10-Q 1 d392633d10q.htm 10-Q 10-Q
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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 27, 2022
 
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
1.000% Notes due 2023
 
GIS23A
 
New York Stock Exchange
0.125% Notes due 2025
GIS25A
New York Stock Exchange
0.450% Notes due 2026
 
GIS26
 
New York Stock Exchange
1.500% Notes due 2027
 
GIS27
 
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 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,
 
2022:
589,610,717
 
(excluding
165,002,611
 
shares held
 
in the
treasury).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Net sales
$
5,220.7
$
5,024.0
$
9,938.3
$
9,563.9
Cost of sales
3,515.6
3,392.8
6,785.5
6,335.3
Selling, general, and administrative expenses
894.2
828.8
1,685.6
1,586.2
Divestitures gain, net
-
-
(430.9)
-
Restructuring, impairment, and other exit
 
costs (recoveries)
11.1
2.3
12.7
(2.0)
Operating profit
799.8
800.1
1,885.4
1,644.4
Benefit plan non-service income
(21.7)
(27.7)
(43.4)
(57.3)
Interest, net
91.5
92.7
179.2
188.6
Earnings before income taxes and after-tax earnings
 
from
 
 
joint ventures
730.0
735.1
1,749.6
1,513.1
Income taxes
147.1
159.7
363.2
328.6
After-tax earnings from joint ventures
25.4
33.0
45.2
62.1
Net earnings, including earnings attributable to redeemable
 
 
and noncontrolling interests
608.3
608.4
1,431.6
1,246.6
Net earnings attributable to redeemable and
 
 
noncontrolling interests
2.4
11.2
5.7
22.4
Net earnings attributable to General Mills
$
605.9
$
597.2
$
1,425.9
$
1,224.2
Earnings per share – basic
$
1.01
$
0.98
$
2.38
$
2.01
Earnings per share – diluted
$
1.01
$
0.97
$
2.36
$
1.99
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. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Net earnings, including earnings attributable to
 
 
redeemable and noncontrolling interests
$
608.3
$
608.4
$
1,431.6
$
1,246.6
Other comprehensive loss, net of tax:
Foreign currency translation
(115.0)
(38.5)
(111.2)
(62.4)
Other fair value changes:
Hedge derivatives
20.8
18.7
(17.5)
20.4
Reclassification to earnings:
Foreign currency translation
-
-
(7.4)
-
Hedge derivatives
1.0
(6.4)
(0.4)
4.2
Amortization of losses and prior service costs
14.2
22.8
28.3
31.2
Other comprehensive loss, net of tax
(79.0)
(3.4)
(108.2)
(6.6)
Total comprehensive
 
income
 
529.3
605.0
1,323.4
1,240.0
Comprehensive income (loss) attributable to
 
 
redeemable and noncontrolling interests
3.0
(25.8)
5.0
(49.3)
Comprehensive income attributable to General Mills
$
526.3
$
630.8
$
1,318.4
$
1,289.3
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Nov. 27, 2022
May 29, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
644.1
$
569.4
Receivables
1,834.0
1,692.1
Inventories
2,121.3
1,867.3
Prepaid expenses and other current assets
731.2
802.1
Assets held for sale
-
158.9
Total current
 
assets
5,330.6
5,089.8
Land, buildings, and equipment
3,358.0
3,393.8
Goodwill
14,476.0
14,378.5
Other intangible assets
6,974.8
6,999.9
Other assets
1,180.4
1,228.1
Total assets
$
31,319.8
$
31,090.1
LIABILITIES
 
AND EQUITY
Current liabilities:
Accounts payable
$
4,022.6
$
3,982.3
Current portion of long-term debt
1,964.3
1,674.2
Notes payable
1,153.4
811.4
Other current liabilities
2,067.9
1,552.0
Total current
 
liabilities
9,208.2
8,019.9
Long-term debt
8,622.5
9,134.8
Deferred income taxes
2,186.9
2,218.3
Other liabilities
930.1
929.1
Total liabilities
20,947.7
20,302.1
Stockholders' equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,155.3
1,182.9
Retained earnings
18,991.9
18,532.6
Common stock in treasury,
 
at cost, shares of
164.4
 
and
155.7
(8,023.5)
(7,278.1)
Accumulated other comprehensive loss
(2,078.0)
(1,970.5)
Total stockholders' equity
10,121.2
10,542.4
Noncontrolling interests
250.9
245.6
Total equity
10,372.1
10,788.0
Total liabilities and equity
$
31,319.8
$
31,090.1
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Consolidated Statements of Total
 
