General Mills Inc.
09/18/2024 | Press release | Distributed by Public on 09/18/2024 13:36
Quarterly Report for Quarter Ending AUGUST 25, 2024 (Form 10-Q)
10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☑
QUARTERLYREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
FOR THE QUARTERLYPERIOD ENDED
AUGUST 25, 2024
☐
TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
FOR THE TRANSITION PERIOD FROMTO
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant's telephone number,including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, $.10 par value
GIS
New York Stock Exchange
0.125% Notes due 2025
GIS 25A
New York Stock Exchange
0.450% Notes due 2026
GIS 26
New York Stock Exchange
1.500% Notes due 2027
GIS 27
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
3.650% Notes due 2030
GIS 30A
New York Stock Exchange
3.850% Notes due 2034
GIS 34
New York Stock Exchange
________________
Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecurities
Exchange Act of 1934during the preceding 12months (or for such shorterperiod that the registrantwas required to file suchreports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
☐
IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmitted
pursuant to Rule 405of Regulation S-T (§232.405 of this chapter) duringthe preceding 12 months (orfor such shorter period thatthe
registrant was required to submit such files).
Yes
☑
No
☐
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmaller
reportingcompany,oranemerginggrowthcompany.Seethedefinitionsof"largeacceleratedfiler,""acceleratedfiler,""smaller
reporting company," and"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodfor
complying with any new or revised financial accounting standards providedpursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Exchange Act).
Yes
☐
No
☑
Number ofshares ofCommon Stockoutstandingas ofSeptember 11,2024:
555,158,898
(excluding
199,454,430
shares heldin the
treasury).
3
General Mills, Inc.
Table of Contents
Page
PART I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings for the quarters ended August 25, 2024 and August 27, 2023
4
Consolidated Statements of Comprehensive Income for the quarters ended August 25, 2024 and August 27,
2023
5
Consolidated Balance Sheets as of August 25, 2024 and May 26, 2024
6
Consolidated Statements of Total Equity for the quarters ended August 25, 2024 and August 27, 2023
7
Consolidated Statements of Cash Flows for the quarters ended August 25, 2024 and August 27, 2023
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3. Quantitative and Qualitative Disclosures About Market Risk
33
Item 4. Controls and Procedures
34
PART II - Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
34
Item 5. Other Information
34
Item 6. Exhibits
35
Signatures
36
4
PARTI.FINANCIAL INFORMATION
Item 1.Financial Statements.
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Net sales
$
4,848.1
$
4,904.7
Cost of sales
3,159.3
3,134.2
Selling, general, and administrative expenses
855.1
839.3
Restructuring, impairment, and other exit costs
2.2
1.2
Operating profit
831.5
930.0
Benefit plan non-service income
(13.9)
(17.0)
Interest, net
123.6
117.0
Earnings before income taxes and after-tax earningsfrom joint ventures
721.8
830.0
Income taxes
157.4
173.2
After-tax earnings from joint ventures
19.2
23.5
Net earnings, including earnings attributable to noncontrolling interests
583.6
680.3
Net earnings attributable to noncontrolling interests
3.7
6.8
Net earnings attributable to General Mills
$
579.9
$
673.5
Earnings per share - basic
$
1.03
$
1.15
Earnings per share - diluted
$
1.03
$
1.14
See accompanying notes to consolidated financial statements.
5
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Net earnings, including earnings attributable to
noncontrolling interests
$
583.6
$
680.3
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(61.9)
(18.1)
Other fair value changes:
Hedge derivatives
(6.0)
(2.3)
Reclassification to earnings:
Hedge derivatives
-
0.2
Amortization of losses and prior service costs
11.6
9.1
Other comprehensive loss, net of tax
(56.3)
(11.1)
Total comprehensiveincome
527.3
669.2
Comprehensive income attributable to noncontrolling
interests
4.2
6.9
Comprehensive income attributable to General Mills
$
523.1
$
662.3
See accompanying notes to consolidated financial statements.
6
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Aug. 25, 2024
May 26, 2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
468.1
$
418.0
Receivables
1,843.8
1,696.2
Inventories
1,996.4
1,898.2
Prepaid expenses and other current assets
505.3
568.5
Total currentassets
4,813.6
4,580.9
Land, buildings, and equipment
3,776.3
3,863.9
Goodwill
14,787.7
14,750.7
Other intangible assets
6,982.8
6,979.9
Other assets
1,408.8
1,294.5
Total assets
$
31,769.2
$
31,469.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,823.4
$
3,987.8
Current portion of long-term debt
1,640.0
1,614.1
Notes payable
249.1
11.8
Other current liabilities
1,576.9
1,419.4
Total currentliabilities
7,289.4
7,033.1
Long-term debt
11,431.3
11,304.2
Deferred income taxes
2,195.3
2,200.6
Other liabilities
1,326.6
1,283.5
Total liabilities
22,242.6
21,821.4
Stockholders' equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,164.6
1,227.0
Retained earnings
21,213.9
20,971.8
Common stock in treasury,at cost, shares of
198.8
and
195.5
(10,601.9)
(10,357.9)
Accumulated other comprehensive loss
(2,576.5)
(2,519.7)
Total stockholders'equity
9,275.6
9,396.7
Noncontrolling interests
251.0
251.8
Total equity
9,526.6
9,648.5
Total liabilities and equity
$
31,769.2
$
31,469.9
See accompanying notes to consolidated financial statements.
7
Consolidated Statements of TotalEquity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Shares
Amount
Shares
Amount
Total equity,beginning balance
$
9,648.5
$
10,700.0
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,227.0
1,222.4
Stock compensation plans
(5.2)
7.3
Unearned compensation related to stock unit awards
(77.1)
(79.4)
Earned compensation
19.9
35.4
Ending balance
1,164.6
1,185.7
Retained earnings:
Beginning balance
20,971.8
19,838.6
Net earnings attributable to General Mills
579.9
673.5
Cash dividends declared ($
0.60
and $
0.59
per share)
(337.8)
(348.5)
Ending balance
21,213.9
20,163.6
Common stock in treasury:
Beginning balance
(195.5)
(10,357.9)
(168.0)
(8,410.0)
Shares purchased, including excise tax of $
2.2
and
$
4.2
million
(4.5)
(302.2)
(6.4)
(504.7)
Stock compensation plans
1.2
58.2
1.0
40.4
Ending balance
(198.8)
(10,601.9)
(173.4)
(8,874.3)
Accumulated other comprehensive loss:
Beginning balance
(2,519.7)
(2,276.9)
Comprehensive loss
(56.8)
(11.2)
Ending balance
(2,576.5)
(2,288.1)
Noncontrolling interests:
Beginning balance
251.8
250.4
Comprehensive income
4.2
6.9
Distributions to noncontrolling interest holders
(5.0)
(4.3)
Ending balance
251.0
253.0
Total equity,ending balance
$
9,526.6
$
10,515.4
See accompanying notes to consolidated financial statements.
8
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
583.6
$
680.3
Adjustments to reconcile net earnings to net cash provided by operatingactivities:
Depreciation and amortization
139.6
137.2
After-tax earnings from joint ventures
(19.2)
(23.5)
Distributions of earnings from joint ventures
23.1
15.8
Stock-based compensation
20.3
35.3
Deferred income taxes
16.2
(14.5)
Pension and other postretirement benefit plan contributions
(7.5)
(7.4)
Pension and other postretirement benefit plan costs
(3.2)
(5.3)
Restructuring, impairment, and other exit costs
0.2
2.4
Changes in current assets and liabilities, excluding the effects of
acquisitions and divestitures
(107.6)
(457.4)
Other, net
(21.3)
15.2
Net cash provided by operating activities
624.2
378.1
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(140.3)
(141.7)
Acquisition, net of cash acquired
(7.7)
-
Proceeds from disposal of land, buildings, and equipment
0.6
-
Other, net
(0.6)
6.2
Net cash used by investing activities
(148.0)
(135.5)
Cash Flows - Financing Activities
Change in notes payable
238.0
551.8
Proceeds from common stock issued on exercised options
9.4
4.5
Purchases of common stock for treasury
(300.0)
(500.5)
Dividends paid
(337.8)
(348.5)
Distributions to noncontrolling interest holders
(5.0)
(4.3)
Other, net
(34.0)
(37.2)
Net cash used by financing activities
(429.4)
(334.2)
Effect of exchange rate changes on cash and cash equivalents
3.3
(3.0)
Increase (decrease) in cash and cash equivalents
50.1
(94.6)
Cash and cash equivalents - beginning of year
418.0
585.5
Cash and cash equivalents - end of period
$
468.1
$
490.9
Cash Flow from changes in current assets and liabilities, excluding the effectsof
acquisitions and divestitures:
Receivables
$
(145.6)
$
(104.4)
Inventories
(95.7)
(54.3)
Prepaid expenses and other current assets
59.7
140.9
Accounts payable
(76.4)
(443.8)
Other current liabilities
150.4
4.2
Changes in current assets and liabilities
$
(107.6)
$
(457.4)
See accompanying notes to consolidated financial statements.
9
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
(Unaudited)
(1) Background
The accompanyingConsolidated FinancialStatements ofGeneral Mills,Inc. (we,us, our,General Mills,or the Company)have been
prepared inaccordance withaccounting principlesgenerally acceptedin theUnited States(GAAP) forinterim financialinformation
and withthe rulesand regulationsfor reportingon Form10-Q. Accordingly,they donot includecertain informationand disclosures
requiredforcomprehensivefinancialstatements.Intheopinionofmanagement,alladjustmentsconsiderednecessaryforafair
presentation havebeen includedand areof anormal recurringnature, includingthe eliminationof allintercompany transactionsand
anynoncontrollinginterests'shareofthosetransactions.OperatingresultsforthefiscalquarterendedAugust25,2024,arenot
necessarily indicative of the results that may be expected for the fiscal year endingMay 25, 2025.
ThesestatementsshouldbereadinconjunctionwiththeConsolidatedFinancialStatementsandfootnotesincludedinourAnnual
Report on Form10-K for the fiscalyear ended May26, 2024. Theaccounting policies usedin preparing theseConsolidated Financial
Statements are the same as those described in Note 2 to the Consolidated FinancialStatements in that Form 10-K.
