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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☑
QUARTERLY
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE QUARTERLY
PERIOD ENDED
NOVEMBER 26, 2023
☐
TRANSITION
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE TRANSITION PERIOD FROM
TO
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, $.10 par value
GIS
New York Stock Exchange
0.125% Notes due 2025
GIS 25A
New York Stock Exchange
0.450% Notes due 2026
GIS 26
New York Stock Exchange
1.500% Notes due 2027
GIS 27
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
________________
Indicate
by
check
mark
whether
the
registrant
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange Act of 1934
during the preceding 12
months (or for such shorter
period that the registrant
was required to file such
reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
☐
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
every
Interactive
Data
File
required
to
be
submitted
pursuant to Rule 405
of Regulation S-T (§
232.405 of this chapter) during
the preceding 12 months (or
for such shorter period that
the
registrant was required to submit such files).
Yes
☑
No
☐
Indicate by check mark
whether the registrant is a
large accelerated filer,
an accelerated filer,
a non-accelerated filer,
smaller reporting
company,
or
an
emerging
growth
company.
See
the
definitions
of
“large
accelerated
filer,”
“accelerated
filer,”
“smaller
reporting
company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☑
Number
of shares
of Common
Stock outstanding
as of
December 13,
2023:
567,890,100
(excluding
186,723,228
shares held
in the
treasury).
3
General Mills, Inc.
Table of Contents
Page
PART I – Financial Information
Item 1. Financial Statements
Consolidated Statements of Earnings for the quarters and six-month periods ended November 26, 2023 and
November 27, 2022
4
Consolidated Statements of Comprehensive Income for the quarters and six-month periods ended November
26, 2023 and November 27, 2022
5
Consolidated Balance Sheets as of November 26, 2023 and May 28, 2023
6
Consolidated Statements of Total Equity for the quarters and six-month periods ended November 26, 2023
and November 27, 2022
7
Consolidated Statements of Cash Flows for the six-month periods ended November 26, 2023 and November
27, 2022
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk
39
Item 4. Controls and Procedures
40
PART II – Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
40
Item 5. Other Information
40
Item 6. Exhibits
41
Signatures
42
4
PART
I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Net sales
$
5,139.4
$
5,220.7
$
10,044.1
$
9,938.3
Cost of sales
3,373.5
3,515.6
6,507.7
6,785.5
Selling, general, and administrative expenses
830.5
894.2
1,669.8
1,685.6
Divestitures gain, net
-
-
-
(430.9)
Restructuring, impairment, and other exit costs
123.6
11.1
124.8
12.7
Operating profit
811.8
799.8
1,741.8
1,885.4
Benefit plan non-service income
(20.1)
(21.7)
(37.1)
(43.4)
Interest, net
117.8
91.5
234.8
179.2
Earnings before income taxes and after-tax earnings
from
joint ventures
714.1
730.0
1,544.1
1,749.6
Income taxes
136.0
147.1
309.2
363.2
After-tax earnings from joint ventures
24.2
25.4
47.7
45.2
Net earnings, including earnings attributable to
noncontrolling interests
602.3
608.3
1,282.6
1,431.6
Net earnings attributable to noncontrolling interests
6.8
2.4
13.6
5.7
Net earnings attributable to General Mills
$
595.5
$
605.9
$
1,269.0
$
1,425.9
Earnings per share – basic
$
1.03
$
1.01
$
2.18
$
2.38
Earnings per share – diluted
$
1.02
$
1.01
$
2.16
$
2.36
See accompanying notes to consolidated financial statements.
5
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Net earnings, including earnings attributable to
noncontrolling interests
$
602.3
$
608.3
$
1,282.6
$
1,431.6
Other comprehensive loss, net of tax:
Foreign currency translation
(22.3)
(115.0)
(40.4)
(111.2)
Other fair value changes:
Hedge derivatives
1.9
20.8
(0.4)
(17.5)
Reclassification to earnings:
Foreign currency translation
-
-
-
(7.4)
Hedge derivatives
(2.4)
1.0
(2.2)
(0.4)
Amortization of losses and prior service costs
9.2
14.2
18.3
28.3
Other comprehensive loss, net of tax
(13.6)
(79.0)
(24.7)
(108.2)
Total comprehensive
income
588.7
529.3
1,257.9
1,323.4
Comprehensive income attributable to noncontrolling
interests
7.1
3.0
14.0
5.0
Comprehensive income attributable to General Mills
$
581.6
$
526.3
$
1,243.9
$
1,318.4
See accompanying notes to consolidated financial statements.
6
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Nov. 26, 2023
May 28, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
593.8
$
585.5
Receivables
1,758.8
1,683.2
Inventories
2,166.0
2,172.0
Prepaid expenses and other current assets
527.0
735.7
Total current
assets
5,045.6
5,176.4
Land, buildings, and equipment
3,598.9
3,636.2
Goodwill
14,441.8
14,511.2
Other intangible assets
6,963.3
6,967.6
Other assets
1,183.8
1,160.3
Total assets
$
31,233.4
$
31,451.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,824.4
$
4,194.2
Current portion of long-term debt
1,321.0
1,709.1
Notes payable
799.2
31.7
Other current liabilities
1,957.6
1,600.7
Total current
liabilities
7,902.2
7,535.7
Long-term debt
10,530.5
9,965.1
Deferred income taxes
2,026.6
2,110.9
Other liabilities
1,142.2
1,140.0
Total liabilities
21,601.5
20,751.7
Stockholders' equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,201.8
1,222.4
Retained earnings
20,080.9
19,838.6
Common stock in treasury,
at cost, shares of
185.7
and
168.0
(9,677.4)
(8,410.0)
Accumulated other comprehensive loss
(2,302.0)
(2,276.9)
Total stockholders'
equity
9,378.8
10,449.6
Noncontrolling interests
253.1
250.4
Total equity
9,631.9
10,700.0
Total liabilities and equity
$
31,233.4
$
31,451.7
See accompanying notes to consolidated financial statements.
7
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Nov. 26, 2023
Nov. 27, 2022
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
10,515.4
$
10,825.6
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,185.7
1,146.1
Stock compensation plans
(6.5)
(7.4)
Unearned compensation related to stock unit awards
(0.5)
(6.8)
Earned compensation
23.1
23.4
Ending balance
1,201.8
1,155.3
Retained earnings:
Beginning balance
20,163.6
19,027.6
Net earnings attributable to General Mills
595.5
605.9
Cash dividends declared ($
1.18
and $
1.08
per share)
(678.2)
(641.6)
Ending balance
20,080.9
18,991.9
Common stock in treasury:
Beginning balance
(173.4)
(8,874.3)
(160.3)
(7,676.0)
Shares purchased, including $
7.9
million of excise tax
(12.4)
(808.8)
(5.2)
(400.5)
Stock compensation plans
0.1
5.7
1.1
53.0
Ending balance
(185.7)
(9,677.4)
(164.4)
(8,023.5)
Accumulated other comprehensive loss:
Beginning balance
(2,288.1)
(1,998.4)
Other comprehensive loss
(13.9)
(79.6)
Ending balance
(2,302.0)
(2,078.0)
Noncontrolling interests:
Beginning balance
253.0
250.8
Comprehensive income
7.1
3.0
Distributions to noncontrolling interest holders
(7.7)
(2.9)
Change in ownership interest
0.7
-
Ending balance
253.1
250.9
Total equity,
ending balance
$
9,631.9
$
10,372.1
See accompanying notes to consolidated financial statements.
8
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
10,700.0
$
10,788.0
Common stock,
1
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,222.4
1,182.9
Stock compensation plans
0.8
1.9
Unearned compensation related to stock unit awards
(79.9)
(85.8)
Earned compensation
58.5
56.3
Ending balance
1,201.8
1,155.3
Retained earnings:
Beginning balance
19,838.6
18,532.6
Net earnings attributable to General Mills
1,269.0
1,425.9
Cash dividends declared ($
1.77
and $
1.62
per share)
(1,026.7)
(966.6)
Ending balance
20,080.9
18,991.9
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
Shares purchased, including $
12.1
million of excise tax
(18.8)
(1,313.5)
(12.1)
(901.3)
Stock compensation plans
1.1
46.1
3.4
155.9
Ending balance
(185.7)
(9,677.4)
(164.4)
(8,023.5)
Accumulated other comprehensive loss:
Beginning balance
(2,276.9)
(1,970.5)
Other comprehensive loss
(25.1)
(107.5)
Ending balance
(2,302.0)
(2,078.0)
Noncontrolling interests:
Beginning balance
250.4
245.6
Comprehensive income
14.0
5.0
Distributions to noncontrolling interest holders
(12.0)
(4.8)
Change in ownership interest
0.7
-
Divestiture
-
5.1
Ending balance
253.1
250.9
Total equity,
ending balance
$
9,631.9
$
10,372.1
See accompanying notes to consolidated financial statements.
9
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
1,282.6
$
1,431.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
265.8
273.9
After-tax earnings from joint ventures
(47.7)
(45.2)
Distributions of earnings from joint ventures
23.5
26.5
Stock-based compensation
58.5
57.6
Deferred income taxes
(58.7)
(48.1)
Pension and other postretirement benefit plan contributions
(12.5)
(12.7)
Pension and other postretirement benefit plan costs
(13.5)
(13.5)
Divestitures gain, net
-
(430.9)
Restructuring, impairment, and other exit costs
123.1
(13.7)
Changes in current assets and liabilities, excluding the effects of
acquisitions and divestitures
(166.1)
(64.4)
Other, net
40.8
39.6
Net cash provided by operating activities
1,495.8
1,200.7
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(293.9)
(226.7)
Acquisition, net of cash acquired
(25.5)
(251.5)
Proceeds from divestitures, net of cash divested
-
610.7
Investments in affiliates, net
(1.5)
(1.4)
Proceeds from disposal of land, buildings, and equipment
0.1
0.5
Other, net
4.6
(6.5)
Net cash (used) provided by investing activities
(316.2)
125.1
Cash Flows - Financing Activities
Change in notes payable
766.9
353.4
Issuance of long-term debt
500.0
500.0
Payment of long-term debt
(400.0)
(600.0)
Proceeds from common stock issued on exercised options
5.7
118.5
Purchases of common stock for treasury
(1,301.4)
(901.3)
Dividends paid
(691.0)
(647.9)
Distributions to noncontrolling interest holders
(12.0)
(4.8)
Other, net
(41.8)
(48.4)
Net cash used by financing activities
(1,173.6)
(1,230.5)
Effect of exchange rate changes on cash and cash equivalents
2.3
(20.6)
Increase in cash and cash equivalents
8.3
74.7
Cash and cash equivalents - beginning of year
585.5
569.4
Cash and cash equivalents - end of period
$
593.8
$
644.1
Cash Flow from changes in current assets and liabilities, excluding the effects
of
acquisitions and divestitures:
Receivables
$
(69.2)
$
(200.8)
Inventories
13.8
(278.5)
Prepaid expenses and other current assets
209.0
62.9
Accounts payable
(329.1)
112.5
Other current liabilities
9.4
239.5
Changes in current assets and liabilities
$
(166.1)
$
(64.4)
See accompanying notes to consolidated financial statements.
10
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
(1) Background
The accompanying
Consolidated Financial
Statements of
General Mills,
Inc. (we,
us, our,
General Mills,
or the Company)
have been
prepared in
accordance with
accounting principles
generally accepted
in the
United States
(GAAP) for
interim financial
information
and with
the rules
and regulations
for reporting
on Form
10-Q. Accordingly,
they do
not include
certain information
and disclosures
required
for
comprehensive
financial
statements.
In
the
opinion
of
management,
all
adjustments
considered
necessary
for
a
fair
presentation have
been included
and are
of a
normal recurring
nature, including
the elimination
of all
intercompany transactions
and
any
noncontrolling
interests’
share
of
those
transactions.
Operating
results
for
the
fiscal
quarter
ended
November
26,
2023,
are not
necessarily indicative of the results that may be expected for the fiscal year ending
May 26, 2024.
These
statements
should
be
read
in
conjunction
with
the
Consolidated
Financial
Statements
and
footnotes
included
in
our
Annual
Report on Form
10-K for the fiscal
year ended May
28, 2023. The
accounting policies used
in preparing these
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
Statements in that Form 10-K with the exception of
new requirements adopted in the first quarter of fiscal 2024.