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Nov. 27, 2022
Nov. 28, 2021
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,825.6
$
9,985.9
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,146.1
1,345.0
Stock compensation plans
(7.4)
(5.1)
Unearned compensation related to stock unit awards
(6.8)
(3.9)
Earned compensation
23.4
20.6
Decrease in redemption value of
 
redeemable interest
-
8.5
Ending balance
1,155.3
1,365.1
Retained earnings:
Beginning balance
19,027.6
17,384.5
Net earnings attributable to General Mills
605.9
597.2
Cash dividends declared ($
1.08
 
and $
1.02
 
per share)
(641.6)
(618.5)
Ending balance
18,991.9
17,363.2
Common stock in treasury:
Beginning balance
(160.3)
(7,676.0)
(148.3)
(6,715.0)
Shares purchased
(5.2)
(400.5)
(3.7)
(224.9)
Stock compensation plans
1.1
53.0
0.6
24.7
Ending balance
(164.4)
(8,023.5)
(151.4)
(6,915.2)
Accumulated other comprehensive loss:
Beginning balance
(1,998.4)
(2,397.7)
Comprehensive (loss) income
(79.6)
33.6
Ending balance
(2,078.0)
(2,364.1)
Noncontrolling interests:
Beginning balance
250.8
293.5
Comprehensive income (loss)
3.0
(11.9)
Distributions to noncontrolling interest holders
(2.9)
(1.4)
Ending balance
250.9
280.2
Total equity,
 
ending balance
$
10,372.1
$
9,804.7
Redeemable interest:
Beginning balance
$
-
$
584.0
Comprehensive loss
-
(13.9)
Decrease in redemption value of
 
 
redeemable interest
-
(8.5)
Ending balance
$
-
$
561.6
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
Consolidated Statements of Total
 
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Six-Month Period Ended
Nov. 27, 2022
Nov. 28, 2021
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,788.0
$
9,773.2
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,182.9
1,365.5
Stock compensation plans
1.9
4.0
Unearned compensation related to stock unit awards
(85.8)
(72.2)
Earned compensation
56.3
53.7
Decrease in redemption value of
 
redeemable interest
-
14.1
Ending balance
1,155.3
1,365.1
Retained earnings:
Beginning balance
18,532.6
17,069.8
Net earnings attributable to General Mills
1,425.9
1,224.2
Cash dividends declared ($
1.62
 
and $
1.53
 
per share)
(966.6)
(930.8)
Ending balance
18,991.9
17,363.2
Common stock in treasury:
Beginning balance
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Shares purchased
(12.1)
(901.3)
(6.2)
(375.0)
Stock compensation plans
3.4
155.9
1.7
71.0
Ending balance
(164.4)
(8,023.5)
(151.4)
(6,915.2)
Accumulated other comprehensive loss:
Beginning balance
(1,970.5)
(2,429.2)
Other comprehensive (loss) income
(107.5)
65.1
Ending balance
(2,078.0)
(2,364.1)
Noncontrolling interests:
Beginning balance
245.6
302.8
Comprehensive income (loss)
5.0
(20.1)
Distributions to noncontrolling interest holders
(4.8)
(2.5)
Divestiture
5.1
-
Ending balance
250.9
280.2
Total equity,
 
ending balance
$
10,372.1
$
9,804.7
Redeemable interest:
Beginning balance
$
-
$
604.9
Comprehensive loss
-
(29.2)
Decrease in redemption value of
 
redeemable interest
-
(14.1)
Ending balance
$
-
$
561.6
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. 27, 2022
Nov. 28, 2021
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling
 