Certain terms used throughout this report are defined in the "Glossary" section below.
(2) Acquisition and Divestiture
During the fourth quarterof fiscal 2024, we acquireda pet food business in Europe,for a purchase price of $
434.1
million, net of cash
acquired.Duringthefirstquarteroffiscal2025,wepaid$
7.7
millionrelatedtoapurchasepriceholdbackaftercertainclosing
conditionsweremet.
We
financedthetransactionwithcashonhand.WeconsolidatedthebusinessintoourConsolidatedBalance
Sheetsandrecordedgoodwillof$
317.7
million,anindefinite-livedbrandintangibleassetof$
118.4
millionandafinite-lived
customerrelationshipassetof$
14.2
million.ThegoodwillisincludedintheInternationalsegmentandisnotdeductiblefortax
purposes. The pro forma effectsof this acquisition were notmaterial. Wehave conducted a preliminary assessmentof the fair value of
the acquiredassets andliabilities ofthe businessand weare continuingour reviewof theseitems duringthe measurementperiod. If
newinformationisobtainedaboutfactsandcircumstancesthatexistedattheacquisitiondate,theacquisitionaccountingwillbe
revisedtoreflecttheresultingadjustmentstocurrentestimatesofthoseitems.Theconsolidatedresultsarereportedinour
International operating segment on a one-month lag beginning in fiscal 2025.
OnSeptember12,2024,subsequenttotheendofthefirstquarteroffiscal2025,weenteredintodefinitiveagreementstosellour
NorthAmericanYogurtbusinessestoaffiliatesofGroupeLactalisS.A.(Lactalis)andSodiaalInternational(Sodiaal)for
approximately$
2.1
billion.Weexpecttoclosethesedivestituresincalendaryear2025,subjecttoregulatoryapprovalsandother
customary closing conditions.
(3) Restructuring, Impairment, and Other Exit Costs
Inthefirstquarteroffiscal2025,wedidnotundertakeanynewrestructuringactions.Werecorded$
2.9
millionofrestructuring
chargesinthefirstquarteroffiscal2025and$
9.8
millionofrestructuringchargesinthefirstquarteroffiscal2024relatedto
restructuring actions previously announced.We expect these actions tobe completed by the end of fiscal 2026.
Wepaid net $
2.7
million of cash inthe first quarterof fiscal 2025related to restructuringactions. Wepaid net $
7.4
million of cashin
the same period of fiscal 2024.
Restructuring and impairment charges and project-relatedcosts are recorded in our Consolidated Statements of Earnings as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Restructuring, impairment, and other exit costs
$
2.2
$
1.2
Cost of sales
0.7
8.6
Total restructuringcharges
$
2.9
$
9.8
Project-related costs classified in cost of sales
$
0.1
$
0.8
10
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
In Millions
Aug. 25, 2024
May 26, 2024
Goodwill
$
14,787.7
$
14,750.7
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,735.9
6,728.6
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
402.9
402.2
Less accumulated amortization
(156.0)
(150.9)
Intangible assets subject to amortization, net
246.9
251.3
Other intangible assets
6,982.8
6,979.9
Total
$
21,770.5
$
21,730.6
Based onthe carryingvalue offinite-lived intangibleassets asof August25, 2024,annual amortizationexpense foreach ofthe next
five fiscal years is estimated to be approximately $
20
million.
The changes in the carrying amount of goodwill during the first quarter of fiscal 2025were as follows:
In Millions
North
America
Retail
North
America
Pet
North
America
Foodservice
International
(a)
Corporate
and Joint
Ventures
Total
Balance as of May 26, 2024
$
6,541.9
$
6,062.8
$
805.5
$
917.1
$
423.4
$
14,750.7
Other activity, primarily
foreign currency translation
1.4
-
-
23.0
12.6
37.0
Balance as of Aug. 25, 2024
$
6,543.3
$
6,062.8
$
805.5
$
940.1
$
436.0
$
14,787.7
(a)
The carrying amounts of goodwill within the International segment as ofMay 26, 2024, and August 25, 2024, were net of
accumulated impairment losses of $
117.1
million.
The changes in the carrying amount of other intangible assets during the first quarterof fiscal 2025 were as follows:
In Millions
Total
Balance as of May 26, 2024
$
6,979.9
Foreign currency translation, net of amortization
2.9
Balance as of Aug. 25, 2024
$
6,982.8
Ourannualgoodwillandindefinite-livedintangibleassetsimpairmenttestwasperformedonthefirstdayofthesecondquarterof
fiscal 2024. As aresult of lower future profitabilityprojections for our LatinAmerica reporting unit, wedetermined that thefair value
of thereportingunit wasless thanits bookvalueandrecorded a$
117.1
million non-cashgoodwillimpairmentcharge.In addition,
during thefourth quarterof fiscal2024, weexecuted ourfiscal 2025planning processand preliminarylong-range planningprocess,
which resulted inlower future sales andprofitability projections forthe businesses supportingour
TopChews
,
True Chews
, and
EPIC
brand intangible assets.As a result ofthis triggering event,we performed aninterim impairment assessmentof these assetsas of May
26, 2024,and determinedthat thefair valueof thesebrand intangibleassets nolonger exceededthe carryingvalues ofthe respective
assets, resulting in $
103.1
million of non-cash impairment charges.We recordedimpairment charges in restructuring,impairment, and
other exitcosts inour ConsolidatedStatements ofEarnings. Ourestimates ofthe fairvalues weredetermined basedon adiscounted
cash flow modelusing inputs whichincluded our long-rangecash flow projectionsfor 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 intangibleasset fair valueswere substantiallyin excess ofthe carryingvalues, except forthe
Uncle Toby's
brand intangible
asset. Inaddition,while havingsignificantcoverage asof ourfiscal 2024assessment date,the
Progresso
,
Nudges
, and
TrueChews
brand intangible assets had risk of decreasing coverage. Wewill continue to monitor these businesses for potential impairment.
11
(5) Inventories
The components of inventories were as follows:
In Millions
Aug. 25, 2024
May 26, 2024
Finished goods
$
1,975.1
$
1,827.7
Raw materials and packaging
488.4
500.5
Grain
79.3
111.1
Excess of FIFO over LIFO cost
(546.4)
(541.1)
Total
$
1,996.4
$
1,898.2
(6) Risk Management Activities
Many commodities weuse in theproduction and distributionof our productsare exposed tomarket price risks.Weutilize derivatives
to manage price risk for our principalingredients and energy costs, includinggrains (oats, wheat, and corn), oils(principally soybean),
dairy products, naturalgas, and diesel fuel.Our primary objectivewhen entering intothese derivative contractsis to achievecertainty
withregardtothefuturepriceofcommoditiespurchasedforuseinoursupplychain.Wemanageourexposuresthrougha
combination of purchase orders, long-termcontracts with suppliers, exchange-tradedfutures and options, and over-the-counteroptions
and swaps.Weoffsetour exposuresbased oncurrent andprojected marketconditions andgenerally seekto acquirethe inputsat as
close as possible to or below our planned cost.
Weuse derivativesto manageour exposureto changesin commodityprices. Wedo notperform theassessments requiredto achieve
hedgeaccountingforcommodityderivativepositions.Accordingly,thechangesinthevaluesofthesederivativesarerecorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we donot meet thecriteria forcash flow hedgeaccounting, we believethat these instrumentsare effectivein achieving our
objective of providing certaintyin the future price of commodities purchasedfor use in our supply chain.Accordingly, forpurposes of
measuringsegmentoperatingperformance,thesegainsandlossesarereportedinunallocatedcorporateitemsoutsideofsegment
operating resultsuntil such timethat the exposurewe are managingaffects earnings.At that time,we reclassifythe gain orloss from
unallocatedcorporateitemstosegmentoperatingprofit,allowingouroperatingsegmentstorealizetheeconomiceffectsofthe
derivative without experiencing any resulting mark-to-market volatility,which remains in unallocated corporate items.
Unallocated corporate items for the quarters ended August 25, 2024, andAugust 27, 2023, included:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net (loss) gain on mark-to-market valuation of certain
commodity positions
$
(37.7)
$
28.4
Net loss on commodity positions reclassified from
unallocated corporate items to segment operating profit
17.2
3.2
Net mark-to-market revaluation of certain grain inventories
(8.3)
13.3
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
(28.8)
$
44.9
AsofAugust25,2024,thenetnotionalvalueofcommodityderivativeswas$
233.4
million,ofwhich$
118.6
millionrelatedto
agricultural inputs and $
114.8
million related to energy inputs. These contracts relate to inputsthat generally will be utilized within the
next
12
months.
Wealso havenet investmentsin foreignsubsidiaries thatare denominatedin euros.As ofAugust 25,2024, wehedged aportionof
these investments with €
3,979.4
million of euro-denominated bonds.
Thefairvaluesofthederivativepositionsusedinourriskmanagementactivitiesandotherassetsrecordedatfairvaluewerenot
material as ofAugust 25, 2024,and were Level1 or Level2 assets andliabilities in thefair valuehierarchy.Wedid not significantly
change our valuation techniques from prior periods.
12
Weoffercertainsuppliersaccesstothird-partyservicesthatallowthemtoviewourscheduledpaymentsonline.Thethird-party
services alsoallow suppliersto financeadvances onour scheduledpayments atthe solediscretion ofthe supplierand the thirdparty.
Wehave noeconomic interestin thesefinancing arrangementsand nodirect relationshipwith thesuppliers, thethird parties,or any
financial institutionsconcerning theseservices, includingnot providingany formof guaranteeand notpledging assetsas securityto
the thirdparties orfinancial institutions.All ofour accountspayable remainas obligationsto oursuppliers asstated inour supplier
agreements. Asof August25, 2024,$
1,421.6
million ofour totalaccounts payablewere payableto supplierswho utilizethese third-
party services.As ofMay 26,2024, $
1,404.4
million ofour totalaccounts payablewere payableto supplierswho utilizethese third-
party services.
(7) Debt
The components of notes payable were as follows:
Aug. 25, 2024
May 26, 2024
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
U.S. commercial paper
$
205.0
5.4
%
$
-
-
%
Financial institutions
44.1
7.7
11.8
8.8
Total
$
249.1
5.8
%
$
11.8
8.8
%
To ensure availabilityof funds, we maintain bank credit lines and have commercial paper programsavailable to us in the United States
and Europe.