In the first quarter
of fiscal 2024, we
adopted optional accounting guidance
to ease the burden
in accounting for reference
rate reform.
The new
standard provides
temporary expedients
and exceptions
to existing
accounting requirements
for contract
modifications
and
hedge accounting
related to transitioning
from discontinued
reference rates.
This resulted in
modifying contracts,
where necessary,
to
apply a new reference rate,
primarily SOFR. The adoption of
this accounting guidance did not
have a material impact on our results
of
operations or financial position.
In the
first quarter
of fiscal
2024, we adopted
new requirements
for enhanced
disclosures related
to supplier
financing programs.
The
new standard requires
disclosure of the
key terms of
the program and
a rollforward of
the related obligation
during the annual
period,
including
the
amount
of
obligations
confirmed
and
obligations
subsequently
paid.
We
have
historically
presented
the
key
terms
of
these programs
and the associated
obligation outstanding
(please see Note
6). The
rollforward requirement
is effective
in fiscal 2025.
The adoption did not have a material impact on our financial statements and related
disclosures.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisition and Divestiture
During
the first
quarter
of fiscal
2023,
we
acquired
TNT Crust,
a
manufacturer
of high-quality
frozen pizza
crusts
for
regional
and
national pizza
chains, foodservice
distributors, and
retail outlets,
for a
purchase price
of $
253.0
million. We
financed the
transaction
with U.S. commercial paper.
We consolidated
the TNT Crust business into
our Consolidated Balance Sheets
and recorded goodwill
of
$
156.7
million. The
goodwill is
included in
the North
America Foodservice
segment and
is not
deductible for
tax purposes.
The pro
forma effects of this acquisition were not material.
During the
first quarter
of fiscal
2023,
we completed
the sale
of our
Helper main
meals and
Suddenly
Salad side
dishes business
to
Eagle Family Foods Group for $
606.8
million and recorded a pre-tax gain of $
442.2
million.
(3) Restructuring, Impairment, and Other Exit Costs
Restructuring and impairment charges were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Goodwill impairment
$
117.1
$
-
$
117.1
$
-
Commercial strategy action
5.1
-
5.1
-
Charges associated with restructuring actions
previously announced
9.7
11.6
19.5
13.9
Total
$
131.9
$
11.6
$
141.7
$
13.9
In the second
quarter of fiscal
2024, we recorded
a $
117.1
million non-cash goodwill
impairment charge
related to our Latin
America
reporting unit.
Please see Note 4 for additional information.
11
In
the
second
quarter
of
fiscal
2024,
we
approved
a
restructuring
action
to
enhance
the
go-to-market
commercial
strategy
and
associated
organizational
structure
of
our
Pet
segment.
We
expect
to
incur
approximately
$
22
million
of
restructuring
charges
and
project-related expenses
related to
this action,
of which
approximately $
4
million will
be cash.
These charges
are expected
to consist
of
approximately
$
16
million
of
accelerated
depreciation
and
$
6
million
of
other
costs,
including
severance.
We
recognized
$
2.4
million of
accelerated depreciation
and $
2.7
million of other
costs, including
severance, in the
six-month period
ended November 26,
2023. We expect
this action to be completed by the end of fiscal 2026.
In
the
second
quarter
of
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
expect
to
incur
an
additional
$
11
million
of
restructuring
charges,
primarily
related
to
$
4
million
of
fixed
asset
impairments
recorded in the second quarter of fiscal 2024 and $
4
million of accelerated depreciation. We
expect to incur approximately $
36
million
of
restructuring
charges
and
project-related
costs,
of
which
approximately
$
18
million
will
be
cash.
These
charges
are
expected
to
consist of
approximately $
12
million of
severance and
$
24
million of
other costs,
primarily asset
write-offs. We
expect these
actions
to be completed by the end of fiscal 2025.
We recorded
$
9.7
million of restructuring charges in the second
quarter of fiscal 2024 and $
19.5
million of restructuring charges in the
six-month
period
ended
November
26,
2023,
related
to
restructuring
actions
previously
announced.
We
recorded
$
11.6
million
of
restructuring
charges
in
the
second
quarter
of
fiscal
2023
and
$
13.9
million
of
restructuring
charges
in
the
six-month
period
ended
November
27,
2022,
related
to
restructuring
actions
previously
announced.
We
expect
these
actions
to
be
completed
by
the
end
of
fiscal 2025.
We
paid
net
$
18.6
million
of cash
in
the
six-month
period ended
November
26,
2023,
related
to
restructuring
actions.
We
paid
net
$
27.6
million of cash in the same period of fiscal 2023.
Restructuring and impairment charges and project-related
costs are recorded in our Consolidated Statements of Earnings as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Restructuring, impairment, and other exit costs
$
123.6
$
11.1
$
124.8
$
12.7
Cost of sales
8.3
0.5
16.9
1.2
Total restructuring
and impairment charges
$
131.9
$
11.6
$
141.7
$
13.9
Project-related costs classified in cost of sales
$
0.3
$
-
$
1.1
$
-
The roll forward of our restructuring and other exit cost reserves, included
in other current liabilities, is as follows:
In Millions
Total
Reserve balance as of May 28, 2023
$
47.7
Fiscal 2024 charges, including foreign currency translation
1.7
Utilized in fiscal 2024
(16.3)
Reserve balance as of Nov. 26, 2023
$
33.1
The reserve balance primarily consists of expected severance payments
associated with restructuring actions.
The charges
recognized in
the roll forward
of our reserves
for restructuring
and other exit
costs do not
include items
charged
directly
to expense
(e.g., asset
impairment charges,
accelerated depreciation,
the gain
or loss
on the
sale of
restructured assets,
and the
write-
off
of
spare parts)
and other
periodic
exit costs
are
recognized
as incurred,
as those
items are
not reflected
in our
restructuring
and
other exit cost reserves on our Consolidated Balance Sheets.
12
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
In Millions
Nov. 26, 2023
May 28, 2023
Goodwill
$
14,441.8
$
14,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,717.2
6,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
387.0
386.3
Less accumulated amortization
(140.9)
(131.1)
Intangible assets subject to amortization, net
246.1
255.2
Other intangible assets
6,963.3
6,967.6
Total
$
21,405.1
$
21,478.8
Based
on
the carrying
value
of
finite-lived
intangible
assets as
of
November
26,
2023,
annual
amortization
expense
for
each of
the
next five fiscal years is estimated to be approximately $
20
million.
The changes in the carrying amount of goodwill during the six-month period
ended November 26, 2023, were as follows:
In Millions
North America
Retail
Pet
North America
Foodservice
International
Corporate and
Joint Ventures
Total
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
Acquisition
-
-
-
-
26.9
26.9
Impairment charge
-
-
-
(117.1)
-
(117.1)
Other activity, primarily
foreign currency translation
(0.2)
-
(0.1)
13.3
7.8
20.8
Balance as of Nov. 26, 2023
$
6,542.2
$
6,062.8
$
805.5
$
604.6
$
426.7
$
14,441.8
The changes in the carrying amount of other intangible assets during the six-month
period ended November 26, 2023, were as follows:
In Millions
Total
Balance as of May 28, 2023
$
6,967.6
Amortization, net of foreign currency translation
(4.3)
Balance as of Nov. 26, 2023
$
6,963.3
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2024. As a
result of lower future profitability
projections for our Latin
America reporting unit, we
determined that the fair
value
of the reporting unit was
less than its book value and
recorded a $
117.1
million non-cash goodwill impairment
charge in restructuring,
impairment,
and
other
exit
costs
in
our
Consolidated
Statements
of
Earnings.
Our
estimates
of
fair
value
for
goodwill
impairment
testing were determined based on a discounted cash flow model and
the fair value is a Level 3 asset in the fair value hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
True Chews
and
Uncle Toby’s
brand intangible
assets. In
addition, while
having significant
coverage as
of our
fiscal 2024
assessment date,
the
Progresso
,
Nudges
,
Top
Chews
,
and
EPIC
brand
intangible
assets
had
risk
of
decreasing
coverage.
We
will
continue
to
monitor
these
businesses
for
potential impairment.
13
(5) Inventories
The components of inventories were as follows:
In Millions
Nov. 26, 2023
May 28, 2023
Finished goods
$
2,053.1
$
2,066.9
Raw materials and packaging
528.0
572.2
Grain
138.5
133.8
Excess of FIFO over LIFO cost
(553.6)
(600.9)
Total
$
2,166.0
$
2,172.0
(6) Risk Management Activities
Many commodities we
use in the
production and distribution
of our products
are exposed to
market price risks.
We
utilize derivatives
to manage price risk for our principal
ingredients and energy costs, including
grains (oats, wheat, and corn), oils
(principally soybean),
dairy products, natural
gas, and diesel fuel.
Our primary objective
when entering into
these derivative contracts
is to achieve
certainty
with
regard
to
the
future
price
of
commodities
purchased
for
use
in
our
supply
chain.
We
manage
our
exposures
through
a
combination of purchase orders, long-term
contracts with suppliers, exchange-traded
futures and options, and over-the-counter
options
and swaps.
We
offset
our exposures
based on
current and
projected market
conditions and
generally seek
to acquire
the inputs
at as
close as possible to or below our planned cost.
We
use derivatives
to manage
our exposure
to changes
in commodity
prices. We
do not
perform the
assessments required
to achieve
hedge
accounting
for
commodity
derivative
positions.
Accordingly,
the
changes
in
the
values
of
these
derivatives
are
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
not meet the
criteria for
cash flow hedge
accounting, we believe
that these instruments
are effective
in achieving our
objective of providing certainty
in the future price of commodities purchased
for use in our supply chain.
Accordingly, for
purposes of
measuring
segment
operating
performance,
these
gains
and
losses
are
reported
in
unallocated
corporate
items
outside
of
segment
operating results
until such time
that the exposure
we are managing
affects earnings.
At that time,
we reclassify
the gain or
loss from
unallocated
corporate
items
to
segment
operating
profit,
allowing
our
operating
segments
to
realize
the
economic
effects
of
the
derivative without experiencing any resulting mark-to-market volatility,
which remains in unallocated corporate items.
Unallocated corporate items for the quarters and six-month periods ended
November 26, 2023, and November 27, 2022, included:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Net loss on mark-to-market valuation of certain
commodity positions
$
(38.2)
$
(20.9)
$
(9.8)
$
(93.2)
Net loss (gain) on commodity positions reclassified from
unallocated corporate items to segment operating profit
14.6
(20.5)
17.8
(63.5)
Net mark-to-market revaluation of certain grain inventories
(1.5)
16.3
11.8
(43.1)
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
(25.1)
$
(25.1)
$
19.8
$
(199.8)
As of
November
26,
2023,
the net
notional
value
of
commodity
derivatives
was
$
420.8
million,
of
which
$
162.5
million
related
to
energy inputs and $
258.3
million related to agricultural inputs. These contracts relate to inputs that generally
will be utilized within the
next
12
months.
We also
have net investments in foreign
subsidiaries that are denominated
in euros. As of November 26,
2023, we hedged a portion
of
these investments with €
2,960.0
million of euro-denominated bonds.
The
fair
values
of
the
derivative
positions
used
in
our
risk
management
activities
and
other
assets
recorded
at
fair
value
were
not
material
as
of
November
26,
2023,
and
were
Level
1
or
Level
2
assets
and
liabilities
in
the
fair
value
hierarchy.
We
did
not
significantly change our valuation techniques from prior periods.
14
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
November
26,
2023,
$
1,388.2
million
of
our
total
accounts
payable
were
payable
to
suppliers
who
utilize
these
third-party services.
As of
May 28,
2023, $
1,430.1
million of
our total
accounts payable
were payable
to suppliers
who utilize
these
third-party services.
(7) Debt
The components of notes payable were as follows:
In Millions
Nov. 26, 2023
May 28, 2023
U.S. commercial paper
$
730.7
$
-
Financial institutions
68.5
31.7
Total
$
799.2
$
31.7
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
The following table details the fee-paid committed and uncommitted credit
lines we had available as of November 26, 2023:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
0.1
Total committed
and uncommitted credit facilities
$
3.3
$
0.1
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 November 26, 2023.