interests
$
1,431.6
$
1,246.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
273.9
286.9
After-tax earnings from joint ventures
(45.2)
(62.1)
Distributions of earnings from joint ventures
26.5
35.8
Stock-based compensation
57.6
47.9
Deferred income taxes
(48.1)
56.4
Pension and other postretirement benefit plan contributions
(12.7)
(12.5)
Pension and other postretirement benefit plan costs
(13.5)
(14.4)
Divestitures gain, net
(430.9)
-
Restructuring, impairment, and other exit costs
(13.7)
(44.2)
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(64.4)
(88.7)
Other, net
39.6
46.1
Net cash provided by operating activities
1,200.7
1,497.8
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(226.7)
(224.3)
Acquisition, net of cash acquired
(251.5)
(1,198.6)
Proceeds from divestitures, net of cash divested
610.7
-
Investments in affiliates, net
(1.4)
4.8
Proceeds from disposal of land, buildings, and equipment
0.5
1.5
Other, net
(6.5)
20.6
Net cash provided (used) by investing activities
125.1
(1,396.0)
Cash Flows - Financing Activities
Change in notes payable
353.4
854.2
Issuance of long-term debt
500.0
1,935.0
Payment of long-term debt
(600.0)
(2,221.7)
Proceeds from common stock issued on exercised options
118.5
26.1
Purchases of common stock for treasury
(901.3)
(375.0)
Dividends paid
(647.9)
(623.2)
Distributions to noncontrolling and redeemable interest holders
(4.8)
(2.5)
Other, net
(48.4)
(20.1)
Net cash used by financing activities
(1,230.5)
(427.2)
Effect of exchange rate changes on cash and cash equivalents
(20.6)
(35.1)
Increase (decrease) in cash and cash equivalents
74.7
(360.5)
Cash and cash equivalents - beginning of year
569.4
1,505.2
Cash and cash equivalents - end of period (includes $
123.7
 
million of cash classified as
held for sale as of November 28, 2021)
$
644.1
$
1,144.7
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(200.8)
$
(237.3)
Inventories
(278.5)
9.2
Prepaid expenses and other current assets
62.9
(1.2)
Accounts payable
112.5
(28.4)
Other current liabilities
239.5
169.0
Changes in current assets and liabilities
$
(64.4)
$
(88.7)
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
 
and redeemable
 
interests’ share
 
of those
 
transactions. Operating
 
results for
 
the fiscal
 
quarter ended
 
November 27,
2022,
 
are not necessarily indicative of the results that may be expected for the fiscal year
 
ending May 28, 2023.
 
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
 
29, 2022. The
 
accounting policies used
 
in preparing these
 
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
 
Statements in that Form 10-K.
Certain terms used throughout this report are defined in the “Glossary” section below.
(2) Acquisitions 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 consoli
 
dated the TNT Crust business
 
into our Consolidated Balance
 
Sheets and recorded goodwill
 
of
$
154.3
 
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.
 
We
 
have
 
conducted
 
a
 
preliminary
 
assessment
 
of
 
the
 
fair
 
value
 
of
 
the
 
acquired
assets
 
and
 
liabilities
 
of
 
the
 
TNT
 
Crust
 
business
 
and
 
will
 
continue
 
to
 
review
 
these
 
items
 
during
 
the
 
measurement
 
period.
 
If
 
new
information is obtained
 
about facts and circumstances
 
that existed at the
 
acquisition date, the
 
acquisition accounting will
 
be revised to
reflect the resulting adjustments to
 
current estimates of these items.
 
The consolidated results of the
 
TNT Crust business are reported
 
in
our North America Foodservice segment on a one-month lag.
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.
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
acquired
 
Tyson
 
Foods’
 
pet
 
treats
 
business
 
for
 
$
1.2
 
billion
 
in
 
cash.
 
We
 
financed
 
the
transaction
 
with
 
a
 
combination
 
of
 
cash
 
on
 
hand
 
and
 
short-term
 
debt.
 
We
 
consolidated
 
the pet
 
treats
 
business
 
into
 
our
 
Consolidated
Balance
 
Sheets
 
and
 
recorded
 
goodwill
 
of
 
$
762.3
 
million,
 
indefinite-lived
 
intangible
 
assets
 
for
 
the
Nudges
,
Top
 
Chews
,
 
and
True
Chews
 
brands
 
totaling
 
$
330.0
 
million
 
in
 
aggregate,
 
and
 
a
 
finite-lived
 
customer
 
relationship
 
asset
 
of
 
$
40.0
 
million.
 