The following table details the fee-paid committed and uncommitted creditlines we had available as of August 25, 2024:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committedand uncommitted credit facilities
$
3.4
$
-
Thecreditfacilitiescontaincovenants,includingarequirementtomaintainafixedchargecoverageratioofatleast
2.5
times.
We
were in compliance with all credit facility covenants as of August 25, 2024.
Long-TermDebt
The fair valuesand carryingamounts of long-termdebt, includingthe current portion,were $
12,653.5
million and $
13,071.3
million,
respectively,asofAugust25,2024.Thefairvalueoflong-termdebtwasestimatedusingmarketquotationsanddiscountedcash
flows basedon ourcurrent incrementalborrowing ratesfor similartypes ofinstruments. Long-term debtis aLevel 2liability inthe
fair value hierarchy.
In thefourth quarterof fiscal 2024,we issued €
500.0
million of
3.65
percent fixed-ratenotes due
October 23, 2030
. Weused thenet
proceeds for general corporate purposes.
Inthe fourthquarterof fiscal2024,we issued€
500.0
millionof
3.85
percentfixed-rate notesdue
April 23, 2034
.Weusedthe net
proceeds for general corporate purposes.
Inthethirdquarter offiscal2024,weissued$
500.0
millionof
4.7
percentfixed-ratenotes due
January 30, 2027
. Weusedthenet
proceeds to repay $
500.0
million of
3.65
percent fixed-rate notes due
February 15, 2024
.
In the secondquarter of fiscal 2024,we issued €
250.0
million of floating-ratenotes due
November 8, 2024
. Weused the net proceeds
to repay €
250.0
million of floating-rate notes due
November 10, 2023
.
In thesecond quarterof fiscal2024, weissued $
500.0
million of
5.5
percent fixed-ratenotes due
October 17, 2028
. Weused thenet
proceeds to repay $
400.0
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
In the firstquarter of fiscal2024, we issued€
500.0
million of floating-ratenotes due
November 8, 2024
. Weused the net proceedsto
repay €
500.0
million of floating-rate notes due
July 27, 2023
.
13
Certainofourlong-termdebtagreementscontainrestrictivecovenants.
As of August 25, 2024, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
Thethird-partyholderoftheGeneralMillsCereals,LLC(GMC)Class AInterestsreceivesquarterlypreferreddistributionsfrom
available netincome basedon the applicationof afloating preferredreturn rateto theholder's capitalaccount balanceestablished in
themostrecentmark-to-marketvaluation(currently$
251.5
million).OnJune1,2024,thefloatingpreferredreturnrateonGMC's
Class A Interests was reset to the sum of the
three-month Term SOFR
plus
261
basis points. The preferred return rate is adjustedevery
three years
through a negotiated agreement with the Class A Interest holder or through a remarketingauction.
Our noncontrolling interests contain restrictive covenants. As of August 25, 2024, we were in compliance with all of these covenants.
(9) Stockholders' Equity
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
579.9
$
3.7
$
673.5
$
6.8
Other comprehensive (loss) income:
Foreign currency translation
$
(93.9)
$
31.5
(62.4)
0.5
$
(22.0)
$
3.8
(18.2)
0.1
Other fair value changes:
Hedge derivatives
(7.5)
1.5
(6.0)
-
(2.7)
0.4
(2.3)
-
Reclassification to earnings:
Hedge derivatives (a)
(0.4)
0.4
-
-
(1.3)
1.5
0.2
-
Amortization of losses and
prior service costs (b)
14.5
(2.9)
11.6
-
11.5
(2.4)
9.1
-
Other comprehensive (loss) income
$
(87.3)
$
30.5
(56.8)
0.5
$
(14.5)
$
3.3
(11.2)
0.1
Total comprehensive income
$
523.1
$
4.2
$
662.3
$
6.9
(a)Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,were as follows:
In Millions
Aug. 25, 2024
May 26, 2024
Foreign currency translation adjustments
$
(857.7)
$
(795.3)
Unrealized (loss) gain from hedge derivatives
(5.8)
0.2
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,790.8)
(1,806.3)
Prior service credits
77.8
81.7
Accumulated other comprehensive loss
$
(2,576.5)
$
(2,519.7)
(10) Stock Plans
Wehave variousstock-based compensationprograms underwhich awards,including stockoptions, restrictedstock, restrictedstock
units, and performanceawards, may be grantedto employees and non-employeedirectors. These programsand related accountingare
described in Note12 to theConsolidated FinancialStatements includedin our AnnualReport on Form10-K for thefiscal year ended
May 26, 2024.
Compensation expense related to stock-based payments recognizedin the Consolidated Statements of Earnings was as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Compensation expense related to stock-based payments
$
20.3
$
35.3
14
Windfall tax benefits from stock-based paymentsin income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Windfall tax benefits from stock-based payments
$
2.8
$
8.4
AsofAugust25,2024,unrecognizedcompensationexpenserelatedtonon-vestedstockoptions,restrictedstockunits,and
performance share units was $
185.9
million. This expense will be recognized over
26
months, on average.
Net cash proceeds from the exercise of stock optionsless shares used for withholding taxes and the intrinsicvalue of options exercised
were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net cash proceeds
$
9.4
$
4.5
Intrinsic value of options exercised
$
1.9
$
2.1
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 method of selecting the other valuation assumptions
is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year
ended May 26, 2024.
TheestimatedfairvaluesofstockoptionsgrantedandtheassumptionsusedfortheBlack-Scholesoption-pricingmodelwereas
follows:
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Estimated fair values of stock options granted
$
13.20
$
17.47
Assumptions:
Risk-free interest rate
4.5
%
4.0
%
Expected term
8.5
years
8.5
years
Expected volatility
21.6
%
21.4
%
Dividend yield
3.8
%
2.8
%
The total grant date fair value of restricted stock unit awards that vested duringthe period was as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Total grant date fairvalue
$
90.8
$
104.8
15
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
Quarter Ended
In Millions, Except per Share Data
Aug. 25, 2024
Aug. 27, 2023
Net earnings attributable to General Mills
$
579.9
$
673.5
Average numberof common shares - basic EPS
560.5
586.3
Incremental share effect from: (a)
Stock options
1.5
2.8
Restricted stock units and performance share units
1.8
2.3
Average numberof common shares - diluted EPS
563.8
591.4
Earnings per share - basic
$
1.03
$
1.15
Earnings per share - diluted
$
1.03
$
1.14
(a)Incrementalsharesfromstockoptions,restrictedstockunits,andperformanceshareunitsarecomputedbythetreasurystock
method
. Stock options, restricted stockunits, and performance shareunits excluded from ourcomputation of diluted EPS because
they were not dilutive were as follows
:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Anti-dilutive stock options, restricted stock units, and
performance share units
4.4
1.6
(12) Share Repurchases
Share repurchases were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Shares of common stock
4.5
6.4
Aggregate purchase price
$
302.2
$
504.7
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net cash interest payments
$
83.7
$
83.9
Net income tax payments
$
18.7
$
13.7
16
(14) Retirement and Postemployment Benefits
Components of net periodic benefit expense (income) are as follows:
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Quarter Ended
Quarter Ended
Quarter Ended
In Millions
Aug. 25,
2024
Aug. 27,
2023
Aug. 25,
2024
Aug. 27,
2023
Aug. 25,
2024
Aug. 27,
2023
Service cost
$
13.0
$
14.2
$
1.1
$
1.2
$
1.8
$
1.8
Interest cost
76.7
74.2
5.3
5.3
1.0
1.0
Expected return on plan assets
(105.0)
(102.9)
(9.0)
(8.7)
-
-
Amortization of losses (gains)
25.1
21.5
(5.2)
(5.1)
0.1
-
Amortization of prior service costs (credits)
0.3
0.4
(5.5)
(5.4)
(0.3)
0.1
Other adjustments
-
-
-
-
2.6
2.6
Net expense (income)
$
10.1
$
7.4
$
(13.3)
$
(12.7)
$
5.2
$
5.5
(15) Income Taxes
During thesecond quarterof fiscal2024, wereceived anotice ofproposed adjustmentfrom theInternal RevenueService associated
with a capital lossfrom fiscal 2019.Webelieve that wehave meritorious defensesagainst this assessmentand will vigorouslydefend
ourposition. Wedonotexpecttheresolutionoftheproposedadjustmenttohaveamaterialimpactonourfinancialpositionor
liquidity.
InDecember2021,theOrganizationforEconomicCooperationandDevelopment(OECD)establishedaframework,referredtoas
Pillar2,designedtoensurelargemultinationalenterprisespayaminimum15percentleveloftaxontheincomearisingineach
jurisdictioninwhichtheyoperate.NumerouscountrieshavealreadyenactedtheOECDmodelruleseffectivefortaxableyears
beginningafterDecember31,2023,whichforusisfiscal2025.Therewasnomaterialimpactonourconsolidatedfinancial
statements.Severalothercountrieshaveenactedordraftedlegislationthatisnotyeteffectiveforus,andwedonotexpectthis
legislationtohaveamaterialimpactonourconsolidatedfinancialstatements.Wewillcontinueto monitorfornewlegislationand
guidance and evaluate potential impact on our consolidated financialstatements.
(16) Contingencies
Duringfiscal2020,wereceivednoticefromthetaxauthorities oftheState ofSãoPaulo,Brazilregardingourcompliancewithits
state sales tax requirements.As a result, wehave been assessed additionalstate sales taxes, interest,and penalties. Webelieve that we
have meritorious defenses against this claim and will vigorously defendour position. As of August 25, 2024, we are unable to estimate
any possible loss and have not recorded a loss contingency for this matter.
(17) Business Segment and Geographic Information
Weoperateinthepackagedfoodsindustry.Ouroperatingsegmentsareasfollows:NorthAmericaRetail,International,North
America Pet,and NorthAmerica Foodservice.In thefirst quarterof fiscal2025, werenamed thePet segmentto theNorth America
Pet segment to reflect thatpet food results outsideNorth America are recordedin the International segment.There were no changes to
thecompositionofourreportablesegmentsorinformationreviewedbyourchiefoperatingdecisionmakerandnoimpactonour
historical segment operating results.