Long-Term
Debt
The fair values
and carrying
amounts of long-term
debt, including
the current portion,
were $
10,920.3
million and $
11,851.5
million,
respectively,
as of
November 26,
2023. The
fair value
of long-term
debt was
estimated using
market quotations
and discounted
cash
flows based
on our
current incremental
borrowing rates
for similar
types of
instruments. Long
-term debt
is a
Level 2
liability in
the
fair value hierarchy.
In the 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.
15
In the
second quarter
of fiscal
2023, we
issued €
250.0
million of
floating-rate notes
due
May 16, 2023
. We
used the
net proceeds
to
repay €
250.0
million of
0.0
percent fixed-rate notes due
November 11, 2022
.
In the
second quarter
of fiscal
2023,
we repaid
$
500.0
million of
2.6
percent fixed-rate
notes due
October 12, 2022
, using
proceeds
from the issuance of commercial paper.
Certain of our
long-term debt agreements
contain restrictive
covenants.
As of November 26, 2023, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most recent
mark-to-market valuation
(currently $
251.5
million). The
floating preferred return
rate on GMC’s
Class A Interests is
the
sum
of
the
three-month Term SOFR
plus
186
basis
points.
The
preferred
return
rate
is
adjusted
every
three years
through
a
negotiated agreement with the Class A Interest holder or through
a remarketing auction.
Our noncontrolling interests contain restrictive covenants. As of November 26, 2023, 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
Nov. 26, 2023
Nov. 27, 2022
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
$
595.5
$
6.8
$
605.9
$
2.4
Other comprehensive (loss) income:
Foreign currency translation
$
(32.4)
$
9.8
(22.6)
0.3
$
(144.7)
$
29.1
(115.6)
0.6
Other fair value changes:
Hedge derivatives
2.5
(0.6)
1.9
-
26.8
(6.0)
20.8
-
Reclassification to earnings:
Hedge derivatives (a)
(3.4)
1.0
(2.4)
-
1.8
(0.8)
1.0
-
Amortization of losses and
prior service costs (b)
11.5
(2.3)
9.2
-
18.3
(4.1)
14.2
-
Other comprehensive (loss) income
$
(21.8)
$
7.9
(13.9)
0.3
$
(97.8)
$
18.2
(79.6)
0.6
Total comprehensive income
$
581.6
$
7.1
$
526.3
$
3.0
(a)
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Six-Month Period Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
1,269.0
$
13.6
$
1,425.9
$
5.7
Other comprehensive (loss) income:
Foreign currency translation
$
(54.4)
$
13.6
(40.8)
0.4
$
(86.7)
$
(23.8)
(110.5)
(0.7)
Other fair value changes:
Hedge derivatives
(0.2)
(0.2)
(0.4)
-
(23.0)
5.5
(17.5)
-
Reclassification to earnings:
Foreign currency translation (a)
-
-
-
-
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(4.7)
2.5
(2.2)
-
(0.1)
(0.3)
(0.4)
-
Amortization of losses and
prior service costs (c)
23.0
(4.7)
18.3
-
36.5
(8.2)
28.3
-
Other comprehensive (loss) income
$
(36.3)
$
11.2
(25.1)
0.4
$
(80.7)
$
(26.8)
(107.5)
(0.7)
Total comprehensive income
$
1,243.9
$
14.0
$
1,318.4
$
5.0
(a)
Gain reclassified from AOCI into earnings is reported in the divestitures gain, net
(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.
16
Accumulated other comprehensive loss balances, net of tax effects,
were as follows:
In Millions
Nov. 26, 2023
May 28, 2023
Foreign currency translation adjustments
$
(749.4)
$
(708.6)
Unrealized gain from hedge derivatives
3.3
5.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,642.8)
(1,670.6)
Prior service credits
86.9
96.4
Accumulated other comprehensive loss
$
(2,302.0)
$
(2,276.9)
(10) Stock Plans
We
have various
stock-based compensation
programs under
which awards,
including stock
options, restricted
stock, restricted
stock
units, and performance
awards, may be granted
to employees and non-employee
directors. These programs
and related accounting
are
described in Note
12 to the
Consolidated Financial
Statements included
in our Annual
Report on Form
10-K for the
fiscal year ended
May 28, 2023.
Compensation expense related to stock-based payments recognized
in the Consolidated Statements of Earnings was as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Compensation expense related to stock-based payments
$
23.1
$
24.1
$
58.5
$
57.6
Windfall tax benefits from stock-based payments
in income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Windfall tax benefits from stock-based payments
$
0.5
$
5.6
$
8.9
$
18.4
As
of
November
26,
2023,
unrecognized
compensation
expense
related
to
non-vested
stock
options,
restricted
stock
units,
and
performance share units was $
149.8
million. This expense will be recognized over
23
months, on average.
Net cash proceeds from the exercise of stock options
less shares used for withholding taxes and the intrinsic
value of options exercised
were as follows:
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Net cash proceeds
$
5.7
$
118.5
Intrinsic value of options exercised
$
2.3
$
55.7
We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-
pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and
dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,
excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We
also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially
those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting
the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 28, 2023.
17
The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Estimated fair values of stock options granted
$
17.47
$
14.16
Assumptions:
Risk-free interest rate
4.0
%
3.3
%
Expected term
8.5
years
8.5
years
Expected volatility
21.4
%
20.9
%
Dividend yield
2.8
%
3.1
%
The total grant date fair value of restricted stock unit awards that vested during
the period was as follows:
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Total grant date fair
value
$
87.4
$
102.6
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
Quarter Ended
Six-Month Period Ended
In Millions, Except per Share Data
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Net earnings attributable to General Mills
$
595.5
$
605.9
$
1,269.0
$
1,425.9
Average number
of common shares - basic EPS
580.1
595.9
583.2
598.0
Incremental share effect from: (a)
Stock options
1.4
3.7
2.1
3.6
Restricted stock units and performance share units
1.9
2.4
2.1
2.4
Average number
of common shares - diluted EPS
583.4
602.0
587.4
604.0
Earnings per share – basic
$
1.03
$
1.01
$
2.18
$
2.38
Earnings per share – diluted
$
1.02
$
1.01
$
2.16
$
2.36
(a)
Incremental
shares
from
stock
options,
restricted
stock
units,
and
performance
share
units
are
computed
by
the
treasury
stock
method.
Stock
options,
restricted
stock
units,
and
performance
share units
excluded
from
our
computation
of
diluted
EPS
because
they
were not dilutive were as follows
:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Anti-dilutive stock options, restricted stock units, and
performance share units
4.5
1.0
2.4
1.0
(12) Share Repurchases
Share repurchases were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Shares of common stock
12.4
5.2
18.8
12.1
Aggregate purchase price
$
808.8
$
400.5
$
1,313.5
$
901.3
18
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Net cash interest payments
$
212.2
$
154.3
Net income tax payments
$
207.0
$
365.4
(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
Nov. 26,
2023
Nov. 27,
2022
Nov. 26,
2023
Nov. 27,
2022
Nov. 26,
2023
Nov. 27,
2022
Service cost
$
14.4
$
17.5
$
1.2
$
1.2
$
1.9
$
2.1
Interest cost
74.1
64.6
5.4
4.5
1.0
0.8
Expected return on plan assets
(106.0)
(105.0)
(8.7)
(7.8)
-
-
Amortization of losses (gains)
21.5
28.4
(5.1)
(4.8)
(0.1)
-
Amortization of prior service costs (credits)
0.5
0.3
(5.5)
(5.7)
0.2
0.1
Other adjustments
-
-
-
-
2.6
2.9
Curtailment gain
(3.4)
-
-
-
-
-
Net expense (income)
$
1.1
$
5.8
$
(12.7)
$
(12.6)
$
5.6
$
5.9
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Six-Month
Period Ended
Six-Month
Period Ended
Six-Month
Period Ended
In Millions
Nov. 26,
2023
Nov. 27,
2022
Nov. 26,
2023
Nov. 27,
2022
Nov. 26,
2023
Nov. 27,
2022
Service cost
$
28.6
$
35.1
$
2.4
$
2.6
$
3.7
$
4.2
Interest cost
148.3
129.2
10.7
9.0
2.0
1.6
Expected return on plan assets
(208.9)
(210.0)
(17.4)
(15.6)
-
-
Amortization of losses (gains)
43.0
56.7
(10.2)
(9.7)
(0.1)
0.1
Amortization of prior service costs (credits)
0.9
0.7
(10.9)
(11.5)
0.3
0.2
Other adjustments
-
-
-
-
5.2
5.9
Curtailment gain
(3.4)
-
-
-
-
-
Net expense (income)
$
8.5
$
11.7
$
(25.4)
$
(25.2)
$
11.1
$
12.0
(15) Income Taxes
During the second quarter of fiscal 2024, we received a notice of proposed adjustment
from the Internal Revenue Service associated
with a capital loss from fiscal 2019. We
believe that we have meritorious defenses against this assessment and will vigorously
defend
our position. We
do not expect the resolution of the proposed adjustment to have a material impact
on our financial position or
liquidity.
During
the
first
quarter
of
fiscal
2023,
the
Inflation
Reduction
Act
(IRA)
was
signed
into
law.
The
IRA
introduces
a
Corporate
Alternative Minimum Tax
beginning in our fiscal 2024
and an excise tax on the
repurchase of corporate
stock starting after January
1,
2023.
The
IRA
does
not
have
a
material
impact
on
our
financial
results,
including
our
annual
estimated
effective
tax
rates
and
liquidity.
19
(16) Contingencies
During
fiscal
2020,
we
received
notice
from
the
tax
authorities of
the
State of
São
Paulo,
Brazil
regarding
our
compliance
with
its
state sales tax requirements.
As a result, we
have been assessed additional
state sales taxes, interest,
and penalties. We
believe that we
have
meritorious
defenses
against
this
claim
and
will
vigorously
defend
our
position.
As
of
November
26,
2023,
we
are
unable
to
estimate any possible loss and have not recorded a loss contingency for
this matter.
(17) Business Segment and Geographic Information
We
operate
in
the
packaged
foods
industry.
Our
operating
segments
are
as
follows:
North
America
Retail,
International,
Pet,
and
North America Foodservice.
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.
Unallocated
corporate
items
include
corporate
overhead
expenses,
variances
to
planned
North
American
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative
project-related
costs,
gains
and
losses
on
corporate investments,
and other
items that
are not
part of
our measurement
of segment
operating performance.
These include
gains
and
losses
arising
from
the
revaluation
of
certain
grain
inventories
and
gains
and
losses
from
mark-to-market
valuation
of
certain
commodity positions
until passed back
to our operating
segments. These items
affecting operating
profit are centrally
managed at
the
corporate
level
and
are
excluded
from
the
measure
of
segment
profitability
reviewed
by
executive
management.
Under
our
supply
chain organization, our manufacturing,
warehouse, and distribution activities are substantially integrated
across our operations in order
to maximize
efficiency
and productivity.
As a
result, fixed
assets and
depreciation and
amortization expenses
are neither
maintained
nor available by operating segment.
