
firm,
has
issued
a
report
on the
effectiveness
of
the Company’s
internal
control over financial reporting.
/s/ J. L. Harmening
/s/ K. A. Bruce
J. L. Harmening
K. A. Bruce
Chief Executive Officer
Chief Financial Officer
June 26, 2024
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
ITEM 9B - Other Information
During
the fiscal
quarter ended
May 26,
2024, no
director or
officer
of the
Company
adopted
or
terminated
a “Rule
10b5-1 trading
arrangement” or “
non-Rule
10b5-1
trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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 “Delinquent
Section 16(a)
Reports” contained
in our definitive
Proxy Statement
for our 2024
Annual Meeting
of Shareholders
is
incorporated herein
by reference. The
information regarding our
insider trading policy
set forth in
the section entitled
“Key Policies -
Supplemental Information”
contained in our
definitive Proxy Statement
for our 2024
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
2024 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
https://www.general
mills.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
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 2024 Annual
Meeting of Shareholders is incorporated herein by reference.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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
Annual
Meeting
of
Shareholders
is
incorporated
herein
by
reference.
Equity Compensation Plan Information
The following table provides certain information as of May 26, 2024,
with respect to our equity compensation plans:
Plan Category
Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (1)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and
Rights (2) (a)
Number of Securities Remaining
Available for
Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column (1)) (3)
Equity compensation plans
approved by
security holders
18,812,894
(b)
$
59.19
32,590,666
(d)
Equity compensation plans
not approved by
security holders
92,110
(c)
-
-
Total
18,905,004
$
59.19
32,590,666
(a)
Only includes the weighted-average exercise price of outstanding options,
whose weighted-average term is 5.05 years.
(b)
Includes 12,044,367 stock
options, 3,335,148 restricted
stock units, 1,323,984
performance share units
(assuming pay out
for
target performance), and 2,109,395 restricted stock units that
have vested and been deferred.
(c)
Includes 92,110
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
interest 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 2022 Stock
Compensation Plan, which has 32,590,666
shares available for
grant at May 26, 2024.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 2024 Annual Meeting of Shareholders is incorporated
herein by reference.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14 - Principal Accountant Fees and Services
The
information
contained
in
the
section
entitled
“Independent
Registered
Public
Accounting
Firm
Fees”
in
our
definitive
Proxy
Statement for our 2024 Annual Meeting of Shareholders is incorporated herein
by reference.
PART
IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15 - Exhibits and Financial Statement Schedules
1.
Financial Statements:
The following financial statements are included in Item 8 of this report:
Consolidated Statements of Earnings for the fiscal years ended May 26, 2024, May 28,
2023, and May 29, 2022.
Consolidated
Statements
of
Comprehensive
Income
for
the
fiscal
years
ended
May
26,
2024,
May
28,
2023,
and
May
29,
2022.
Consolidated Balance Sheets as of May 26, 2024 and May 28, 2023.
Consolidated Statements of Cash Flows for the fiscal years ended May 26, 2024,
May 28, 2023, and May 29, 2022.
Consolidated
Statements of
Total
Equity
and Redeemable
Interest for
the fiscal
years ended
May 26,
2024, May
28, 2023,
and May 29, 2022.
Notes to Consolidated Financial Statements.
Report of Management Responsibilities.
Report of Independent Registered Public Accounting Firm. PCAOB ID:
.
2.
Financial Statement Schedule:
For the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022:
II - Valuation
and Qualifying Accounts
3.
Exhibits
:
Exhibit No.
Description
3.1
Amended
and
Restated
Certificate
of
Incorporation
of
the
Company
(incorporated
herein
by
reference to Exhibit 3.1 to the Company’s
Current Report on Form 8-K filed October 1, 2021).
3.2
By-laws
of
the
Company
(incorporated
herein
by
reference
to
Exhibit
to
the
Company’s
Current Report on Form 8-K filed January 30, 2024).
4.1
Indenture,
dated
as
of
February
1,
1996,
between
the
Company
and
U.S.
Bank
National
Association
(f/k/a
First
Trust
of
Illinois,
National
Association)
(incorporated
herein
by
reference to
Exhibit 4.1
to the
Company’s
Registration Statement
on Form
S-3 filed
February
6, 1996 (File no. 333-00745)).
4.2
First Supplemental
Indenture, dated as
of May 18,
2009, between the
Company and U.S.
Bank
National
Association
(incorporated
herein
by
reference
to
Exhibit
4.2
to
Registrant’s
Annual
Report on Form 10-K for the fiscal year ended May 31, 2009).
4.3
Description of the Company’s registered
securities.
10.1
*
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
August 29, 2010).
10.2
*
2006 Compensation Plan for Non-Employee Directors (incorporated
herein by reference to
Exhibit 10.5 to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended
August 29, 2010).
10.3
*
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).
10.4
*
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).
10.5
*
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 27, 2016).
10.6
*
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).
10.7
*
Separation Pay
and Benefits
Program for
Officers (incorporated
herein by
reference to
Exhibit
10.1
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
23, 2020).
10.8
*
Supplemental Savings Plan (incorporated
herein by reference to Exhibit
10.4 to the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended February
28, 2021).
10.9
*
Supplemental
Retirement
Plan
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.1
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
28, 2021).
10.10
*
Supplemental
Retirement
Plan
(incorporated
herein
by
reference
to
Exhibit
10.3
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 2021).