Our North America Retailoperating segment reflects businesswith a wide variety ofgrocery stores, mass merchandisers, membership
stores,naturalfoodchains,drug,dollaranddiscountchains,conveniencestores,ande-commercegroceryproviders.Ourproduct
categoriesinthisbusinesssegmentincludeready-to-eatcereals,refrigeratedyogurt,soup,mealkits,refrigeratedandfrozendough
products,dessertandbakingmixes,frozenpizzaandpizzasnacks,snackbars,fruitsnacks,savorysnacks,andawidevarietyof
organic products including ready-to-eat cereal, frozenand shelf-stable vegetables, meal kits, fruit snacks, and snack bars.
OurInternationaloperatingsegmentconsistsofretailandfoodservicebusinessesoutsideoftheUnitedStatesandCanada.Our
product categories include super-premiumice cream and frozen desserts, meal kits, salty snacks,snack bars, dessert and baking mixes,
shelf-stablevegetables,andpetfoodproducts.Wealsosellsuper-premiumicecreamandfrozendessertsdirectlytoconsumers
through ownedretail shops. OurInternational segmentalso includes productsmanufactured inthe United Statesfor export, mainlyto
Caribbean and Latin American markets, as well as products wemanufacture for sale to our international joint ventures. Revenuesfrom
export activities are reported in the region or country where the end customeris located.
17
Our NorthAmerica Petoperating segmentincludes petfood productssold primarilyin theUnited Statesand Canadain nationalpet
superstorechains,e-commerceretailers,grocerystores,regionalpetstorechains,massmerchandisers,andveterinaryclinicsand
hospitals.Ourproductcategoriesincludedogandcatfood(dryfoods,wetfoods,andtreats)madewithwholemeats,fruits,
vegetables,and otherhigh-qualitynaturalingredients.Our tailoredpet productofferingsaddressspecific dietary,lifestyle,andlife-
stage needsand spandifferent producttypes, diettypes, breedsizes fordogs, life-stages,flavors, productfunctions,and texturesand
cuts for wet foods.
OurNorthAmericaFoodservicesegmentconsistsoffoodservicebusinessesintheUnitedStatesandCanada.Ourmajorproduct
categoriesinourNorthAmericaFoodserviceoperatingsegmentareready-to-eatcereals,snacks,refrigeratedyogurt,frozenmeals,
unbaked andfully bakedfrozen dough products,baking mixes,and bakeryflour.Many products wesell are brandedto the consumer
and nearlyall arebranded toour customers.Wesell todistributors andoperators inmany customerchannels includingfoodservice,
vending, and supermarket bakeries.
Operating profitfor thesesegments excludesunallocated corporateitems, gainor losson divestitures,and restructuring,impairment,
and otherexit costs.Results fromcertain businessesmanaged byour GoldMedal Venturesentity areincluded withincorporate and
other netsales andunallocated corporateitems withinoperatingprofit. Unallocatedcorporate itemsalso includecorporate overhead
expenses,variancestoplannedNorthAmericanemployeebenefitsandincentives,certaincharitablecontributions,restructuring
initiativeproject-relatedcosts,gainsandlossesoncorporateinvestments,andotheritemsthatarenotpartofourmeasurementof
segment operating performance.These include gains andlosses arising from therevaluation of certain graininventories and gainsand
lossesfrommark-to-marketvaluationofcertaincommoditypositionsuntilpassedbacktoouroperatingsegments.Theseitems
affectingoperatingprofitarecentrallymanagedatthecorporatelevelandareexcludedfromthemeasureofsegmentprofitability
reviewedby executivemanagement.Under oursupply chainorganization,our manufacturing,warehouse,and distributionactivities
aresubstantiallyintegratedacrossouroperationsinordertomaximizeefficiencyandproductivity.Asaresult,fixedassetsand
depreciation and amortization expenses are neither maintained nor availableby operating segment.
Our operating segment results were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net sales:
North America Retail
$
3,016.6
$
3,073.0
International
717.0
715.8
North America Pet
576.1
579.9
North America Foodservice
536.2
536.0
Total segment netsales
$
4,845.9
$
4,904.7
Corporate and other
2.2
-
Total net sales
$
4,848.1
$
4,904.7
Operating profit:
North America Retail
$
745.7
$
798.2
International
20.9
50.0
North America Pet
119.4
111.2
North America Foodservice
71.5
59.1
Total segment operatingprofit
$
957.5
$
1,018.5
Unallocated corporate items
123.8
87.3
Restructuring, impairment, and other exit costs
2.2
1.2
Operating profit
$
831.5
$
930.0
18
Net sales for our North America Retail operating units were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
U.S. Meals & Baking Solutions
$
946.3
$
941.9
U.S. Snacks
910.5
954.5
U.S. Morning Foods
902.9
927.8
Canada
256.9
248.8
Total
$
3,016.6
$
3,073.0
Net sales by class of similar products were as follows:
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Snacks
$
1,106.8
$
1,136.7
Cereal
793.1
817.9
Convenient meals
678.9
665.5
Pet
604.6
579.9
Dough
517.8
534.9
Baking mixes and ingredients
457.1
466.5
Yogurt
371.9
368.4
Super-premium ice cream
212.9
224.0
Other
105.0
110.9
Total
$
4,848.1
$
4,904.7
19
Item 2.Management's Discussion and Analysisof Financial Condition and Results of Operations.
INTRODUCTION
ThisManagement'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(MD&A)shouldbereadin
conjunctionwiththeMD&AincludedinourAnnualReportonForm10-KforthefiscalyearendedMay26,2024,forimportant
backgroundregarding,among otherthings, ourkey businessdrivers.Significanttrademarks andservice marksused inour business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the"Glossary" section below.
Ourkeyprioritiesinfiscal2025aretoaccelerateourorganicnetsalesgrowth,createfuelforinvestment,anddrivestrongcash
generation.Amidacontinueduncertainmacroeconomicbackdropforconsumers,weexpectvolumetrendsinourcategorieswill
gradually improveover thecourse ofthe year,though full-yearcategory dollargrowth is expectedto be belowour long-termgrowth
projections. Weexpect to increaseour organicnet sales growthby delivering remarkableexperiences acrossour leadingfood brands,
resultinginimprovedhouseholdpenetrationandstrongermarketsharetrendsversustheprioryear.Ourfiscal2025plancallsfor
productnewsandinnovationfocusedontaste,health,convenience,andvalue,supportedwithstrongbrandcampaignsand
omnichannel visibility.Weexpect togenerate higherlevels of HolisticMargin Management(HMM) cost savingsto morethan offset
inputcost inflationin fiscal2025. Weexpect toreinvest inthe business,including plansfor increasedbrand-buildinginvestmentin
fiscal 2025 to drive improved volume performance.
CONSOLIDATEDRESULTSOF OPERATIONS
First Quarter Results
In the first quarterof fiscal 2025, netsales and organicnet sales decreased 1percent compared to thesame period last year.Operating
profitdecreased11percentto$832million,primarilydrivenbyanunfavorablechangeinthemark-to-marketvaluationofcertain
commoditypositionsandgraininventories,unfavorablenetpricerealizationandmix,andanincreaseinselling,generaland
administrative(SG&A)expenses, partiallyoffsetby lowerinputcosts. Operatingprofit marginof 17.2percent decreased180basis
points.Adjustedoperating profitof $865milliondecreased 4percent ona constant-currencybasis, primarilydriven byunfavorable
netpricerealizationandmixandanincreaseinSG&Aexpenses,partiallyoffsetbylowerinputcosts.Adjustedoperatingprofit
margin decreased 50basis points to 17.8percent. Diluted earnings pershare of $1.03 decreased 10percent in the firstquarter of fiscal
2025.Adjusted dilutedearnings pershare of$1.07 decreased2 percenton aconstant-currency basiscompared tothe firstquarter of
fiscal 2024.See the "Non-GAAP Measures" section below for a description of our use of measures notdefined by GAAP.
A summary of our consolidated financial results for the first quarter offiscal 2025 follows:
Quarter Ended Aug. 25, 2024
In millions,
except per share
Quarter Ended
Aug. 25, 2024 vs.
Aug. 27, 2023
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
4,848.1
(1)
%
Operating profit
831.5
(11)
%
17.2
%
Net earnings attributable to General Mills
579.9
(14)
%
Diluted earnings per share
$
1.03
(10)
%
Organic net sales growth rate (a)
(1)
%
Adjusted operating profit (a)
865.3
(4)
%
17.8
%
(4)
%
Adjusted diluted earnings per share (a)
$
1.07
(2)
%
(2)
%
(a)See the "Non-GAAP Measures" section below for our use of measures not defined byGAAP.
Consolidated
net sales
were as follows:
Quarter Ended
Aug. 25, 2024
Aug. 25, 2024 vs.
Aug. 27, 2023
Aug. 27, 2023
Net sales (in millions)
$
4,848.1
(1)
%
$
4,904.7
Contributions from volume growth (a)
Flat
Net price realization and mix
(1)
pt
Foreign currency exchange
Flat
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
20
Net sales inthe first quarterof fiscal 2025decreased 1 percentcompared to thesame period infiscal 2024, drivenby unfavorable net
price realization and mix.
Components of organic net sales growth are shown in the followingtable:
Quarter Ended Aug. 25, 2024 vs.
Quarter Ended Aug. 27, 2023
Contributions from organic volume growth (a)
Flat
Organic net price realization and mix
(1)
pt
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Acquisition
Flat
Net sales growth
(1)
pt
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Organicnetsalesdecreased1percentinthefirstquarteroffiscal2025comparedtothesameperiodinfiscal2024,drivenby
unfavorable organic net price realization and mix.
Cost ofsales
increased $25million to$3,159 millionin thefirst quarterof fiscal2025 comparedto thesame periodin fiscal2024.
The increase included a$7 million increase attributableto volume and a $47million decrease attributable to productrate and mix. We
recorded a$29 million netincrease incost ofsales relatedto themark-to-market valuationof certaincommodity positionsand grain
inventoriesinthefirstquarteroffiscal2025,comparedtoa$45 millionnetdecreaseinthefirstquarteroffiscal2024.Wealso
recorded $1million ofrestructuring chargesin the firstquarter offiscal 2025compared to$9 millionof restructuringcharges and$1
million ofrestructuring initiativeproject-relatedcosts incost ofsales inthe firstquarter offiscal 2024(please referto Note3 tothe
Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A expenses
increased $16 millionto $855 million inthe first quarterof fiscal 2025,compared to thesame period infiscal 2024,
primarily drivenby increasedmedia andadvertising expenses.SG&A expensesas apercent ofnet salesin thefirst quarterof fiscal
2025 increased 50 basis points compared to the first quarter of fiscal 2024.