20
Our operating segment results were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Net sales:
North America Retail
$
3,305.0
$
3,373.1
$
6,378.0
$
6,361.9
International
683.1
671.7
1,398.9
1,324.2
Pet
569.3
592.9
1,149.2
1,172.8
North America Foodservice
582.0
583.0
1,118.0
1,079.4
Total
$
5,139.4
$
5,220.7
$
10,044.1
$
9,938.3
Operating profit:
North America Retail
$
859.9
$
837.1
$
1,658.1
$
1,614.9
International
34.6
17.8
84.6
52.6
Pet
102.5
86.6
213.7
209.7
North America Foodservice
95.5
81.5
154.6
135.1
Total segment operating
profit
$
1,092.5
$
1,023.0
$
2,111.0
$
2,012.3
Unallocated corporate items
157.1
212.1
244.4
545.1
Divestitures gain, net
-
-
-
(430.9)
Restructuring, impairment, and other exit costs
123.6
11.1
124.8
12.7
Operating profit
$
811.8
$
799.8
$
1,741.8
$
1,885.4
Net sales for our North America Retail operating units were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
U.S. Meals & Baking Solutions
$
1,343.3
$
1,321.7
$
2,285.2
$
2,270.9
U.S. Snacks
836.3
892.9
1,790.8
1,780.1
U.S. Morning Foods
856.9
908.5
1,784.7
1,812.5
Canada
268.5
250.0
517.3
498.4
Total
$
3,305.0
$
3,373.1
$
6,378.0
$
6,361.9
Net sales by class of similar products were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
Snacks
$
1,037.3
$
1,102.8
$
2,174.0
$
2,171.2
Cereal
776.9
810.9
1,594.8
1,625.6
Convenient meals
785.1
786.4
1,450.6
1,465.6
Dough
775.1
745.6
1,310.0
1,210.4
Pet
572.3
593.7
1,152.2
1,174.5
Baking mixes and ingredients
562.3
563.7
1,028.8
1,037.2
Yogurt
364.9
357.5
733.3
703.5
Super-premium ice cream
168.3
164.9
392.3
348.4
Other
97.2
95.2
208.1
201.9
Total
$
5,139.4
$
5,220.7
$
10,044.1
$
9,938.3
21
Item 2.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
INTRODUCTION
This
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
(MD&A)
should
be
read
in
conjunction
with
the
MD&A
included
in
our
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
May
28,
2023,
for
important
background
regarding,
among other
things, our
key business
drivers.
Significant
trademarks and
service marks
used in
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
“Glossary” section below.
We
expect the largest
factors impacting our performance
in fiscal 2024
will be the economic
health of consumers, the
moderating rate
of
input
cost
inflation,
and
the
increasing
stability
of
the
supply
chain
environment.
We
anticipate
input
cost
inflation
of
approximately
5
percent
in
fiscal
2024
and
expect
to
generate
higher
levels
of
Holistic
Margin
Management
(HMM)
cost
savings
compared to fiscal 2023.
CONSOLIDATED
RESULTS
OF OPERATIONS
Second Quarter Results
In
the
second
quarter
of
fiscal
2024,
net
sales
and
organic
net
sales
decreased
2
percent
compared
to
the
same
period
last
year.
Operating
profit
increased 2
percent
to $812
million,
primarily
driven
by favorable
net price
realization
and
mix
and lower
selling,
general and
administrative (SG&A)
expenses,
including a
decrease in
certain compensation
and benefits
expenses,
partially offset
by
goodwill
impairment
and
restructuring
charges,
a
decrease
in
contributions
from
volume
growth,
and
higher
input
costs.
Operating
profit margin
of 15.8 percent
increased 50
basis points. Adjusted
operating profit
of $989 million
increased 13
percent on a
constant-
currency basis, primarily
driven by favorable
net price realization
and mix and
lower SG&A expenses,
including a decrease
in certain
compensation
and
benefits
expenses,
partially
offset
by
a
decrease
in
contributions
from
volume
growth
and
higher
input
costs.
Adjusted operating profit margin
increased 240 basis points to
19.3 percent. Diluted earnings
per share of $1.02 increased
1 percent in
the
second
quarter
of
fiscal
2024.
Adjusted
diluted
earnings
per
share
of
$1.25
increased
14
percent
on
a
constant-currency
basis
compared to the
second quarter of fiscal
2023. See the “Non-GAAP
Measures” section below
for a description of
our use of measures
not defined by GAAP.
A summary of our consolidated financial results for the second quarter
of fiscal 2024 follows:
Quarter Ended Nov. 26, 2023
In millions,
except per share
Quarter Ended
Nov. 26, 2023 vs.
Nov. 27, 2022
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
5,139.4
(2)
%
Operating profit
811.8
2
%
15.8
%
Net earnings attributable to General Mills
595.5
(2)
%
Diluted earnings per share
$
1.02
1
%
Organic net sales growth rate (a)
(2)
%
Adjusted operating profit (a)
989.4
12
%
19.3
%
13
%
Adjusted diluted earnings per share (a)
$
1.25
14
%
14
%
(a)
See the "Non-GAAP Measures" section below for our use of measures not defined by
GAAP.
Consolidated
net sales
were as follows:
Quarter Ended
Nov. 26, 2023
Nov. 26, 2023 vs.
Nov. 27, 2022
Nov. 27, 2022
Net sales (in millions)
$
5,139.4
(2)%
$
5,220.7
Contributions from volume growth (a)
(4)
pts
Net price realization and mix
3
pts
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Net sales in the
second quarter of
fiscal 2024 decreased
2 percent compared
to the same period
in fiscal 2023,
driven by a decrease
in
contributions from volume growth, partially offset by
favorable net price realization and mix.
22
Components of organic net sales growth are shown in the following
table:
Quarter Ended Nov. 26, 2023 vs.
Quarter Ended Nov. 27, 2022
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
3
pts
Organic net sales growth
(2)
pts
Foreign currency exchange
Flat
Acquisition and divestitures
Flat
Net sales growth
(2)
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Organic
net sales
decreased
2 percent
in
the second
quarter of
fiscal
2024
compared
to the
same
period in
fiscal
2023,
driven
by a
decrease in contributions from organic volume growth,
partially offset by favorable organic net price realization
and mix.
Cost
of
sales
decreased
$142 million
to
$3,374
million
in
the
second
quarter
of
fiscal
2024
compared
to
the
same
period
in
fiscal
2023.
The
decrease
was
primarily
driven
by
a
$153 million
decline
attributable
to
lower
volume,
partially
offset
by
a
$6
million
increase
attributable
to
product
rate
and
mix.
We
recorded
a
$25 million
net
increase
in cost
of
sales related
to
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
second
quarter
of
fiscal
2024,
compared
to
a
$25 million
net
increase
in
the
second
quarter
of
fiscal
2023.
We
also
recorded
$8
million
of
restructuring
charges
in
cost
of
sales
in
the
second
quarter of
fiscal 2024
(please refer
to Note
3 to
the Consolidated
Financial Statements
in Part
I, Item
1 of
this report).
In the
second
quarter of
fiscal 2023,
we recorded
a $3
million charge
related to
a voluntary
recall on
certain international
Häagen-Dazs
ice cream
products.
SG&A
expenses
decreased
$64 million
to $830 million
in the
second
quarter
of fiscal
2024,
compared
to the
same period
in fiscal
2023,
primarily driven
by a
decrease in
certain compensation
and benefits
expenses
and net
favorable corporate
investment activity.
SG&A expenses as a percent of net sales in the second
quarter of fiscal 2024 decreased 90 basis points compared
to the second quarter
of fiscal 2023.
Restructuring, impairment,
and other exit
costs
totaled $124 million
in the second
quarter of fiscal
2024, compared to
$11 million
in the
same period
last year.
In the
second quarter
of fiscal
2024, we
recorded a
$117
million non-cash
goodwill impairment
charge
related to our Latin America
reporting unit.
In the second quarter of fiscal
2024, we approved a restructuring
action to enhance the go-
to-market commercial strategy
and related organizational
structure of our Pet
segment, and as a
result, recorded $4 million
of charges.
In
addition,
we
also
recorded
$2
million
of
charges
in
the
second
quarter
of
fiscal
2024
related
to
actions
previously
announced
compared to $11
million in the same
period last year
(please refer to Note
3 to the Consolidated
Financial Statements in
Part I, Item 1
of this report).
Benefit plan non-service income
totaled $20 million in the second quarter
of fiscal 2024, compared to $22
million in the same period
last year,
primarily reflecting
an increase
in interest
costs, partially
offset by
lower amortization
of losses
and higher
expected return
on plan assets.
Interest,
net
for
the
second
quarter
of
fiscal
2024
totaled
$118 million,
up
$26 million
from
the
second
quarter
of
fiscal
2023,
primarily driven by higher interest rates and higher average long-term debt
levels.
The
effective tax rate
for the second quarter
of fiscal 2024 was 19.0
percent compared to 20.2
percent for the second
quarter of fiscal
2023.
The
1.2
percentage
point
decrease
was
primarily
due
to
favorable
changes
in
earnings
mix
by
jurisdiction
and
certain
nonrecurring
discrete
tax
benefits
in
the
second
quarter
of
fiscal
2024.
Our
effective
tax
rate
excluding
certain
items
affecting
comparability
was 20.8
percent in
the second
quarter of
fiscal 2024,
compared to
21.1 percent
in the
same period
last year
(see the
“Non-GAAP
Measures”
section
below
for
a
description
of
our
use
of
measures
not
defined
by
GAAP).
The
0.3
percentage
point
decrease was primarily due to favorable earnings mix by jurisdiction in
the second quarter of fiscal 2024.
23
After-tax earnings from joint
ventures
for the second quarter of fiscal 2024
decreased to $24 million compared to
$25 million in the
same period in fiscal 2023,
primarily driven by foreign currency exchange and higher input costs at Cereal Partners
Worldwide (CPW)
and Häagen-Dazs
Japan, Inc. (HDJ),
partially offset
by higher net
sales driven by
favorable net price
realization and mix
at CPW and
HDJ. On a constant-currency
basis, after-tax earnings
from joint ventures increased
5 percent (see the “Non-GAAP
Measures” section
below for a description of our use of measures not defined by GAAP).
The components of our joint ventures’ net sales growth are shown in the following
table:
Quarter Ended Nov. 26, 2023 vs.
Quarter Ended Nov. 27, 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(6)
pts
(1)
pt
Net price realization and mix
17
pts
6
pts
Net sales growth in constant currency
11
pts
6
pts
10
pts
Foreign currency exchange
(2)
pts
(3)
pts
(2)
pts
Net sales growth
10
pts
2
pts
8
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Average
diluted shares
outstanding
decreased by
19 million
in the
second quarter
of fiscal
2024 from
the same
period a
year ago
primarily due to share repurchases.
Six-Month Results
In the
six-month period
ended November
26, 2023,
net sales
and organic
net sales
increased 1
percent compared
to the
same period
last year.
Operating profit
decreased 8 percent
to $1,742 million,
primarily driven
by a net
gain on
divestitures in fiscal
2023, higher
input
costs, goodwill
impairment
and restructuring
charges,
and
a decrease
in contributions
from volume
growth,
partially offset
by
favorable
net price
realization
and
mix and
a favorable
change
to the
mark-to-market
valuation
of certain
commodity positions
and
grain
inventories.
Operating
profit
margin
of
17.3
percent
decreased
170
basis
points.
Adjusted
operating
profit
of
$1,888
million
increased 7 percent on
a constant-currency basis, primarily
driven by favorable net price
realization and mix, partially offset
by higher
input
costs,
a
decrease
in
contributions
from
volume
growth
and
an
increase
in
certain
SG&A
expenses.
Adjusted
operating
profit
margin
increased
110
basis points
to
18.8 percent
.
Diluted earnings
per
share of
$2.16 decreased
8 percent
in
the six-month
period
ended
November
26,
2023,
and
adjusted
diluted
earnings
per
share
of
$2.34
increased
6
percent
on
a
constant-currency
basis
compared
to
the
same
period last
year
(see
the
“Non-GAAP
Measures”
section
below
for
a
description
of our
use
of measures
not
defined by GAAP).
A summary of our consolidated financial results for the six-month period
ended November 26, 2023, follows:
Six-Month Period Ended Nov.
26, 2023
In millions,
except per share
Six-Month Period
Ended Nov. 26,
2023 vs. Nov. 27,
2022
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
10,044.1
1
%
Operating profit
1,741.8
(8)
%
17.3
%
Net earnings attributable to General Mills
1,269.0
(11)
%
Diluted earnings per share
$
2.16
(8)
%
Organic net sales growth rate (a)
1
%
Adjusted operating profit (a)
1,888.4
7
%
18.8
%
7
%
Adjusted diluted earnings per share (a)
$
2.34
6
%
6
%
(a)
See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP.
24
Consolidated
net sales
were as follows:
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023 vs.
Nov. 27, 2022
Nov. 27, 2022
Net sales (in millions)
$
10,044.1
1
%
$
9,938.3
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
4
pts
Foreign currency exchange
Flat
Note: Table may not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The 1
percent increase
in net
sales for
the six-month
period ended
November 26,
2023, was
driven
by favorable
net price
realization
and mix, partially offset by a decrease in contributions
from volume growth.