The
 
goodwill
 
is
included in the Pet segment and is deductible for tax purposes. The pro forma effects
 
of this acquisition were not material.
(3) Restructuring, Impairment, and Other Exit Costs
In the six-month period
 
ended November 27, 2022,
 
we did not undertake
 
any new restructuring
 
actions. 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
 
recorded $
2.7
 
million of
 
restructuring charges
 
in the
second
 
quarter of
 
fiscal 2022
 
and
 
a $
1.4
 
million net
 
recovery of
 
restructuring
 
charges
 
in the
 
six-month
 
period
 
ended November
 
28,
2021, related to restructuring actions previously announced. We
 
expect these actions to be completed by the end of
fiscal 2024
.
In
 
the
 
second
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
increased
 
the
 
estimate
 
of
 
restructuring
 
charges
 
that
 
we
 
expect
 
to
 
incur
 
related
 
to
 
our
previously announced
 
actions in the
 
International segment
 
to drive efficiencies
 
in manufacturing
 
and logistics operations.
 
As a result,
we recorded
 
a $
4.5
 
million increase
 
to our
 
restructuring reserve
 
primarily related
 
to estimated
 
severance charges.
 
We
 
expect to
 
incur
approximately
 
$
25
 
million
 
of
 
restructuring
 
charges
 
and
 
project-related
 
costs
 
related
 
to
 
these
 
actions,
 
of
 
which
 
approximately
 
$
16
million will be
 
cash. These charges
 
are expected
 
to consist of
 
approximately $
12
 
million of severance
 
and $
10
 
million of other
 
costs,
primarily
 
asset write-offs.
 
We
 
also
 
expect
 
to
 
incur
 
approximately
 
$
3
 
million
 
of project-related
 
costs.
 
We
 
expect
 
these actions
 
to be
completed by the end of
fiscal 2024
.
In
 
the
 
second
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
increased
 
the
 
estimate
 
of
 
restructuring
 
charges
 
that
 
we
 
expect
 
to
 
incur
 
related
 
to
 
our
previously
 
announced
 
global
 
organizational
 
structure
 
and
 
resource
 
realignment
 
actions.
 
As
 
a
 
result,
 
we
 
recorded
 
a
 
$
4.1
 
million
increase to our
 
restructuring reserve primarily
 
related to estimated
 
severance charges.
 
We
 
expect to incur
 
approximately $
140
 
million
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
of
 
restructuring
 
charges
 
related
 
to
 
these
 
actions,
 
of
 
which
 
approximately
 
$
115
 
million
 
will
 
be
 
cash.
 
These
 
charges
 
are
 
expected
 
to
consist
 
of
 
approximately
 
$
105
 
million
 
of
 
severance
 
and
 
approximately
 
$
35
 
million
 
of
 
other
 
costs.
 
We
 
expect
 
these
 
actions
 
to
 
be
completed by the end of
fiscal 2023
.
 
We
 
paid
 
net
 
$
27.6
 
million
 
of
 
cash
 
in
 
the
 
six-month
 
period
 
ended
 
November
 
27,
 
2022,
 
related
 
to
 
restructuring
 
actions
 
previously
announced. We
 
paid net $
42.8
 
million of cash in the same period of fiscal 2022.
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 29, 2022
$
36.8
Fiscal 2023 charges, including foreign currency translation
7.5
Utilized in fiscal 2023
(24.1)
Reserve balance as of Nov. 27, 2022
$
20.2
The reserve balance primarily consists of expected severance payments
 
associated with restructuring actions.
 
The charges
 
recognized in
 
the roll forward
 
of our reserves
 
for restructuring
 
and other exit
 
costs do not
 
include items
 
charged directly
to expense
 
(e.g., asset
 
impairment charges,
 
accelerated depreciation,
 
the gain
 
or loss
 
on the
 
sale of
 
restructured assets,
 
and the
 
write-
off
 
of
 
spare parts)
 
and other
 
periodic
 
exit costs
 
are
 
recognized
 
as incurred,
 
as those
 
items are
 
not reflected
 
in our
 
restructuring
 
and
other exit cost reserves on our Consolidated Balance Sheets.
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
 
 
In Millions
Nov. 27, 2022
May 29, 2022
Goodwill
$
14,476.0
$
14,378.5
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,706.6
6,725.8
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
401.9
400.3
Less accumulated amortization
(133.7)
(126.2)
Intangible assets subject to amortization, net
268.2
274.1
Other intangible assets
6,974.8
6,999.9
Total
$
21,450.8
$
21,378.4
Based
 
on
 
the carrying
 
value
 
of
 
finite-lived
 
intangible
 
assets as
 
of
 
November
 
27,
 
2022,
 
annual
 
amortization
 
expense
 
for
 
each of
 
the
next five fiscal years is estimated to be approximately $
20
 
million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
The changes in the carrying amount of goodwill during the six-month period
 