Restructuring, impairment,and other exitcosts
totaled $2 millionin the firstquarter of fiscal2025,compared to $1million in the
same period last year (please refer to Note 3 to the Consolidated FinancialStatements in Part I, Item 1 of this report).
Benefit plannon-service income
totaled $14 millionin thefirst quarterof fiscal2025, comparedto $17 millionin thesame period
last year, primarily reflecting higheramortization of losses.
Interest,net
forthefirstquarteroffiscal2025totaled$124 million,up$7 millionfromthefirstquarteroffiscal2024,primarily
driven by higher average long-term debt levels.
The
effective tax rate
for the first quarter of fiscal2025 was 21.8 percent comparedto 20.9 percent for the firstquarter of fiscal 2024.
The0.9percentagepointincreasewasprimarilyduetocertainnonrecurringdiscretetax benefitsinthefirstquarterof fiscal2024,
partiallyoffsetbyfavorableearningsmixbyjurisdictionin thefirstquarteroffiscal2025.Oureffectivetaxrateexcludingcertain
items affecting comparability was21.9 percent in the first quarterof fiscal 2025, compared to 21.1 percentin the same period last year
(see the"Non-GAAP Measures"section belowfor adescription ofour useof measuresnot definedby GAAP).The 0.8percentage
pointincreasewasprimarilyduetocertainnonrecurringdiscretetaxbenefitsinthefirstquarteroffiscal2024,partiallyoffsetby
favorable earnings mix by jurisdiction in the first quarter of fiscal 2025.
21
After-tax earningsfromjoint ventures
for thefirst quarterof fiscal2025
decreased to$19 million comparedto $24 millionin the
same period in fiscal 2024, primarilydue to favorable discrete tax itemsin the first quarter of fiscal 2024,higher SG&A expenses, and
adecreaseinvolumeatCerealPartnersWorldwide(CPW),partiallyoffsetbyfavorablenetpricerealizationandmix atCPWand
lowerSG&AexpensesatHäagen-DazsJapan,Inc.(HDJ).Onaconstant-currencybasis,after-taxearningsfromjointventures
decreased 14 percent (see the "Non-GAAP Measures" section below fora description of our use of measures not defined by GAAP).
The components of our joint ventures' net sales growth are shown in the followingtable:
Quarter Ended Aug. 25, 2024 vs.
Quarter Ended Aug. 27, 2023
CPW
HDJ
Total
Contributions from volume growth (a)
(2)
pts
1
pt
Net price realization and mix
3
pts
(1)
pt
Net sales growth in constant currency
1
pt
Flat
1
pt
Foreign currency exchange
(4)
pts
(8)
pts
(5)
pts
Net sales growth
(4)
pts
(8)
pts
(4)
pts
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Averagedilutedsharesoutstanding
decreasedby28millioninthefirstquarteroffiscal2025fromthesameperiodayearago
primarily due to share repurchases, partially offset by optionexercises.
SEGMENT OPERATINGRESULTS
Ourbusinessesareorganizedintofouroperatingsegments:NorthAmericaRetail,International,NorthAmericaPet,andNorth
America Foodservice. Please referto Note 17 of theConsolidated Financial Statements inPart I, Item 1 ofthis report for a description
of our operating segments.
North America Retail Segment Results
North America Retail net sales were as follows:
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
3,016.6
(2)
%
$
3,073.0
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
1
pt
Foreign currency exchange
Flat
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
NorthAmericaRetailnetsalesdecreased2percentinthefirstquarteroffiscal2025comparedtothesameperiodinfiscal2024,
driven by a decrease in contributions from volume growth, partially offsetby favorable net price realization and mix.
The components of North America Retail organic netsales growth are shown in the following table:
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
1
pt
Organic net sales growth
(2)
pts
Foreign currency exchange
Flat
Net sales growth
(2)
pts
Note: Table maynot foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
22
NorthAmericaRetail organicnet salesdecreased2 percentin thefirst quarterof fiscal2025compared tothe sameperiod infiscal
2024, driven by a decreasein contributions from organicvolume growth, partially offsetby favorable organic netprice realization and
mix.
North America Retail net sales percentage change by operating unit are shownin the following table:
Quarter Ended
Aug. 25, 2024
U.S. Snacks
(5)
%
U.S. Morning Foods
(3)
%
Canada (a)
3
%
U.S. Meals & Baking Solutions
Flat
Total
(2)
%
(a)On a constant-currencybasis, Canada netsales increased 6 percentin the first quarterof fiscal 2025 comparedto the same period
in fiscal 2024. See the "Non-GAAP Measures" section below for our use ofthis measure not defined by GAAP.
Segment operatingprofit decreased 7percent to $746 millionin the first quarterof fiscal 2025,compared to $798 millionin the same
period infiscal 2024,primarily drivenby higherinput costsand adecrease incontributions fromvolume growth,partially offsetby
favorable netprice realizationand mix.Segment operatingprofit decreased6 percenton a constant-currency basisin thefirst quarter
of fiscal 2025,compared to thesame period infiscal 2024 (seethe "Non-GAAPMeasures" section belowfor our useof this measure
not defined by GAAP).
International Segment Results
International net sales were as follows:
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
717.0
Flat
$
715.8
Contributions from volume growth (a)
8
pts
Net price realization and mix
(6)
pts
Foreign currency exchange
(2)
pts
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
International net sales in the first quarter of fiscal 2025 essentially matchedthe same period in fiscal 2024.
The components of International organic net sales growthare shown in the following table:
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
6
pts
Organic net price realization and mix
(7)
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
(2)
pts
Acquisition (b)
3
pts
Net sales growth
Flat
Note: Table maynot foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of a pet food business in Europe in fiscal 2024. Please see Note 2 tothe Consolidated Financial Statements in Part I,
Item 1 of this report.
Internationalorganicnetsalesdecreased1percentinthefirstquarteroffiscal2025,comparedtothesameperiodinfiscal2024,
drivenbyunfavorableorganicnetpricerealizationandmix,partiallyoffsetbyanincreaseincontributionsfromorganicvolume
growth.
23
Segment operatingprofit decreased58 percentto $21 millionin thefirst quarterof fiscal2025, comparedto $50 millionin thesame
periodinfiscal2024,primarilydrivenby unfavorablenet pricerealizationandmixand higherSG&Aexpenses,partiallyoffsetby
lower inputcosts and anincrease in contributionsfrom volume growth.Segment operatingprofit decreased 64percent on aconstant-
currency basisin the firstquarter offiscal 2025,compared tothe sameperiod infiscal 2024 (seethe "Non-GAAPMeasures" section
below for our use of this measure not defined by GAAP).
North America Pet Segment Results
North America Pet net sales were as follows:
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
576.1
(1)
%
$
579.9
Contributions from volume growth (a)
3
pts
Net price realization and mix
(3)
pts
Foreign currency exchange
Flat
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Petnet sales decreased1 percent inthe first quarterof fiscal 2025,compared to thesame period infiscal 2024, driven
by unfavorable net price realization and mix, partially offset byan increase in contributions from volume growth.
The components of North America Pet organic net sales growth areshown in the following table:
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
3
pts
Organic net price realization and mix
(3)
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Net sales growth
(1)
pt
Note: Table maynot foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
North America Pet organicnet sales decreased 1 percentin the first quarter of fiscal 2025, comparedto the same period in fiscal2024,
drivenbyunfavorableorganicnetpricerealizationandmix,partiallyoffsetbyanincreaseincontributionsfromorganicvolume
growth.
Segment operatingprofit increased 7percent to $119million in thefirst quarter offiscal 2025,compared to $111million in thesame
period infiscal 2024,primarily drivenby lowerinput costsand anincrease incontributions fromvolume growth,partially offsetby
unfavorablenetpricerealizationandmixandhigherSG&A expenses.Segmentoperatingprofitincreased7percentonaconstant-
currency basisin the firstquarter offiscal 2025,compared tothe sameperiod infiscal 2024 (seethe "Non-GAAPMeasures" section
below for our use of this measure not defined by GAAP).
24
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
536.2
Flat
$
536.0
Contributions from volume growth (a)
Flat
Net price realization and mix
Flat
Foreign currency exchange
Flat
Note: Table maynot foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Foodservice net sales in the first quarter of fiscal 2025 essentiallymatched the same period in fiscal 2024.
The components of North America Foodservice organicnet sales growth are shown in the following table:
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
Flat
Organic net price realization and mix
Flat
Organic net sales growth
Flat
Foreign currency exchange
Flat
Net sales growth
Flat
Note: Table maynot foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
North America Foodservice organic net sales in thefirst quarter of fiscal 2025 essentially matched the same period in fiscal 2024.
Segment operatingprofit increased21 percentto $72million inthe firstquarter offiscal 2025,compared to$59 million inthe same
periodinfiscal2024,primarilydrivenbylowerinputcosts.Segmentoperatingprofitincreased21percentonaconstant-currency
basis in the firstquarter of fiscal2025,compared to thesame period infiscal 2024 (seethe "Non-GAAP Measures"section below for
our use of this measure not defined by GAAP).
UNALLOCATEDCORPORATEITEMS
Unallocated corporateexpenses totaled $124million in thefirst quarterof fiscal 2025,compared to$87 million in thesame periodin
fiscal2024.Inthefirstquarteroffiscal2025,werecordeda$29 millionnetincreaseinexpenserelatedtothemark-to-market
valuation of certaincommodity positions andgrain inventories, comparedto a $45 millionnet decrease inexpense in thesame period
last year.Certain compensationand benefitsexpenses decreasedin thefirst quarterof fiscal2025compared tothe sameperiod last
year.Werecorded$1millionofrestructuringchargesincostofsales inthefirst quarteroffiscal2025,comparedto $9millionof
restructuringchargesincostofsalesinthesameperiodlastyear.Werecorded$3 millionofnetlossesrelatedtovaluation
adjustments on certain corporate investmentsin the first quarter of fiscal 2024.In addition, we recorded $2 millionof integration costs
in the first quarter of fiscal 2025 related to our acquisition of a pet food business inEurope in fiscal 2024.