Components of organic net sales growth are shown in the following
table:
Six-Month Period Ended Nov.
26, 2023 vs.
Six-Month Period Ended Nov.
27, 2022
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
5
pts
Organic net sales growth
1
pt
Foreign currency exchange
Flat
Acquisition and divestitures
Flat
Net sales growth
1
pt
Note: Table may not foot due to rounding
(a)
Measured in tons based on the stated weight of our product shipments.
Organic
net
sales
increased
1
percent
in
the
six-month
period
ended
November
26,
2023,
driven
by
favorable
organic
net
price
realization and mix, partially offset by a decrease in
contributions from organic volume growth.
Cost
of
sales
decreased
$278 million
to
$6,508
million
in
the
six-month
period
ended
November
26,
2023,
compared
to
the
same
period
in
fiscal
2023.
The
decrease
was
primarily
driven
by
a
$207
million
decline
due
to
lower
volume,
partially
offset
by
a
$156 million increase attributable
to product rate and mix.
We recorded
a $20 million net decrease in
cost of sales related to
the mark-
to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
six-month
period
ended
November
26,
2023,
compared to a
$200 million net increase
in the six-month
period ended November
27, 2022. In the
six-month period ended
November
27, 2022,
we recorded
a $24 million
charge related
to a voluntary
recall on
certain international
Häagen-Dazs
ice cream
products. In
addition,
we
recorded
$17
million
of
restructuring
charges
and
$1
million
of
restructuring
initiative
project-related
costs in
cost
of
sales in the
six-month period
ended November
26, 2023,
compared to $1
million of restructuring
charges in
the same period
last year
(please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of
this report).
SG&A expenses
decreased $16
million to
$1,670 million in
the six-month
period ended
November 26,
2023, compared
to the
same
period in fiscal
2023, primarily driven
by net favorable
corporate investment activity,
partially offset
by higher media
and advertising
expenses.
SG&A expenses as
a percent
of net sales
decreased 40
basis points compared
to the six-month
period ended November
26,
2023, compared to the same period of fiscal 2023.
Divestitures
gain,
net
totaled
$431
million
in
the
six-month
period
ended
November
27,
2022,
primarily
related
to the
sale of
our
Helper main meals
and Suddenly Salad
side dishes business (please
refer to Note 2
to the Consolidated Financial
Statements in Part
I,
Item 1 of this report).
Restructuring, impairment,
and other exit
costs
totaled $125 million
in the six-month period
ended November 26,
2023, compared
to $13 million in the same period
last year. In
fiscal 2024, we recorded a $117
million non-cash goodwill impairment
charge related to
our
Latin
America
reporting
unit.
In
fiscal
2024,
we
approved
a
restructuring
action
to
enhance
the
go-to-market
and
associated
organization structure of
our Pet segment,
and as a result,
we recorded $4 million
of charges in the
six-month period ended
November
26,
2023. In
addition,
we recorded
$3
million of
charges
related to
related
to actions
previously
announced
in the
six-month period
ended
November
26,
2023,
compared
to
$13
million
in
the
same
period
of
fiscal
2023
(please
refer
to
Note
3
to
the
Consolidated
Financial Statements in Part I, Item 1 of this report).
25
Benefit plan non-service
income
totaled $37 million
in the six-month
period ended November
26, 2023, compared
to $43 million
in
the same period last year, primarily reflecting
an increase in interest costs, partially offset by lower amortization of
losses.
Interest, net
for the six-month
period ended November
26, 2023, increased
$56 million to $235 million
compared to the
same period
of fiscal 2023, primarily driven by higher interest rates and higher average
long-term debt levels.
The
effective
tax rate
for
the six-month
period ended
November
26, 2023,
was 20.0
percent compared
to 20.8
percent in
the same
period
last
year.
The
0.8
percentage
point
decrease
was
primarily
due
to
unfavorable
tax
components
related
to
the
divestitures
in
fiscal 2023
and favorable
earnings mix
by jurisdiction
in fiscal
2024,
partially offset
by certain
nonrecurring
discrete tax
benefits in
fiscal
2023.
Our
effective
tax
rate
excluding
certain
items
affecting
comparability
was
21.0
percent
in
the
six-month
period
ended
November
26,
2023,
compared
to
20.4
percent
in
the
same
period
last
year
(see
the
“Non-GAAP
Measures”
section
below
for
a
description of
our use
of measures
not defined
by GAAP).
The 0.6
percentage point
increase is primarily
due to
certain nonrecurring
discrete tax benefits in fiscal 2023.
After-tax
earnings from
joint ventures
increased
to $48 million
for the
six-month period
ended November
26, 2023,
compared to
$45 million
in the
same period
in fiscal
2023,
primarily
due to
higher
net sales
driven by
favorable
net price
realization and
mix at
CPW
and
HDJ, partially
offset
by
higher
input
costs
at
CPW and
HDJ.
On
a
constant-currency
basis,
after-tax
earnings
from
joint
ventures increased
14 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:
Six-Month Period Ended Nov.
26, 2023 vs.
Six-Month Period Ended Nov.
27, 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(8)
pts
(3)
pts
Net price realization and mix
18
pts
8
pts
Net sales growth in constant currency
10
pts
5
pts
9
pts
Foreign currency exchange
Flat
(4)
pts
(1)
pt
Net sales growth
9
pts
1
pt
8
pts
Note: Table may not foot due to rounding
(a)
Measured in tons based on the stated weight of our product shipments.
Average
diluted
shares
outstanding
decreased
by
17 million
in
the
six-month
period
ended
November
26,
2023,
from
the
same
period a year ago primarily due to share repurchases, partially offset
by option exercises.
SEGMENT OPERATING
RESULTS
Our businesses are
organized into
four operating segments:
North America Retail,
International,
Pet, and North
America Foodservice.
Please
refer
to
Note
17
of
the
Consolidated
Financial
Statements
in
Part
I,
Item
1
of
this
report
for
a
description
of
our
operating
segments.
North America Retail Segment Results
North America Retail net sales were as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Net sales (in millions)
$
3,305.0
(2)
%
$
3,373.1
6,378.0
Flat
$
6,361.9
Contributions from volume growth (a)
(5)
pts
(5)
pts
Net price realization and mix
4
pts
6
pts
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North America
Retail net
sales decreased
2 percent
in the
second quarter
of fiscal
2024,
compared to
the same
period in
fiscal 2023,
driven by a decrease in contributions from volume growth, partially offset
by favorable net price realization and mix.
North America Retail net sales in the six-month period ended November 26, 2023,
essentially matched the same period in fiscal 2023.
26
The components of North America Retail organic net
sales growth are shown in the following table:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023
Contributions from organic volume growth (a)
(5)
pts
(5)
pts
Organic net price realization and mix
4
pts
6
pts
Organic net sales growth
(2)
pts
1
pt
Foreign currency exchange
Flat
Flat
Divestiture (b)
Flat
(1)
pt
Net sales growth
(2)
pts
Flat
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestiture of our Helper main meals and Suddenly Salad side dishes businesses in
fiscal 2023. Please see Note 2 to the
Consolidated Financial Statements in Part I, Item 1 of this report.
North America Retail organic
net sales decreased 2
percent in the second
quarter of fiscal 2024
,
compared to the same
period in fiscal
2023,
driven by a decrease in contributions
from organic volume growth,
partially offset by favorable
organic net price realization and
mix.
North America
Retail organic
net sales increased
1 percent in
the six-month
period ended November
26, 2023, compared
to the same
period
in fiscal
2023,
driven by
favorable
organic
net price
realization
and
mix, partially
offset
by a
decrease in
contributions
from
organic volume growth.
North America Retail net sales percentage change by operating unit are shown
in the following table:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023
Canada (a)
7
%
4
%
U.S. Meals & Baking Solutions
2
%
1
%
U.S. Snacks
(6)
%
1
%
U.S. Morning Foods
(6)
%
(2)
%
Total
(2)
%
Flat
(a)
On a constant-currency
basis, Canada net
sales increased 9 percent
in the second quarter
of fiscal 2024 and
increased 6 percent in
the six-month
period
ended November
26, 2023,
compared to
the same
periods in
fiscal 2023.
See the
"Non-GAAP Measures"
section below for our use of this measure not defined by GAAP.
Segment
operating
profit
increased
3
percent
to
$860 million
in
the
second
quarter
of
fiscal 2024
,
compared
to
$837 million
in
the
same period
in fiscal
2023, primarily
driven by
favorable net
price realization
and mix,
partially offset
by a decrease
in contributions
from
volume
growth,
higher
input
costs,
and
an
increase
in
SG&A
expenses.
Segment
operating
profit
increased
3
percent
on
a
constant-currency
basis
in
the
second
quarter
of
fiscal
2024,
compared
to
the
same
period
in
fiscal
2023
(see
the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Segment
operating
profit
increased
3
percent
to
$1,658 million
in
the
six-month
period
ended
November
26,
2023,
compared
to
$1,615 million
in
the
same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix,
partially
offset
by
a
decrease in contributions
from volume growth,
higher input costs,
and an increase
in SG&A expenses,
including increased media
and
advertising
expenses.
Segment
operating
profit
increased
3
percent
on
a
constant-currency
basis
in
the
six-month
period
ended
November
26,
2023,
compared to
the same
period
in fiscal
2023
(see the
“Non-GAAP Measures”
section below
for our
use of
this
measure not defined by GAAP).
27
International Segment Results
International net sales were as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Net sales (in millions)
$
683.1
2
%
$
671.7
$
1,398.9
6
%
$
1,324.2
Contributions from volume growth (a)
(4)
pts
(4)
pts
Net price realization and mix
3
pts
8
pts
Foreign currency exchange
2
pts
2
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
International net sales increased 2 percent in the second quarter of fiscal 2024
,
compared to the same period in fiscal 2023 that
included the impact of the voluntary recall on certain international
Häagen-Dazs
ice cream products, driven by favorable net price
realization and mix and favorable foreign currency exchange, partially offset
by a decrease in contributions from volume growth.
International net sales increased 6 percent in the six-month period
ended November 26, 2023, compared to the same period in fiscal
2023 that included the impact of the voluntary recall on certain international
Häagen-Dazs
ice cream products, driven by favorable net
price realization and mix and favorable foreign currency exchange, partially
offset by a decrease in contributions from volume growth.
The components of International organic net sales growth
are shown in the following table:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023
Contributions from organic volume growth (a)
(4)
pts
(4)
pts
Organic net price realization and mix
3
pts
8
pts
Organic net sales growth
Flat
4
pts
Foreign currency exchange
2
pts
2
pts
Net sales growth
2
pts
6
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
International organic net
sales in the second quarter
of fiscal 2024 essentially
matched the same period
in fiscal 2023 that included
the
impact
of the
voluntary
recall on
certain
international
Häagen-Dazs
ice
cream products
as a
decrease
in
contributions from
organic
volume growth was offset by favorable organic
net price realization and mix.
International organic
net sales increased
4 percent in the
six-month period ended
November 26, 2023,
compared to the same
period in
fiscal
2023
that
included
the
impact
of
the
voluntary
recall
on
certain
international
Häagen-Dazs
ice
cream
products,
driven
by
favorable organic net price realization and mix, partially offset
by a decrease in contributions from organic volume growth.
Segment operating profit increased 94 percent
to $35 million in the second quarter of fiscal 2024,
compared to $18 million in the same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix
and
the
voluntary
recall
on
certain
international
Häagen-Dazs
ice cream products
in fiscal 2023,
partially offset
by higher input
costs. Segment operating
profit increased 100
percent
on a
constant-currency
basis in
the second
quarter of
fiscal 2024,
compared to
the same
period
in fiscal
2023
(see the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Segment
operating
profit
increased
61
percent
to
$85
million
in
the
six-month
period
ended
November
26,
2023,
compared
to
$53 million in
the same
period in
fiscal 2023,
primarily driven
by favorable
net price
realization and
mix and
the voluntary
recall on
certain international
Häagen-Dazs
ice cream
products
in fiscal
2023,
partially offset
by higher
input costs.