ended November 27, 2022, were as follows:
In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Joint Ventures
Total
Balance as of May 29, 2022
$
6,552.9
$
6,062.8
$
648.8
$
721.6
$
392.4
$
14,378.5
Acquisition
-
-
154.3
-
-
154.3
Divestiture
-
-
-
(0.4)
-
(0.4)
Other activity, primarily
 
 
foreign currency translation
(6.4)
-
-
(37.5)
(12.5)
(56.4)
Balance as of Nov. 27, 2022
$
6,546.5
$
6,062.8
$
803.1
$
683.7
$
379.9
$
14,476.0
The changes in the carrying amount of other intangible assets during the six-month
 
period ended November 27, 2022, were as follows:
In Millions
Total
Balance as of May 29, 2022
$
6,999.9
Acquisition
3.8
Other activity, primarily
 
foreign currency translation
(28.9)
Balance as of Nov. 27, 2022
$
6,974.8
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
 
brand intangible assets
 
had risk of decreasing
 
coverage. We
 
will continue to
monitor these businesses for potential impairment.
(5) Inventories
The components of inventories were as follows:
In Millions
Nov. 27, 2022
May 29, 2022
Raw materials and packaging
$
565.8
$
532.0
Finished goods
1,923.6
1,634.7
Grain
156.1
164.0
Excess of FIFO over LIFO cost
(524.2)
(463.4)
Total
$
2,121.3
$
1,867.3
(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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
Unallocated corporate items for the quarters and six-month periods ended
 
November 27, 2022, and November 28, 2021, included:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Net (loss) gain on mark-to-market valuation of certain
 
 
commodity positions
$
(20.9)
$
16.6
$
(93.2)
$
47.0
Net gain on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
(20.5)
(35.9)
(63.5)
(70.6)
Net mark-to-market revaluation of certain grain inventories
16.3
31.4
(43.1)
59.8
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
(25.1)
$
12.1
$
(199.8)
$
36.2
As of
 
November
 
27,
 
2022,
 
the net
 
notional
 
value
 
of
 
commodity
 
derivatives
 
was $
429.4
 
million,
 
of
 
which
 
$
158.1
 
million
 
related
 
to
energy inputs and $
271.3
 
million related to agricultural inputs. These contracts relate to inputs that generally
 
will be utilized within the
next
12
 
months.
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
 
27,
 
2022
 
and
 
were
 
Level
 
1
 
or
 
Level
 
2
 
assets
 
and
 
liabilities
 
in
 
the
 
fair
 
value
 
hierarchy.
 
We
 
did
 
not
significantly change our valuation techniques from prior periods.
 
We
 
offer
 
certain
 
suppliers
 
access
 
to
 
third
 
party
 
services
 
that
 
allow
 
them
 
to
 
view
 
our
 
scheduled
 
payments
 
online.
 
The
 
third-party
services also
 
allow suppliers
 
to finance
 
advances on
 
our scheduled
 
payments at
 
the sole
 
discretion of
 
the supplier
 
and the third
 
party.
We
 
have no
 
economic interest
 
in these
 
financing arrangements
 
and no
 
direct relationship
 
with the
 
suppliers, the
 
third parties,
 
or any
financial
 
institutions
 
concerning
 
these
 
services.
 
All
 
of
 
our
 
accounts
 
payable
 
remain
 
as
 
obligations
 
to
 
our
 
suppliers
 
as
 
stated
 
in
 
our
supplier agreements.
 
As of
 
November 27,
 
2022, $
1,477.4
 
million of
 
our total
 
accounts payable
 
were payable
 
to suppliers
 
who utilize
these third-party
 
services. As
 
of November
 
28,
 
2021, $
1,378.1
 
million
 
of our
 
total accounts
 
payable
 
were payable
 
to suppliers
 
who
utilize these third-party services.
During
 
the
 
second
 
quarter
 
of
 
fiscal
 
2023,
 
we
 
entered
 
into
 
a
 
$
500.0
 
million
 
notional
 
amount
 
interest
 
rate
 
swap
 
to
 
convert
 
our
$
500.0
 
million fixed rate notes due
November 18, 2025
, to a floating rate.
(7) Debt
The components of notes payable were as follows:
 
 
In Millions
Nov. 27, 2022
May 29, 2022
U.S. commercial paper
$
1,126.6
$
694.8
Financial institutions
26.8
116.6
Total
$
1,153.4
$
811.4
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
 