LIQUIDITYAND CAPITALRESOURCES
During the first quarter offiscal 2025,cash provided by operations was $624 millioncompared to $378 million in the sameperiod last
year.The $246million increasewas primarilydriven bya $350millionchange incurrent assetsandliabilities, partiallyoffsetby a
$97 milliondecrease innet earnings.The $350million changein currentassets andliabilities isprimarilydriven bya $367million
change in the timing of accounts payable.
Cash used by investing activities during the first quarterof fiscal 2025 was $148 million compared to $136 millionfor the same period
infiscal2024.Duringthefirst quarteroffiscal2025,wepaid$8millionrelatedtoa purchasepriceholdbackafter certainclosing
conditionswere metfor theacquisition ofa petfood businessin Europein thefourthquarter offiscal 2024.In addition,during the
first quarterof fiscal2025, wespent $140million onpurchases ofland, buildings,and equipmentin thefirst quarterof fiscal2025,
compared to $142 million in the same period last year.
25
Cash used by financingactivities during the firstquarter of fiscal 2025was $429 million comparedto $334 million in the sameperiod
infiscal2024.Wehad$238millionofnetdebtissuancesinthefirstquarteroffiscal2025,comparedto$552millionof netdebt
issuances in the same perioda year ago. Wepaid $300 million for purchasesof common stock fortreasury in the first quarterof fiscal
2025,compared to $500 million in thesame period in fiscal 2024. Inaddition, we paid $338 million of dividendsin the first quarter of
fiscal 2025, compared to $348 million in the same period last year.
As of August25, 2024, we had$414 million of cashand cash equivalentsin foreign jurisdictions. Inanticipation of repatriatingfunds
from foreignjurisdictions, werecord localcountry withholdingtaxes onour internationalearnings, asapplicable. Wemay repatriate
ourcashandcashequivalentsheldbyourforeignsubsidiarieswithoutsuchfundsbeingsubjecttofurtherU.S.incometax
liability. Earningsprior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested inthose jurisdictions.
The following table details the fee-paid committed and uncommitted creditlines we had available as of August 25, 2024:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committedand uncommitted credit facilities
$
3.4
$
-
To ensure availabilityof funds, we maintain bank credit lines and have commercial paper programsavailable to us in the United States
and Europe.
Certainofourlong-termdebtagreements,ourcreditfacilities,andournoncontrollinginterestscontainrestrictivecovenants.Asof
August 25, 2024, we were in compliance with all of these covenants.
Wehave$1,640millionoflong-termdebtmaturinginthenext12monthsthatisclassifiedascurrent,including€750millionof
floating-rate notesdue November8, 2024,and $800million of4.0 percentfixed-rate notesdue April17, 2025.Webelieve thatcash
flows fromoperations, togetherwith availableshort-and long-termdebt financing,will be adequateto meetour liquidityand capital
needs for at least the next 12 months.
Thethird-partyholderoftheGeneralMillsCereals,LLC(GMC)Class AInterestsreceivesquarterlypreferreddistributionsfrom
available netincome basedon the applicationof afloating preferredreturn rateto theholder's capitalaccount balanceestablished in
the most recent mark-to-market valuation(currently $252 million). On June 1, 2024,the floating preferred return rate on GMC'sClass
A Interests was reset to thesum of the three-month TermSOFR plus 261 basis points.The preferred return rate is adjustedevery three
years through a negotiated agreement with the Class A Interest holderor through a remarketing auction.
Wehave an optionto purchase theClass A Interests forconsideration equal tothe then currentcapital account value,plus any unpaid
preferred returnand theprescribed make-wholeamount. Ifwe purchasethese interests,any changein thethird-party holder'scapital
accountfromitsoriginalvaluewillbechargeddirectlytoretainedearningsandwillincreaseordecreasethenetearningsusedto
calculate EPS in that period.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2to the Consolidated Financial Statements included inour Annual Report on
Form10-K forthe fiscalyear endedMay 26,2024. Theaccounting policiesused inpreparing ourinterim fiscal2025 Consolidated
Financial Statements are thesame as those describedin our Form 10-K.Please see Note 1 tothe Consolidated Financial Statementsin
Part I, Item 1 of this report for additional information.
Ourcriticalaccountingestimatesarethosethathavemeaningfulimpactonthereportingofourfinancialconditionandresultsof
operations.These estimatesincludeour accountingfor revenuerecognition,valuation oflong-livedassets, intangibleassets, income
taxes,anddefinedbenefitpension,otherpostretirementbenefit,andpostemploymentbenefitplans.Theassumptionsand
methodologiesusedinthedeterminationofthoseestimatesasofAugust25,2024,arethesameasthosedescribedinourAnnual
Report on Form 10-K for the fiscal year ended May 26, 2024.
Ourannualgoodwillandindefinite-livedintangibleassetsimpairmenttestwasperformedonthefirstdayofthesecondquarterof
fiscal 2024. As aresult of lower future profitabilityprojections for our LatinAmerica reporting unit, wedetermined that thefair value
ofthereportingunitwaslessthanitsbookvalueandrecordeda$117millionnon-cashgoodwillimpairmentcharge.Inaddition,
during thefourth quarterof fiscal2024, weexecuted ourfiscal 2025planning processand preliminarylong-range planningprocess,
which resulted inlower future sales andprofitability projections forthe businesses supportingour
TopChews
,
True Chews
, and
EPIC
brand intangible assets.As a result ofthis triggering event,we performed aninterim impairment assessmentof these assetsas of May
26
26, 2024,and determinedthat thefair valueof thesebrand intangibleassets nolonger exceededthe carryingvalues ofthe respective
assets, resultingin $103million ofnon-cash impairmentcharges. Werecorded impairmentcharges inrestructuring, impairment,and
other exitcosts inour ConsolidatedStatements ofEarnings. Ourestimates ofthe fairvalues weredetermined basedon adiscounted
cash flow modelusing inputs whichincluded our long-rangecash flow projectionsfor the businesses,royalty rates, weighted-average
cost of capital rates, and tax rates. The fair valuesare Level 3 assets in the fair value hierarchy.
All other intangibleasset fair valueswere substantiallyin excess ofthe carryingvalues, except forthe
Uncle Toby's
brand intangible
asset. Inaddition,while havingsignificantcoverage asof ourfiscal 2024assessment date,the
Progresso
,
Nudges
, and
TrueChews
brand intangible assets had risk of decreasing coverage. Wewill continue to monitor these businesses for potential impairment.
RECENTLYISSUED ACCOUNTING PRONOUNCEMENTS
In March 2024, the Securitiesand Exchange Commission (SEC)issued final rules on theenhancement and standardizationof climate-
related disclosures. The rules requiredisclosure of, among other things:material climate-related risks; activitiesto mitigate or adaptto
suchrisks;governanceandmanagementofsuchrisks;andmaterialgreenhousegas(GHG)emissionsfromoperationsownedor
controlled(Scope1)and/orindirectemissionsfrompurchasedenergyconsumedinoperations(Scope2).Additionally,therules
require disclosurein thenotes tothe financialstatements ofthe effectsof severeweather eventsand othernatural conditions,subject
tocertainmaterialitythresholds.TheSEChasissuedastayonthefinalrulesduetolitigationandtheeffectivedateisdelayed
indefinitely. Weare in the process of analyzing the impact of the rules on our disclosures.
In December 2023, theFinancial Accounting Standards Board(FASB) issuedAccounting Standards Update (ASU)2023-09 requiring
enhancedincometaxdisclosures.TheASUrequiresdisclosureofspecificcategoriesanddisaggregationofinformationintherate
reconciliation table. TheASU also requiresdisclosure of disaggregatedinformation related toincome taxes paid,income or lossfrom
continuingoperationsbeforeincometaxexpenseorbenefit,andincometaxexpenseorbenefitfromcontinuingoperations.The
requirementsoftheASUareeffectiveforannualperiodsbeginningafterDecember15,2024,whichforusisfiscal2026.Early
adoption is permittedand the amendmentsshould be appliedon a prospectivebasis. Retrospective applicationis permitted. Weare in
the process of analyzing the impact of the ASU on our related disclosures.
InNovember2023,theFASBissuedASU2023-07requiringenhancedsegmentdisclosures.TheASUrequiresdisclosureof
significantsegmentexpensesregularlyprovidedtothechiefoperatingdecisionmaker(CODM)includedwithinsegmentoperating
profitorloss.Additionally,theASUrequiresadescriptionofhowtheCODMutilizessegmentoperatingprofitorlosstoassess
segment performance.The requirementsof theASU are effectivefor annualperiods beginningafter December15, 2023,and interim
periods withinfiscal yearsbeginning afterDecember 15,2024. Forus, annualreporting requirementswill beeffective forour fiscal
2025 andinterim reportingrequirements willbe effectivebeginning withour firstquarter offiscal 2026.Early adoptionis permitted
and retrospectiveapplication isrequiredfor allperiods presented.Weare inthe processof analyzingthe impactof theASU onour
related disclosures.
27
NON-GAAP MEASURES
Wehaveincludedinthisreportmeasuresoffinancialperformancethatare notdefinedbyGAAP.Webelievethatthesemeasures
provide useful information to investors, and include these measures in othercommunications to investors.
For eachof thesenon-GAAP financialmeasures, weare providingbelow areconciliation ofthe differencesbetween thenon-GAAP
measure and the mostdirectly comparable GAAP measure,an explanation of whywe believe the non-GAAPmeasure provides useful
information toinvestors, andany additionalmaterial purposesfor whichour managementor Boardof Directorsuses thenon-GAAP
measure. These non-GAAP measures should be viewed in addition to, and notin lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Severalmeasuresbelowarepresentedonanadjustedbasis.Theadjustmentsareeitheritemsresultingfrominfrequentlyoccurring
events or items that, in management'sjudgment, significantly affect the year-to-yearassessment of operating results.
The following are descriptions of significant items impacting comparabilityof our results.