Segment operating
profit
increased 68
percent on a
constant-currency basis in
the six-month period
ended November 26,
2023, compared
to the same period
in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
28
Pet Segment Results
Pet net sales were as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Net sales (in millions)
$
569.3
(4)
%
$
592.9
$
1,149.2
(2)
%
$
1,172.8
Contributions from volume growth (a)
(11)
pts
(8)
pts
Net price realization and mix
7
pts
6
pts
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Pet net sales decreased 4 percent in the second
quarter of fiscal 2024,
compared to the same period in fiscal 2023,
driven by a decrease
in contributions from volume growth, partially offset by
favorable net price realization and mix.
Pet
net
sales
decreased
2
percent
in
the
six-month
period
ended
November
26,
2023,
compared
to
the
same
period
in
fiscal
2023,
driven by a decrease in contributions from volume growth, partially offset
by favorable net price realization and mix.
The components of Pet organic net sales growth are shown in the following
table:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023
Contributions from organic volume growth (a)
(11)
pts
(8)
pts
Organic net price realization and mix
7
pts
6
pts
Organic net sales growth
(4)
pts
(2)
pts
Foreign currency exchange
Flat
Flat
Net sales growth
(4)
pts
(2)
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
Pet organic net
sales decreased 4 percent
in the second quarter
of fiscal 2024,
compared to the same
period in fiscal 2023,
driven by a
decrease in contributions from organic volume growth,
partially offset by favorable organic net price
realization and mix.
Pet organic
net sales
decreased
2 percent
in the
six-month period
ended November
26, 2023,
compared
to the
same period
in fiscal
2023,
driven by a decrease in contributions
from organic volume growth,
partially offset by favorable
organic net price realization and
mix.
Segment
operating
profit
increased 18
percent
to $102
million
in
the second
quarter
of fiscal
2024,
compared
to $87
million
in
the
same period
in fiscal
2023, primarily
driven by
favorable net
price realization
and mix,
partially offset
by a decrease
in contributions
from volume
growth and
an increase in
SG&A expenses.
Segment operating
profit increased
18 percent
on a
constant-currency basis
in the second quarter of fiscal 2024,
compared to the same period in fiscal 2023 (see the “Non-GAAP Measures” section
below for our
use of this measure not defined by GAAP).
Segment
operating
profit
increased
2
percent
to
$214 million
in
the
six-month
period
ended
November
26,
2023,
compared
to
$210 million
in
the
same
period
in
fiscal
2023,
primarily
driven
by
favorable
net
price
realization
and
mix,
partially
offset
by
a
decrease
in
contributions
from
volume
growth,
higher
input
costs,
and
an
increase
in
SG&A
expenses.
Segment
operating
profit
increased 2
percent on
a constant-currency
basis in
the six-month
period ended
November 26,
2023, compared
to the
same period
in
fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
29
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Nov. 26,
2023
Nov. 26, 2023 vs
Nov. 27, 2022
Nov. 27,
2022
Net sales (in millions)
$
582.0
Flat
$
583.0
1,118.0
4
%
$
1,079.4
Contributions from volume growth (a)
(1)
pt
3
pts
Net price realization and mix
Flat
1
pt
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North America Foodservice net sales in the second quarter of fiscal 2024
essentially matched the same period in fiscal 2023.
North
America Foodservice
net sales
increased
4 percent
in the
six-month period
ended November
26, 2023,
compared to
the same
period in fiscal 2023, driven by an increase in contributions from volume growth
and favorable net price realization and mix.
The components of North America Foodservice organic
net sales growth are shown in the following table:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 26, 2023
Contributions from organic volume growth (a)
(1)
pt
1
pt
Organic net price realization and mix
1
pt
Flat
Organic net sales growth
Flat
2
pts
Foreign currency exchange
Flat
Flat
Acquisition (b)
Flat
2
pts
Net sales growth
Flat
4
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of TNT Crust in fiscal 2023. Please see Note 2 to the Consolidated Financial Statements
in Part I, Item 1 of this report.
North America Foodservice organic net sales in the second
quarter of fiscal 2024, essentially matched the same period in fiscal 2023.
North America Foodservice
organic net sales
increased 2 percent
in the six-month
period ended November
26, 2023, compared
to the
same period in fiscal 2023, driven by an increase in contributions from organic
volume growth.
Segment operating profit increased 17 percent
to $96 million in the second quarter of fiscal 2024,
compared to $82 million in the same
period in
fiscal 2023,
primarily driven
by favorable
net price realization
and mix.
Segment operating
profit increased
17 percent on
a
constant-currency
basis
in
the
second
quarter
of
fiscal
2024,
compared
to
the
same
period
in
fiscal
2023
(see
the
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
Segment
operating
profit
increased
14
percent
to
$155
million
in
the
six-month
period
ended
November
26,
2023,
compared
to
$135 million in
the same
period in
fiscal 2023,
primarily driven
by favorable
net price
realization and
mix, partially
offset by
higher
input costs.
Segment operating
profit increased
14 percent
on a
constant-currency basis
in the
six-month period
ended November
26,
2023,
compared
to
the
same
period
in
fiscal
2023
(see
the
“Non-GAAP
Measures”
section
below
for
our
use
of
this
measure
not
defined by GAAP).
30
UNALLOCATED
CORPORATE
ITEMS
Unallocated corporate expenses totaled $157 million
in the second quarter of fiscal 2024,
compared to $212 million in the same period
in fiscal
2023. In
the second
quarter of
fiscal 2024,
we recorded
a $25 million
net increase
in expense
related to
the mark-to-market
valuation of
certain commodity
positions and
grain inventories, compared
to a $25 million
net increase
in expense in
the same period
last year. We
recorded $20 million of net losses related to valuation
adjustments on certain corporate investments in the second quarter
of
fiscal
2024,
compared
to
$36 million
of
net
losses
related
to
valuation
adjustments
and
the
loss
on
sale
of
certain
corporate
investments in the
second quarter of
fiscal 2023. We
recorded $8 million
of restructuring charges
in the second quarter
of fiscal 2024.
In
the second
quarter of
fiscal 2023,
we
recorded
a $3
million
charge
related
to a
voluntary
recall on
certain
international
Häagen-
Dazs
ice cream products. In addition, we recorded $3
million of integration costs primarily related to our acquisition of TNT Crust and
$2 million
of transaction
costs primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
the
second quarter of fiscal 2023. Certain
compensation and benefits expenses decreased
in the second quarter of fiscal
2024, compared to
the same period last year.
Unallocated corporate
expenses totaled $244
million in the
six-month period
ended November
26, 2023, compared
to $545 million in
the
same
period
last
year.
We
recorded
a
$20
million
net
decrease
in
expense
related
to
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
six-month
period
ended
November
26,
2023,
compared
to
a
$200
million
net
increase in expense in the
same period last year.
We recorded
$22 million of net losses related
to valuation adjustments and the
sale of
corporate
investments in
the six-month
period ended
November 26,
2023, compared
to $62
million of
net losses
in the
same period
last year.
In the six-month period
ended November 27,
2022, we recorded
a $24 million charge
related to a voluntary
recall on certain
international
Häagen-Dazs
ice
cream
products.
We
recorded
$17
million
of
restructuring
charges
and
$1
million
of
restructuring
initiative
project-related
costs
in
cost
of
sales
in
the
six-month
period
ended
November
26,
2023,
compared
to
$1
million
of
restructuring
charges
in cost
of sales
in the
same period
last year.
In addition,
we recorded
$4 million
of integration
costs primarily
related to our
acquisition of TNT
Crust and $2
million of
transaction costs primarily
related to the
sale of our
Helper main
meals and
Suddenly Salad
side dishes business
in the
six-month period
ended November
27, 2022. Certain
compensation and
benefits expenses
decreased in the six-month period ended November 26, 2023, compared
to the same period last year.
LIQUIDITY
AND CAPITAL
RESOURCES
During the
six-month period
ended November
26, 2023,
cash provided by
operations was
$1,496 million compared
to $1,201 million
in the
same period
last year.
The $295
million increase
was mainly
driven by
a $282
million increase
in net
earnings, excluding
the
$431 million net divestitures gain in fiscal 2023.
Cash used by investing activities during the six-month
period ended November 26, 2023, was $316 million compared
to cash provided
by investing activities of $125 million
for the same period in fiscal
2023. During the first quarter
of fiscal 2023, we completed the
sale
of
the
Helper main
meals
and Suddenly
Salad side
dishes
business
for
$607
million
cash.
In
the
first
quarter
of
fiscal
2023,
we
acquired TNT
Crust for
$252 million
cash, net
of cash
acquired.
In addition,
we spent
$294 million
on purchases
of land,
buildings,
and equipment in the six months ended November 26, 2023, compared
to $227 million in the same period last year.
Cash
used
by
financing
activities
during
the
six-month
period
ended
November
26,
2023,
was
$1,174
million
compared
to
$1,230 million
of cash
used by
financing
activities in
the same
period in
fiscal 2023.
We
paid
$691 million
of dividends
in the
six-
month period ended November 26, 2023, compared
to $648 million in the same period last year.
We paid $1,30
2
million for purchases
of
common
stock
for
treasury
in
the
six-month
period
ended
November
26,
2023,
compared
to
$901
million
in
the
same
period
in
fiscal 2023.
In addition,
we had
$867 million
of net
debt issuances
in the
six-month period
ended November
26, 2023,
compared to
$253 million of net debt issuances in the same period a year ago.
As of
November
26,
2023, we
had
$473 million
of cash
and cash
equivalents
in foreign
jurisdictions. In
anticipation
of repatriating
funds from
foreign jurisdictions,
we record
local country
withholding taxes
on our
international earnings,
as applicable.
Furthermore,
we
may
repatriate
our
cash
and
cash
equivalents
held
by
our
foreign
subsidiaries
without
such
funds
being
subject
to
further
U.S.
income tax liability.
Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently
reinvested in those jurisdictions.
The following table details the fee-paid committed and uncommitted credit
lines we had available as of November 26, 2023:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
0.1
Total committed
and uncommitted credit facilities
$
3.3
$
0.1
31
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the most
recent mark
-to-market valuation
(currently
$252 million). The
floating preferred
return rate
on GMC’s
Class A Interests
is
the sum of three
-month Term
SOFR plus 186
basis points. The preferred
return rate is adjusted
every three years
through a negotiated
agreement with the Class A Interest holder or through a remarketing auction.
We
have an option
to purchase the
Class A Interests for
consideration equal to
the then current
capital account value,
plus any unpaid
preferred return
and the
prescribed make-whole
amount. If
we purchase
these interests,
any change
in the
third-party holder’s
capital
account
from
its
original
value
will
be
charged
directly
to
retained
earnings
and
will
increase
or
decrease
the
net
earnings
used
to
calculate EPS in that period.
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
Certain
of
our
long-term
debt
agreements,
our
credit
facilities,
and
our
noncontrolling
interests
contain
restrictive
covenants.
As
of
November 26, 2023, we were in compliance with all of these covenants.
We
have $1,321 million
of long-term debt
maturing in the
next 12 months
that is classified
as current, including
$500 million of
3.65
percent fixed-rate
notes due
February 15,
2024, 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.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
to the Consolidated Financial Statements included
in our Annual Report on
Form
10-K for
the fiscal
year ended
May 28,
2023. The
accounting policies
used in
preparing our
interim fiscal
2024
Consolidated
Financial
Statements
are
the
same
as
those
described
in
our
Form
10-K
with
the
exception
of
the
new
accounting
requirements
adopted in the first quarter of fiscal 2024. Please see Note 1
to the Consolidated Financial Statements in Part I, Item 1 of
this report for
additional information.
Our
critical
accounting
estimates
are
those
that
have
meaningful
impact
on
the
reporting
of
our
financial
condition
and
results
of
operations.
These
estimates
include
our
accounting
for
revenue
recognition,
valuation
of
long-lived
assets,
intangible
assets,
stock-
based compensation,
income taxes,
and defined
benefit pension,
other postretirement
benefit, and
postemployment benefit
plans. The
assumptions and methodologies used in the determination of those
estimates as of November 26, 2023, are the same as those described
in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023.
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal 2024. As a
result of lower future profitability
projections for our Latin
America reporting unit, we
determined that the fair
value
of the
reporting unit
was less
than its
book value
and recorded
a $117
million non-cash
goodwill impairment
charge in
restructuring,
impairment,
and
other
exit
costs
in
our
Consolidated
Statements
of
Earnings.