10.11
*
Deferred
Compensation
Plan
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.14 to
the Company’s
Quarterly Report
on Form
10-Q for
the fiscal
quarter ended
February
22, 2009).
10.12
*
Deferred
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.5
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 2021).
10.13
*
Executive
Survivor
Income
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 29, 2005).
10.14
*
Supplemental
Benefits
Trust
Agreement,
amended
and
restated
as
of
September
26,
1988,
between the Company and
Norwest Bank Minnesota, N.A. (incorporated
herein by reference to
Exhibit
10.3
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
November 27, 2011).
10.15
*
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).
10.16
*
Form
of
Performance
Share
Unit
Award
Agreement
(incorporated
herein
by
reference
to
Exhibit
10.1
to
the
Company’s
Quarterly
Report
on
Form
10-Q
for
the
fiscal
quarter
ended
August 27, 2023).
10.17
*
Form
of
Stock
Option
Agreement
(incorporated
herein
by
reference
to
Exhibit
10.2
to
the
Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended August 27, 2023).
10.18
*
Form of
Restricted Stock
Unit Agreement
(incorporated herein
by reference
to Exhibit
10.3
to
the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended August 27, 2023).
10.19
*
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).
10.20
*
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).
10.21
*
Supplemental
Retirement
Plan
I
(Grandfathered)
(incorporated
herein
by
reference
to
Exhibit
10.2
to the
Company’s
Quarterly
Report
on
Form
10-Q
for the
fiscal
quarter
ended February
28, 2021).
10.22
*
Supplemental
Retirement
Plan
I
(incorporated
herein
by
reference
to
Exhibit
10.6
to
the
Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended
February 28, 2021).
10.23
*
Stock
Compensation
Plan
(incorporated
herein
by
reference
to
Exhibit
10.1
to
the
Company's Current Report on Form 8-K filed September 30, 2022).
10.24
Agreements,
dated
November
29,
1989,
by
and
between
the
Company
and
Nestle
S.A.
(incorporated
herein by
reference
to Exhibit
10.15 to
the Company’s
Annual Report
on Form
10-K for the fiscal year ended May 28, 2000).
10.25
Protocol
of
Cereal
Partners
Worldwide,
dated
November
21,
1989,
and
Addendum
No.
to
Protocol, dated
February 9,
1990, between
the Company
and Nestle
S.A. (incorporated
herein
by
reference
to
Exhibit
10.16
to
the
Company’s
Annual
Report
on
Form
10-K
for
the
fiscal
year ended May 27, 2001).
10.26
Addendum
No.
to
the
Protocol
of
Cereal
Partners
Worldwide,
dated
March
16,
1993,
between the Company and Nestle S.A. (incorporated herein by
reference to Exhibit 10.18 to the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 30, 2004).
10.27
Addendum No. 3 to the Protocol of Cereal Partners Worldwide,
effective as of March 15, 1993,
between the
Company and
Nestle S.A. (incorporated
herein by reference
to Exhibit 10.2
to the
Company’s Annual Report
on Form 10-K for the fiscal year ended May 28, 2000).
10.28
+
Addendum
No.
4,
effective
as
August
1,
1998,
and
Addendum
No.
5,
effective
as
April
1,
2000,
to
the
Protocol
of
Cereal
Partners
Worldwide
between
the
Company
and
Nestle
S.A.
(incorporated
herein by
reference
to Exhibit
10.26 to
the Company’s
Annual Report
on Form
10-K for the fiscal year ended May 31, 2009).
10.29
Addendum
No.
to
the
Protocol
of
Cereal
Partners
Worldwide,
effective
January
1,
2010,
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 February
28, 2010).
10.30
Five-Year
Credit Agreement, dated
as of April 12,
2021, as amended
April 3, 2023,
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
10.30
to the Company’s Annual
Report on Form 10-K for the fiscal year ended May 28, 2023).
19.1
Insider trading policies of the Company
21.1
Subsidiaries of the Company.
23.1
Consent of Independent Registered Public Accounting Firm.
31.1
Certification of
Chief Executive
Officer pursuant
to Section
302 of
the Sarbanes-Oxley
Act of
2002.
31.2
Certification of
Chief Financial
Officer
pursuant to
Section 302
of the
Sarbanes-Oxley
Act of
2002.
32.1
Certification of
Chief Executive
Officer pursuant
to Section
906 of
the Sarbanes-Oxley
Act of
2002.
32.2
Certification of
Chief Financial
Officer
pursuant to
Section 906
of the
Sarbanes-Oxley
Act of
2002.
97.1
Mandatory Executive Compensation Clawback Policy.
The following
materials from
the Company’s
Annual Report
on Form
10-K for
the fiscal
year
ended
May
26,
2024,
formatted
in
Inline
Extensible
Business
Reporting
Language:
(i)
the
Consolidated
Balance
Sheets;
(ii)
the
Consolidated
Statements
of
Earnings;
(iii)
the
Consolidated Statements
of Comprehensive
Income; (iv)
the Consolidated
Statements of
Total
Equity and Redeemable Interest; (v)
the Consolidated Statements of Cash
Flows; (vi) the Notes
to
Consolidated
Financial
Statements;
and
(vii)
Schedule
II
-
Valuation
of
Qualifying
Accounts.
Cover
Page,
formatted
in
Inline
Extensible
Business
Reporting
Language
and
contained
in
Exhibit 101.
_____________
*
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.