Mark-to-market effects
Netmark-to-marketvaluationofcertaincommoditypositionsrecognizedinunallocatedcorporateitems.PleaseseeNote6tothe
Consolidated Financial Statements in Part I, Item 1 of this report.
Restructuring charges and project-related costs
Restructuring charges andproject-related costs related to previouslyannounced restructuring actions recordedin fiscal 2025 and fiscal
2024. Please see Note 3 to the Consolidated Financial Statements in Part I, Item 1of this report.
Acquisition integration costs
IntegrationcostsrelatedtotheacquisitionofapetfoodbusinessinEuroperecordedinfiscal2025.Integrationcostsprimarily
resulting from the acquisition of TNT Crust recorded in fiscal 2024.Please see Note 2 to the Consolidated Financial Statements in Part
I, Item 1 of this report.
Investment activity, net
Valuationadjustments of certain corporate investments in fiscal 2025 and fiscal 2024.
Product recall
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
ice cream products.
Organic Net Sales Growth Rates
Weprovide organicnet salesgrowth ratesfor ourconsolidated netsales andsegment netsales. Thismeasure isused inreporting to
ourBoardofDirectorsandexecutivemanagementandasacomponentofthemeasurementofourperformanceforincentive
compensation purposes.Webelieve thatorganic netsales growthrates provideuseful informationto investorsbecause theyprovide
transparencytounderlyingperformanceinournetsalesbyexcludingtheeffectthatforeigncurrencyexchangeratefluctuations,
acquisitions, divestitures,and a 53
rd
week, when applicable,have on year-to-year comparability.A reconciliation ofthese measures to
reported netsales growthrates, therelevant GAAPmeasures, areincluded inour ConsolidatedResults ofOperations andResults of
Segment Operations discussions in the MD&A above.
28
Adjusted Operating Profit as a Percent of Net Sales (Adjusted OperatingProfit Margin)
We believethis measure provides useful informationto investors because it is importantfor assessing our operating profit marginon a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
831.5
17.2
%
$
930.0
19.0
%
Mark-to-market effects
28.8
0.6
%
(44.9)
(0.9)
%
Restructuring charges
2.9
0.1
%
9.8
0.2
%
Acquisition integration costs
1.6
-
%
0.2
-
%
Investment activity, net
0.4
-
%
2.9
0.1
%
Project-related costs
0.1
-
%
0.8
-
%
Product recall
-
-
%
0.2
-
%
Adjusted operating profit
$
865.3
17.8
%
$
899.0
18.3
%
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 Operating Profit and Related Constant-currency Growth Rate
This measure is used in reportingto our Board of Directors andexecutive management and as acomponent of the measurement ofour
performance forincentive compensation purposes.Webelieve thatthis measure providesuseful informationto investors becauseit is
theoperatingprofitmeasureweusetoevaluateoperatingprofitperformanceonacomparableyear-to-yearbasis.Additionally,the
measureisevaluatedonaconstant-currencybasisbyexcludingtheeffectthatforeigncurrencyexchangeratefluctuationshaveon
year-to-year comparability given the volatility in foreigncurrency exchange rates.
Our adjusted operating profit growth on a constant-currency basis is calculatedas follows:
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Change
Operating profit as reported
$
831.5
$
930.0
(11)
%
Mark-to-market effects
28.8
(44.9)
Restructuring charges
2.9
9.8
Acquisition integration costs
1.6
0.2
Investment activity, net
0.4
2.9
Project-related costs
0.1
0.8
Product recall
-
0.2
Adjusted operating profit
$
865.3
$
899.0
(4)
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
(4)
%
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.
29
Adjusted Diluted EPS and Related Constant-currency Growth Rate
This measureis used inreporting toour Board ofDirectors and executivemanagement. Webelieve thatthis measure providesuseful
information toinvestors because itis the profitabilitymeasure we useto evaluate earningsperformance ona comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted dilutedEPS and the related constant-currency growth rates follows:
Quarter Ended
Per Share Data
Aug. 25, 2024
Aug. 27, 2023
Change
Diluted earnings per share, as reported
$
1.03
$
1.14
(10)
%
Mark-to-market effects
0.04
(0.06)
Restructuring charges
-
0.01
Adjusted diluted earnings per share
$
1.07
$
1.09
(2)
%
Foreign currency exchange impact
Flat
Adjusted diluted earnings per share growth, on a constant-currencybasis
(2)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliationbelow of the effectiveincome tax rate asreported to the adjustedeffective income taxrate for the taximpact of
each item affecting comparability.
Constant-currency After-tax Earnings from Joint VenturesGrowth Rates
Webelieve thatthis measureprovides usefulinformation toinvestors becauseit providestransparency tounderlying performanceof
our jointventures byexcluding theeffectthat foreigncurrency exchangerate fluctuationshave onyear-to-yearcomparability given
volatility in foreign currency exchange markets.
After-tax earnings from joint ventures growth rates on a constant-currencybasis are calculated as follows:
Percentage Change in
After-TaxEarnings from Joint
Venturesas Reported
Impact of Foreign
Currency
Exchange
Percentage Change in After-Tax
Earnings from Joint Ventures
on Constant-Currency Basis
Quarter Ended Aug. 25, 2024
(18)
%
(4)
pts
(14)
%
Note: Table may not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currencyBasis
WebelievethatthismeasureofourCanadaoperatingunitnetsalesprovidesusefulinformationtoinvestorsbecauseitprovides
transparency tothe underlyingperformance forthe Canada operatingunit within ourNorth America Retailsegment byexcluding the
effectthatforeigncurrencyexchangeratefluctuationshaveonyear-to-yearcomparabilitygivenvolatilityinforeigncurrency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currencybasis are calculated as follows:
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Aug. 25, 2024
3
%
(3)
pts
6
%
Note: Table may not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
Webelieve thatthis measureprovides usefulinformation toinvestors becauseit providestransparency tounderlying performanceof
oursegmentsbyexcludingtheeffectthatforeigncurrencyexchangeratefluctuationshaveonyear-to-yearcomparabilitygiven
volatility in foreign currency exchange markets.
30
Our segments' operating profit growth rates on a constant-currencybasis are calculated as follows:
Quarter Ended Aug. 25, 2024
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
(7)
%
Flat
(6)
%
International
(58)
%
6
pts
(64)
%
North America Pet
7
%
Flat
7
%
North America Foodservice
21
%
Flat
21
%
Note: Table may not foot due to rounding.
Adjusted Effective Income TaxRates
Webelievethismeasureprovidesusefulinformationtoinvestorsbecauseitpresentstheadjustedeffectiveincometaxrateona
comparable year-to-year basis.
Adjusted effective income tax rates are calculated as follows:
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
721.8
$
157.4
$
830.0
$
173.2
Mark-to-market effects
28.8
6.6
(44.9)
(10.3)
Restructuring charges
2.9
0.7
9.8
4.7
Acquisition integration costs
1.6
0.4
0.2
0.1
Investment activity, net
0.4
0.1
2.9
1.0
Project-related costs
0.1
-
0.8
0.3
Product recall
-
-
0.2
0.1
As adjusted
$
755.6
$
165.3
$
799.1
$
169.0
Effective tax rate:
As reported
21.8%
20.9%
As adjusted
21.9%
21.1%
Sum of adjustments to income taxes
$
7.8
$
(4.3)
Average numberof common shares - diluted EPS
563.8
591.4
Impact of income tax adjustments on adjusted diluted EPS
$
(0.01)
$
0.01
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.
31
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-yearcomparability.
Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-yearcomparability.
Adjusted operating profitmargin.
Operating profit adjustedfor certain itemsaffecting year-over-yearcomparability,divided by net
sales.
Constant currency.
Financial resultstranslated toUnited Statesdollars usingconstant foreigncurrency exchangerates basedon the
ratesineffectforthecomparableprior-yearperiod.Topresentthisinformation,currentperiodresultsforentitiesreportingin
currencies otherthan UnitedStates dollarsare translatedinto UnitedStates dollarsat theaverage exchangerates ineffect duringthe
correspondingperiodofthepriorfiscalyear,ratherthantheactualaverageexchangeratesineffectduringthecurrentfiscalyear.
Therefore,theforeigncurrencyimpactisequaltocurrentyearresultsinlocalcurrenciesmultipliedbythechangeintheaverage
foreign currency exchange rate between the current fiscal period and the correspondingperiod of the prior fiscal year.
Core working capital.
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments suchas futures, swaps,options, and forwardcontracts that weuse to manageour risk arisingfrom
changes in commodity prices, interest rates, foreign exchange rates, and stockprices.
Euribor.
Euro Interbank Offered Rate.
Fair valuehierarchy.
For purposesof fairvalue measurement,we categorizeassets andliabilities intoone ofthree levelsbased on
the assumptions(inputs) usedin valuingthe asset orliability.Level 1 providesthe most reliablemeasure offair value, whileLevel 3
generally requires significant management judgment. The three levels aredefined as follows:
Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:Observable inputs other than quoted prices included inLevel 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'sassumptions about the inputs used in pricing the asset or liability.
Free cash flow.
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally AcceptedAccounting Principles(GAAP).
Guidelines, procedures,and practicesthat weare requiredto use inrecording
and reporting accounting information in our financial statements.
Goodwill.
The differencebetween the purchaseprice of acquiredcompanies plus the fairvalue of any noncontrollingand redeemable
interests and the related fair values of net assets acquired.
Gross margin.
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifyinghedges that allows changes ina hedging instrument'sfair value to offsetcorresponding
changes inthe hedgeditem inthe samereporting period.Hedge accountingis permittedfor certainhedging instrumentsand hedged
itemsonlyifthehedgingrelationshipishighlyeffective,andonlyprospectivelyfromthedateahedgingrelationshipisformally
documented.
Holistic Margin Management(HMM).
Company-wide initiative touse productivity savings, mixmanagement, and price realization
to offset input cost inflation, protect margins,and generate funds to reinvest in sales-generating activities.
Interestbearinginstruments.
Notespayable,long-termdebt,includingcurrentportion,cashandcashequivalents,andcertain
interest bearing investments classified within prepaid expenses and other currentassets and other assets.
Mark-to-market.
The act of determining a value forfinancial instruments, commodity contracts, andrelated assets or liabilities based
on the current market price for that item.