Our
estimates
of
fair
value
for
goodwill
impairment
testing
were
determined
based
on
a
discounted
cash
flow
model
using
inputs
from
our
long-range
planning
process
to
determine
growth
rates
for
sales
and
profits.
Other
significant
assumptions
include
weighted
average
cost
of
capital
rates,
perpetuity
growth
assumptions, market comparables, and tax rates. The fair value is a Level 3
asset in the fair value hierarchy.
All other intangible
asset fair values
were substantially
in excess of
the carrying
values, except for
the
True Chews
and
Uncle Toby’s
brand intangible
assets. In
addition, while
having significant
coverage as
of our
fiscal 2024
assessment date,
the
Progresso
,
Nudges
,
Top
Chews
,
and
EPIC
brand
intangible
assets
had
risk
of
decreasing
coverage.
We
will
continue
to
monitor
these
businesses
for
potential impairment.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2023, the Financial Accounting
Standards Board (FASB)
issued Accounting Standards Update
(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.
32
In
December
2023,
the
FASB
issued
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.
NON-GAAP MEASURES
We
have
included
in
this
report
measures
of
financial
performance
that
are not
defined
by
GAAP.
We
believe
that
these
measures
provide useful information to investors, and include these measures in other
communications to investors.
For each
of these
non-GAAP financial
measures, we
are providing
below a
reconciliation of
the differences
between the
non-GAAP
measure and the most
directly comparable GAAP measure,
an explanation of why
we believe the non-GAAP
measure provides useful
information to
investors, and
any additional
material purposes
for which
our management
or Board
of Directors
uses the
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several
measures
below
are
presented
on
an
adjusted
basis.
The
adjustments
are
either
items
resulting
from
infrequently
occurring
events or items that, in management’s
judgment, significantly affect the year-to-year
assessment of operating results.
The following are descriptions of significant items impacting comparability
of our results.
Goodwill impairment
Non-cash
goodwill
impairment
charge
related
to our
Latin America
reporting
unit.
Please see
Note
4
to
the
Consolidated
Financial
Statements in Part I, Item 1 of this report.
Restructuring charges and project-related costs
Restructuring
charges
and
project-related
costs
related
to
a
commercial
strategy
restructuring
action
and
previously
announced
restructuring actions
recorded in
fiscal 2024.
Restructuring charges
for previously
announced restructuring
actions recorded
in fiscal
2023. Please see Note 3 to the Consolidated Financial Statements in Part I, Item 1
of this report.
Investment activity, net
Valuation
adjustments of
certain corporate
investments in
fiscal 2024.
Valuation
adjustments and the
loss on sale
of certain corporate
investments in fiscal 2023.
Mark-to-market effects
Net
mark-to-market
valuation
of
certain
commodity
positions
recognized
in
unallocated
corporate
items.
Please
see
Note
6
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Transaction costs
Immaterial
transaction
costs
incurred
in
fiscal
2024.
Transaction
costs
primarily
related
to
the
sale
of
our
Helper
main
meals
and
Suddenly Salad side dishes
business in fiscal 2023. Please
see Note 2 to the
Consolidated Financial Statements in Part
I, Item 1 of
this
report.
Product recall
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
ice cream products.
Acquisition integration costs
Integration
costs
primarily
resulting
from
the
acquisition
of
TNT
Crust
in
fiscal
2024
and
fiscal
2023.
Please
see
Note
2
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Divestitures gain, net
Net divestitures
gain primarily
related to
the sale
of our
Helper main
meals and
Suddenly Salad
side dishes
business in
fiscal 2023.
Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
33
Organic Net Sales Growth Rates
We
provide organic
net sales
growth rates
for our
consolidated net
sales and
segment net
sales. This
measure is
used in
reporting to
our
Board
of
Directors
and
executive
management
and
as
a
component
of
the
measurement
of
our
performance
for
incentive
compensation purposes.
We
believe that
organic net
sales growth
rates provide
useful information
to investors
because they
provide
transparency
to
underlying
performance
in
our
net
sales
by
excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations,
acquisitions, divestitures,
and a 53
rd
week, when applicable,
have on year-to-year comparability.
A reconciliation of
these measures to
reported net
sales growth
rates, the
relevant GAAP
measures, are
included in
our Consolidated
Results of
Operations and
Results of
Segment Operations discussions in the MD&A above.
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit
Margin)
We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit margin
on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Nov. 26, 2023
Nov. 27, 2022
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
811.8
15.8
%
$
799.8
15.3
%
Goodwill impairment
117.1
2.3
%
-
-
%
Restructuring charges
14.8
0.3
%
11.6
0.2
%
Investment activity, net
19.6
0.4
%
35.7
0.7
%
Mark-to-market effects
25.1
0.5
%
25.1
0.5
%
Project-related costs
0.3
-
%
-
-
%
Transaction costs
0.6
-
%
1.8
-
%
Product recall
0.2
-
%
2.9
0.1
%
Acquisition integration costs
-
-
%
2.8
0.1
%
Adjusted operating profit
$
989.4
19.3
%
$
879.7
16.9
%
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
1,741.8
17.3
%
$
1,885.4
19.0
%
Goodwill impairment
117.1
1.2
%
-
-
%
Restructuring charges
24.6
0.2
%
13.9
0.1
%
Investment activity, net
22.5
0.2
%
62.0
0.6
%
Mark-to-market effects
(19.8)
(0.2)
%
199.8
2.0
%
Project-related costs
1.1
-
%
-
-
%
Transaction costs
0.6
-
%
2.0
-
%
Product recall
0.4
-
%
24.4
0.2
%
Acquisition integration costs
0.2
-
%
4.3
-
%
Divestitures gain, net
-
-
%
(430.9)
(4.3)
%
Adjusted operating profit
$
1,888.4
18.8
%
$
1,760.9
17.7
%
Note: Tables
may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
34
Adjusted Operating Profit Growth on a Constant-currency Basis
This measure is used in reporting
to our Board of Directors and
executive management and as a
component of the measurement of
our
performance for
incentive compensation purposes.
We
believe that
this measure provides
useful information
to investors because
it is
the
operating
profit
measure
we
use
to
evaluate
operating
profit
performance
on
a
comparable
year-to-year
basis.
The
measure
is
evaluated on
a constant-currency
basis by
excluding the
effect that
foreign currency
exchange rate
fluctuations have
on year-to-year
comparability given the volatility in foreign currency exchange rates.
Our adjusted operating profit growth on a constant-currency basis is calculated
as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Change
Nov. 26, 2023
Nov. 27, 2022
Change
Operating profit as reported
$
811.8
$
799.8
2
%
$
1,741.8
$
1,885.4
(8)
%
Goodwill impairment
117.1
-
117.1
-
Restructuring charges
14.8
11.6
24.6
13.9
Investment activity, net
19.6
35.7
22.5
62.0
Mark-to-market effects
25.1
25.1
(19.8)
199.8
Project-related costs
0.3
-
1.1
-
Transaction costs
0.6
1.8
0.6
2.0
Product recall
0.2
2.9
0.4
24.4
Acquisition integration costs
-
2.8
0.2
4.3
Divestitures gain, net
-
-
-
(430.9)
Adjusted operating profit
$
989.4
$
879.7
12
%
$
1,888.4
$
1,760.9
7
%
Foreign currency exchange impact
Flat
Flat
Adjusted operating profit growth,
on a constant-currency basis
13
%
7
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rates
This measure
is used in
reporting to
our Board of
Directors and executive
management. We
believe that
this measure provides
useful
information to
investors because it
is the profitability
measure we use
to evaluate earnings
performance on
a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted
EPS and the related constant-currency growth rates follows:
Quarter Ended
Six-Month Period Ended
Per Share Data
Nov. 26, 2023
Nov. 27, 2022
Change
Nov. 26, 2023
Nov. 27, 2022
Change
Diluted earnings per share, as reported
$
1.02
$
1.01
1
%
$
2.16
$
2.36
(8)
%
Goodwill impairment
0.14
-
0.14
-
Restructuring charges
0.02
0.02
0.03
0.02
Investment activity, net
0.03
0.04
0.03
0.08
Mark-to-market effects
0.03
0.03
(0.03)
0.25
Product recall
-
-
-
0.03
Acquisition integration costs
-
0.01
-
0.01
Divestitures gain, net
-
-
-
(0.54)
Adjusted diluted earnings per share
$
1.25
$
1.10
14
%
$
2.34
$
2.21
6
%
Foreign currency exchange impact
Flat
(1)
pt
Adjusted diluted earnings per share
growth, on a constant-currency basis
14
%
6
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our reconciliation
below of the effective
income tax rate as
reported to the adjusted
effective income tax
rate for the tax
impact of
each item affecting comparability.
35
Constant-currency After-tax Earnings from Joint Ventures
Growth Rates
We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our joint
ventures by
excluding the
effect
that foreign
currency exchange
rate fluctuations
have on
year-to-year
comparability given
volatility in foreign currency exchange markets.
After-tax earnings from joint ventures growth rates on a constant-currency
basis are calculated as follows:
Percentage Change in
After-Tax
Earnings from Joint
Ventures
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in After-Tax
Earnings from Joint Ventures
on Constant-Currency Basis
Quarter Ended Nov. 26,
2023
(5)
%
(9)
pts
5
%
Six-Month Period Ended Nov.
26, 2023
6
%
(8)
pts
14
%
Note: Table may
not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency
Basis
We
believe
that
this
measure
of
our
Canada
operating
unit
net
sales
provides
useful
information
to
investors
because
it
provides
transparency to
the underlying
performance for
the Canada operating
unit within our
North America Retail
segment by
excluding the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility
in
foreign
currency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currency
basis are calculated as follows:
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Nov. 26,
2023
7
%
(2)
pts
9
%
Six-Month Period Ended Nov.
26, 2023
4
%
(2)
pts
6
%
Note: Table may
not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our
segments
by
excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility in foreign currency exchange markets.
36
Our segments’ operating profit growth rates on a constant-currency
basis are calculated as follows:
Quarter Ended Nov. 26, 2023
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
94
%
(6)
pts
100
%
Pet
18
%
Flat
18
%
North America Foodservice
17
%
Flat
17
%
Six-Month Period Ended Nov.
26, 2023
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
61
%
(7)
pts
68
%
Pet
2
%
Flat
2
%
North America Foodservice
14
%
Flat
14
%
Note: Tables may not
foot due to rounding.
Adjusted Effective Income Tax
Rates
We
believe
this
measure
provides
useful
information
to
investors
because
it
presents
the
adjusted
effective
income
tax
rate
on
a
comparable year-to-year basis.
Adjusted effective income tax rates are calculated as follows:
Quarter Ended
Six-Month Period Ended
Nov. 26, 2023
Nov. 27, 2022
Nov. 26, 2023
Nov. 27, 2022
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
714.1
$
136.0
$
730.0
$
147.1
$
1,544.1
$
309.2
$
1,749.6
$
363.2
Goodwill impairment
117.1
34.7
-
-
117.1
34.7
-
-
Restructuring charges
14.8
4.5
11.6
3.2
24.6
9.2
13.9
3.8
Investment activity, net
19.6
4.2
35.7
13.0
22.5
5.2
62.0
13.5
Mark-to-market effects
25.1
5.7
25.1
5.8
(19.8)
(4.6)
199.8
46.0
Project-related costs
0.3
0.1
-
-
1.1
0.4
-
-
Transaction costs
0.6
-
1.8
0.6
0.6
-
2.0
0.6
Product recall
0.2
-
2.9
0.7
0.4
0.1
24.4
5.6
Acquisition integration costs
-
-
2.8
0.7
0.2
0.1
4.3
1.0
Divestitures gain, net
-
-
-
-
-
-
(430.9)
(101.9)
As adjusted
$
891.7
$
185.2
$
809.9
$
171.0
$
1,690.8
$
354.2
$
1,625.1
$
331.8
Effective tax rate:
As reported
19.0%
20.2%
20.0%
20.8%
As adjusted
20.8%
21.1%
21.0%
20.4%
Sum of adjustment to income taxes
$
49.4
$
23.9
$
45.1
$
(31.4)
Average number
of common shares
- diluted EPS
583.4
602.0
587.4
604.0
Impact of income tax adjustments
on adjusted diluted EPS
$
(0.08)
$
(0.04)
$
(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.
37
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit
margin.
Operating profit adjusted
for certain items
affecting year-over-year
comparability,
divided by net
sales.
Constant currency.
Financial results
translated to
United States
dollars using
constant foreign
currency exchange
rates based
on the
rates
in
effect
for
the
comparable
prior-year
period.
To
present
this
information,
current
period
results
for
entities
reporting
in
currencies other
than United
States dollars
are translated
into United
States dollars
at the
average exchange
rates in
effect during
the
corresponding
period
of
the
prior
fiscal
year,
rather
than
the
actual
average
exchange
rates
in
effect
during
the
current
fiscal
year.
Therefore,
the
foreign
currency
impact
is
equal
to
current
year
results
in
local
currencies
multiplied
by
the
change
in
the
average
foreign currency exchange rate between the current fiscal period and the corresponding
period of the prior fiscal year.
Core working capital.
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments such
as futures, swaps,
options, and forward
contracts that we
use to manage
our risk arising
from
changes in commodity prices, interest rates, foreign exchange rates, and stock
prices.
Euribor.
Euro Interbank Offered Rate.
Fair value
hierarchy.
For purposes
of fair
value measurement,
we categorize
assets and
liabilities into
one of
three levels
based on
the assumptions
(inputs) used
in valuing
the asset or
liability.
Level 1 provides
the most reliable
measure of
fair value, while
Level 3
generally requires significant management judgment. The three levels are
defined as follows:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Observable inputs other than quoted prices included in
Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:
Unobservable inputs reflecting management’s
assumptions about the inputs used in pricing the asset or liability.
Free cash flow.
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted
Accounting Principles
(GAAP).
Guidelines, procedures,
and practices
that we
are required
to use in
recording
and reporting accounting information in our financial statements.
Goodwill.
The difference
between the purchase
price of acquired
companies plus the fair
value of any noncontrolling
and redeemable
interests and the related fair values of net assets acquired.
Gross margin.
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
hedges that allows changes in
a hedging instrument’s
fair value to offset
corresponding
changes in
the hedged
item in
the same
reporting period.
Hedge accounting
is permitted
for certain
hedging instruments
and hedged
items
only
if
the
hedging
relationship
is
highly
effective,
and
only
prospectively
from
the
date
a
hedging
relationship
is
formally
documented.
Holistic Margin Management
(HMM).
Company-wide initiative to
use productivity savings, mix
management, and price realization
to offset input cost inflation, protect margins,
and generate funds to reinvest in sales-generating activities.
Interest
bearing
instruments.
Notes
payable,
long-term
debt,
including
current
portion,
cash
and
cash
equivalents,
and
certain
interest bearing investments classified within prepaid expenses and other current
assets and other assets.
Mark-to-market.
The act of determining a value for
financial instruments, commodity contracts, and
related assets or liabilities based
on the current market price for that item.
38
Net
mark-to-market
valuation of
certain
commodity
positions.
Realized
and
unrealized
gains
and
losses on
derivative
contracts
that will be allocated to segment operating profit when the exposure we are hedging
affects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other price
promotion costs.
Net realizable
value.
The estimated
selling price
in the
ordinary course
of business,
less reasonably
predictable costs
of completion,
disposal, and transportation.
Noncontrolling interests.
Interests of subsidiaries held by third parties.
Notional
amount.
The
amount
of
a
position
or
an
agreed
upon
amount
in
a
derivative
contract
on
which
the
value
of
financial
instruments are calculated.
OCI.
Other Comprehensive Income.
Organic net sales growth
. Net sales growth adjusted
for foreign currency translation,
acquisitions, divestitures and a
53
rd
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
charges.
Reporting unit
. An operating segment or a business one level below an operating
segment.
SOFR.
Secured Overnight Financing Rate.
Strategic
Revenue
Management
(SRM).
A
company-wide
capability
focused
on
generating
sustainable
benefits
from
net
price
realization
and
mix
by
identifying
and
executing
against
specific
opportunities
to
apply
tools
including
pricing,
sizing,
mix
management, and promotion optimization across each of our businesses.
Supply chain
input costs.
Costs incurred
to produce
and deliver
product,
including costs
for
ingredients
and
conversion, inventory
management, logistics, and warehousing.
Translation
adjustments.
The impact
of the conversion
of our foreign
affiliates’ financial
statements to United
States dollars
for the
purpose of consolidating our financial statements.
Working capital
. Current assets and current liabilities, all as of the last day of our fiscal year.
39
CAUTIONARY STATEMENT
RELEVANT
TO FORWARD
-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995
This report
contains or
incorporates by
reference
forward-looking
statements within
the meaning
of the
Private Securities
Litigation
Reform Act
of 1995
that are
based on
our current
expectations and
assumptions. We
also may
make written
or oral
forward-looking
statements,
including
statements
contained
in
our
filings
with
the
Securities
and
Exchange
Commission
and
in
our
reports
to
stockholders.
The words or
phrases “will likely
result,” “are expected
to,” “will continue,”
“is anticipated,” “estimate,”
“plan,” “project,” or
similar
expressions identify
“forward-looking statements”
within the
meaning of
the Private
Securities Litigation
Reform Act
of 1995.
Such
statements are
subject to
certain risks
and uncertainties
that could
cause actual
results to
differ
materially from
historical results
and
those currently anticipated or projected. We
caution you not to place undue reliance on any such forward-looking statements.
In connection
with the “safe
harbor” provisions
of the Private
Securities Litigation
Reform Act of
1995, we are
identifying important
factors
that could
affect
our financial
performance
and could
cause our
actual results
in future
periods
to differ
materially
from any
current opinions or statements.
Our
future
results
could
be
affected
by
a
variety
of
factors,
such
as:
disruptions
or
inefficiencies
in
the
supply
chain;
competitive
dynamics in the consumer foods
industry and the markets for
our products, including new product
introductions, advertising activities,
pricing actions, and promotional
activities of our competitors;
economic conditions, including
changes in inflation rates,
interest rates,
tax
rates,
or
the
availability
of
capital;
product
development
and
innovation;
consumer
acceptance
of
new
products
and
product
improvements;
consumer
reaction
to
pricing
actions
and
changes
in
promotion
levels;
acquisitions
or
dispositions
of
businesses
or
assets; changes in capital structure;
changes in the legal and regulatory
environment, including tax legislation, labeling
and advertising
regulations, and litigation; impairments in the carrying
value of goodwill, other intangible assets, or other long
-lived assets, or changes
in the
useful lives
of other
intangible assets;
changes in
accounting standards
and the impact
of critical
accounting estimates;
product
quality
and
safety
issues,
including
recalls
and
product
liability;
changes
in
consumer
demand
for
our
products;
effectiveness
of
advertising,
marketing,
and
promotional
programs;
changes
in
consumer
behavior,
trends,
and
preferences,
including
weight
loss
trends; consumer perception
of health-related issues,
including obesity; consolidation
in the retail environment;
changes in purchasing
and
inventory
levels
of
significant
customers;
fluctuations
in
the
cost
and
availability
of
supply
chain
resources,
including
raw
materials,
packaging,
energy,
and
transportation;
effectiveness
of
restructuring
and
cost
saving
initiatives;
volatility
in
the
market
value of
derivatives used to
manage price
risk for certain
commodities; benefit
plan expenses due
to changes
in plan asset
values and
discount rates used to determine plan liabilities; failure or
breach of our information technology systems; foreign
economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
and economic uncertainty due to terrorism or war.
You
should also
consider the risk
factors that we
identify in Item
1A of Part
I of our
Annual Report on
Form 10-K for
the fiscal year
ended May 28, 2023, which could also affect our future results.
We undertake
no obligation to publicly revise any forward-looking
statements to reflect events or circumstances
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
The
estimated
maximum
potential
value-at-risk
arising
from
a
one-day
loss
in
fair
value
for
our
interest
rate,
foreign
exchange,
commodity, and equity
market-risk-sensitive instruments outstanding as of November 26,
2023, was as follows:
In Millions
One-day Risk
of Loss
Change During
Six-Month
Period Ended
Nov. 26, 2023
Analysis of Change
Interest rate instruments
$
57
$
(9)
Lower interest rate volatility
Foreign currency instruments
28
(8)
Net price stability in portfolio
Commodity instruments
6
(1)
Immaterial
Equity instruments
2
(1)
Immaterial
For additional information, see Item 7A of Part II of our Annual Report on Form 10-K
for the fiscal year ended May 28, 2023.
40
Item 4.
Controls and Procedures.
We,
under the
supervision and
with the
participation of
our management,
including our
Chief Executive
Officer and
Chief Financial
Officer,
have
evaluated
the
effectiveness
of
the design
and
operation
of
our
disclosure
controls
and
procedures
(as
defined
in
Rule
13a-15(e)
under
the
Securities
Exchange
Act
of
1934).
Based
on
our
evaluation,
our
Chief
Executive
Officer
and
Chief
Financial
Officer
have
concluded
that,
as
of
November
26,
2023,
our
disclosure
controls
and
procedures
were
effective
to
ensure
that
information required to
be disclosed by us
in reports that we
file or submit under
the Securities Exchange Act
of 1934 is (1)
recorded,
processed, summarized,
and reported
within the
time periods
specified in
Securities and
Exchange Commission
rules and
forms, and
(2)
accumulated
and
communicated
to
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
in
a
manner that allows timely decisions regarding required disclosure.
There were no changes in our internal
control over financial reporting (as defined
in Rule 13a-15(f) under the Securities Exchange
Act
of
1934)
during
the
quarter
ended
November
26,
2023,
that
materially
affected,
or
are
reasonably
likely
to
materially
affect,
our
internal control over financial reporting.
PART
II.
OTHER INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
The
following
table
sets forth
information
with
respect
to
shares
of
our
common
stock
that we
purchased
during
the quarter
ended
November 26, 2023:
Period
Total
Number
of Shares
Purchased (a)
Average
Price Paid
Per Share
Total
Number of Shares
Purchased as Part of a Publicly
Announced Program (b)
Maximum Number of Shares
that may yet be Purchased
Under the Program (b)
August 28, 2023 -
September 24, 2023
1,885,427
$
64.39
1,885,427
76,589,932
September 25, 2023 -
October 29, 2023
3,286,392
62.75
3,286,392
73,303,540
October 30, 2023 -
November 26, 2023
7,272,350
64.95
7,272,350
66,031,190
Total
12,444,169
$
64.29
12,444,169
66,031,190
(a)
The total number
of shares purchased
includes shares of
common stock withheld
for the payment
of withholding taxes
upon the distribution
of
deferred option units.
(b)
On June
27, 2022,
our Board
of Directors approved
an authorization
for the
repurchase of
up to
100,000,000 shares of
our common stock
and
terminated the
prior authorization.
Purchases can
be made
in the
open market
or in
privately negotiated
transactions, including
the use
of call
options
and
other
derivative
instruments,
Rule
10b5-1
trading
plans,
and
accelerated
repurchase
programs.
The
Board
did
not
specify
an
expiration date for the authorization.
Item 5.
Other Information.
During
the
fiscal
quarter
ended
November
26,
2023,
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.
41
PART
II. OTHER INFORMATION
Item 6.
Exhibits.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Financial Statements from the
Quarterly Report on Form
10-Q of the Company
for the quarter ended November
26,
2023,
formatted
in
Inline
Extensible
Business
Reporting
Language:
(i)
Consolidated
Statements
of
Earnings;
(ii)
Consolidated
Statements
of
Comprehensive
Income,
(iii)
Consolidated
Balance
Sheets;
(iv)
Consolidated
Statements of
Total
Equity; (v)
Consolidated Statements
of Cash
Flows; and
(vi) Notes
to Consolidated
Financial
Statements.
104
Cover Page, formatted in Inline Extensible Business Reporting Language
and contained in Exhibit 101.
42
SIGNATURES
Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalf by the undersigned thereunto duly authorized.
GENERAL MILLS, INC.
(Registrant)
Date: December 20, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
Officer
(Principal Accounting Officer and Duly Authorized
Officer)