32
Netmark-to-marketvaluation ofcertaincommoditypositions.
Realizedandunrealizedgainsandlosses onderivativecontracts
that will be allocated to segment operating profit when the exposure we are hedgingaffects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other pricepromotion costs.
Net realizablevalue.
The estimatedselling pricein theordinary courseof business,less reasonablypredictable costsof completion,
disposal, and transportation.
Noncontrolling interests.
Interests of subsidiaries held by third parties.
Notionalamount.
Theamountofapositionoranagreeduponamountinaderivativecontractonwhichthevalueoffinancial
instruments are calculated.
OCI.
Other Comprehensive Income (Loss).
Organic net sales growth
. Net sales growth adjustedfor foreign currency translation,acquisitions, divestitures and a53
rd
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuringcharges.
Reporting unit
. An operating segment or a business one level below an operatingsegment.
SOFR.
Secured Overnight Financing Rate.
StrategicRevenueManagement(SRM).
Acompany-widecapabilityfocusedongeneratingsustainablebenefitsfromnetprice
realizationandmixbyidentifyingandexecutingagainstspecificopportunitiestoapplytoolsincludingpricing,sizing,mix
management, and promotion optimization across each of our businesses.
Supply chaininput costs.
Costs incurredto produceand deliverproduct,including costsforingredientsandconversion, inventory
management, logistics, and warehousing.
Translationadjustments.
The impactof the conversionof our foreignaffiliates' financialstatements to UnitedStates dollarsfor the
purpose of consolidating our financial statements.
Working capital
. Current assets and current liabilities, all as of the last day of our fiscal year.
33
CAUTIONARY STATEMENTRELEVANTTO FORWARD-LOOKING INFORMATIONFOR THE PURPOSE OF "SAFE
HARBOR" PROVISIONS OF THE PRIVATESECURITIES LITIGATIONREFORM ACT OF 1995
This reportcontains orincorporates byreferenceforward-lookingstatements withinthe meaningof thePrivate SecuritiesLitigation
Reform Actof 1995that arebased onour currentexpectations andassumptions. Wealso maymake writtenor oralforward-looking
statements,includingstatementscontainedinourfilingswiththeSecuritiesandExchangeCommissionandinourreportsto
stockholders.
The words orphrases "will likelyresult," "are expectedto," "will continue,""is anticipated," "estimate,""plan," "project," orsimilar
expressions identify"forward-looking statements"within themeaning ofthe PrivateSecurities LitigationReform Actof 1995.Such
statements aresubject tocertain risksand uncertaintiesthat couldcause actualresults todiffermaterially fromhistorical resultsand
those currently anticipated or projected. Wecaution you not to place undue reliance on any such forward-looking statements.
In connectionwith the "safeharbor" provisionsof the PrivateSecurities LitigationReform Act of1995, we areidentifying important
factorsthat couldaffectour financialperformanceand couldcause ouractual resultsin futureperiodsto differmateriallyfrom any
current opinions or statements.
Ourfutureresultscouldbeaffectedbyavarietyoffactors,suchas:disruptionsorinefficienciesinthesupplychain;competitive
dynamics in the consumer foodsindustry and the markets forour products, including new productintroductions, advertising activities,
pricing actions, and promotionalactivities of our competitors;economic conditions, includingchanges in inflation rates,interest rates,
taxrates,ortheavailabilityofcapital;productdevelopmentandinnovation;consumeracceptanceofnewproductsandproduct
improvements;consumerreactiontopricingactionsandchangesinpromotionlevels;acquisitionsordispositionsofbusinessesor
assets; changes in capital structure;changes in the legal and regulatoryenvironment, including tax legislation, labelingand advertising
regulations, and litigation; impairments in the carryingvalue of goodwill, other intangible assets, or other long-lived assets, or changes
in theuseful livesof otherintangible assets;changes inaccounting standardsand the impactof criticalaccounting estimates;product
qualityandsafetyissues,includingrecallsandproductliability;changesinconsumerdemandforourproducts;effectivenessof
advertising,marketing,andpromotionalprograms;changesinconsumerbehavior,trends,andpreferences,includingweightloss
trends; consumer perceptionof health-related issues,including obesity; consolidationin the retail environment;changes in purchasing
andinventorylevelsofsignificantcustomers;fluctuationsinthecostandavailabilityofsupplychainresources,includingraw
materials,packaging,energy,andtransportation;effectivenessofrestructuringandcostsavinginitiatives;volatilityinthemarket
value ofderivatives used tomanage pricerisk for certaincommodities; benefitplan expenses dueto changesin plan assetvalues and
discount rates used to determine plan liabilities; failure orbreach of our information technology systems; foreigneconomic conditions,
including currency rate fluctuations; and political unrest in foreign marketsand economic uncertainty due to terrorism or war.
Youshould alsoconsider the riskfactors that weidentify in Item1A of PartI of ourAnnual Report onForm 10-K forthe fiscal year
ended May 26, 2024, which could also affect our future results.
We undertakeno obligation to publicly revise any forward-lookingstatements to reflect events or circumstancesafter the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Theestimatedmaximumpotentialvalue-at-riskarisingfromaone-daylossinfairvalueforourinterestrate,foreignexchange,
commodity, and equitymarket-risk-sensitive instruments outstanding as of August 25, 2024,was as follows:
In Millions
One-day Risk
of Loss
Change During
Quarter Ended
Aug. 25, 2024
Analysis of Change
Interest rate instruments
$
53
$
-
Immaterial
Foreign currency instruments
34
4
Increase in exchange rate volatility
Commodity instruments
3
(1)
Decrease in commodity contracts
Equity instruments
2
-
Immaterial
For additional information, see Item 7A of Part II of our Annual Report on Form 10-Kfor the fiscal year ended May 26, 2024.
34
Item 4.Controls and Procedures.
We,under thesupervision andwith theparticipation ofour management,including ourChief ExecutiveOfficer andChief Financial
Officer,haveevaluatedtheeffectivenessofthe designandoperationofourdisclosurecontrolsandprocedures(asdefinedinRule
13a-15(e)undertheSecuritiesExchangeActof1934).Basedonourevaluation,ourChiefExecutiveOfficerandChiefFinancial
Officer haveconcluded that,as ofAugust 25,2024, ourdisclosure controlsand procedureswere effectiveto ensurethat information
required tobe disclosedby usin reportsthat we fileor submitunder theSecurities ExchangeAct of1934 is (1)recorded, processed,
summarized,andreportedwithinthetimeperiodsspecifiedinSecuritiesandExchangeCommissionrulesandforms,and(2)
accumulated andcommunicated toour management,including ourChief ExecutiveOfficer andChief FinancialOfficer,in amanner
that allows timely decisions regarding required disclosure.
There were no changes in our internalcontrol over financial reporting (as definedin Rule 13a-15(f) under the Securities ExchangeAct
of 1934)during thequarter endedAugust 25,2024, thatmaterially affected,or are reasonablylikely tomaterially affect,our internal
control over financial reporting.
PARTII.OTHER INFORMATION
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Thefollowingtablesets forthinformationwithrespecttosharesofourcommonstockthat wepurchasedduringthe quarterended
August 25, 2024:
Period
TotalNumber
of Shares
Purchased (a)
Average
Price Paid
Per Share
TotalNumber of Shares
Purchased as Part of a Publicly
Announced Program (b)
Maximum Number of Shares
that may yet be Purchased
Under the Program (b)
May 27, 2024 -
June 30, 2024
2,015,083
$
67.21
2,015,083
53,643,914
July 1, 2024 -
July 28, 2024
1,679,017
64.81
1,679,017
51,964,897
July 29, 2024 -
August 25, 2024
839,009
69.09
839,009
51,125,888
Total
4,533,109
$
66.67
4,533,109
51,125,888
(a)The total numberof shares purchasedincludes shares ofcommon stock withheldfor the paymentof withholding taxesupon the distributionof
deferred option units.
(b)On June27, 2022,our Boardof Directors approvedan authorizationfor therepurchase ofup to100,000,000 shares ofour common stockand
terminated theprior authorization.Purchases canbe madein theopen marketor inprivately negotiatedtransactions, includingthe useof call
optionsandotherderivativeinstruments,Rule10b5-1tradingplans,andacceleratedrepurchaseprograms.TheBoarddidnotspecifyan
expiration date for the authorization.
Item 5.Other Information.
Exceptassetforthbelow,duringthefiscalquarterendedAugust25,2024,nodirectororofficeroftheCompanyadoptedor
terminated
a "Rule 10b5-1trading arrangement" or"
non-Rule
10b5-1
trading arrangement," aseach term is definedin Item 408(a)of
Regulation S-K.
DuringthefiscalquarterendedAugust25,2024,
Jeffrey L. Harmening
,theCompany's
Chairman and Chief Executive Officer
,
adopted
a"Rule 10b5-1tradingarrangement."Thetrading plan,adoptedon
July 24, 2024
, relatestothe exerciseand saleof upto
57,879
sharesoftheCompany'scommonstockthataresubjecttoacompany-grantedstockoptionawardthatexpiresonJuly30,
2025. The plan is scheduled to terminate when all shares subject to the awardare exercised and sold or July 31, 2025.
35
PARTII. OTHER INFORMATION
Item 6.
Exhibits.
10.1
Form of Performance Share Unit Award Agreement
.
10.2
Form of Stock Option Agreement.
10.3
Form of Restricted Stock Unit Agreement.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
FinancialStatementsfromthe QuarterlyReporton Form10-Qof theCompanyforthe quarterendedAugust25,
2024,formattedinInlineExtensibleBusinessReportingLanguage:(i)ConsolidatedStatementsofEarnings;(ii)
ConsolidatedStatementsofComprehensiveIncome,(iii)ConsolidatedBalanceSheets;(iv)Consolidated
Statements ofTotalEquity; (v)Consolidated Statementsof CashFlows; and(vi) Notesto ConsolidatedFinancial
Statements.
104
Cover Page, formatted in Inline Extensible Business Reporting Languageand contained in Exhibit 101.
36
SIGNATURES
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonits
behalf by the undersigned thereunto duly authorized.
GENERAL MILLS, INC.
(Registrant)
Date: September 18, 2024
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief AccountingOfficer
(Principal Accounting Officer and Duly AuthorizedOfficer)