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of November 27, 2022:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.6
-
Total committed
 
and uncommitted credit facilities
$
3.3
$
-
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 27, 2022.
Long-Term
 
Debt
 
The fair
 
values and
 
carrying amounts
 
of long-term
 
debt, including
 
the current
 
portion, were
 
$
9,875.3
 
million and
 
$
10,586.8
 
million,
respectively,
 
as of
 
November 27,
 
2022. The
 
fair value
 
of long-term
 
debt was
 
estimated using
 
market quotations
 
and discounted
 
cash
 
14
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
 
2023,
 
we
 
issued
 
$
500.0
 
million
 
of
5.241
 
percent
 
notes
 
due
November 18, 2025
.
 
We
 
used
 
the
 
net
proceeds to repay a portion of our outstanding commercial paper and
 
for general corporate purposes.
In the
 
second quarter
 
of fiscal
 
2023, we
 
issued €
250.0
 
million of
 
floating-rate notes
 
due
May 16, 2023
.
 
We
 
used the
 
net proceeds
 
to
repay €
250.0
 
million of
0.0
 
percent fixed-rate notes due
November 11, 2022
.
In
 
the fourth
 
quarter
 
of fiscal
 
2022,
 
we repaid
 
$
850.0
 
million
 
of
3.7
 
percent
 
fixed
 
rate notes
 
due
October 17, 2023
, using
 
proceeds
from the issuance of commercial paper.
In the fourth quarter of fiscal 2022, we issued €
250.0
 
million of
0.0
 
percent fixed-rate notes due
November 11, 2022
. We used the net
proceeds for general corporate purposes.
In the second quarter of fiscal 2022, we issued €
500.0
 
million of
0.125
 
percent fixed-rate notes due
November 15, 2025
. We used the
net proceeds to repay a portion of our €
500.0
 
million of
0.0
 
percent fixed-rate notes due
November 16, 2021
, and for general corporate
purposes.
In the second quarter of fiscal 2022, we issued €
250.0
 
million of floating-rate notes due
May 16, 2023
. We used the net proceeds
 
to
repay a portion of our outstanding commercial paper and for general
 
corporate purposes.
In the second quarter of fiscal 2022, we issued $
500.0
 
million of
2.25
 
percent notes due
October 14, 2031
. We used the net proceeds
together with proceeds from the issuance of commercial paper,
 
to repay $
1,000.0
 
million of
3.15
 
percent fixed-rate notes due
December 15, 2021
.
In the first quarter of fiscal 2022, we issued €
500.0
 
million of floating-rate notes due
July 27, 2023
. We used the net proceeds to
 
repay
500.0
 
million of
0.0
 
percent fixed-rate notes due
August 21, 2021
.
In the first quarter of fiscal 2022, we repaid €
200.0
 
million of
2.2
 
percent fixed-rate notes due
June 24, 2021
, using proceeds from the
issuance of €
50.0
 
million of
2.2
 
percent fixed-rate notes due
November 29, 2021
, and borrowings under a committed credit facility.
Certain of our
 
long-term debt agreements
 
contain restrictive
 
covenants.
As of November 27, 2022, we were in compliance with all of
these covenants.
(8) Redeemable and 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).
 
On
 
June 1,
 
2021,
 
the
 
floating
 
preferred
 
return
 
rate
 
on
 
GMC’s
Class A Interests
 
was reset
 
to the
 
sum of
three-month LIBOR
 
plus
160
 
basis points.
 
The preferred
 
return rate
 
is adjusted
 
every
three
years
 
through a negotiated agreement with the Class A Interest holder or through
 
a remarketing auction.
During
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
completed
 
the
 
sale
 
of
 
our
 
interests
 
in
 
Yoplait
 
SAS,
 
Yoplait
 
Marques
 
SNC
 
and
 
Liberté
Marques
 
Sàrl
 
to
 
Sodiaal
 
International
 
(Sodiaal)
 
in
 
exchange
 
for
 
Sodiaal’s
 
interest
 
in
 
our
 
Canadian
 
yogurt
 
business,
 
a
 
modified
agreement for the use of
Yoplait
 
and
Liberté
brands in the United States and Canada, and cash.
 
Up to
 
the date
 
of the
 
divestiture, Sodiaal
 
held the remaining
 
interests in
 
each of
 
the entities.
 
On the
 
acquisition date,
 
we recorded
 
the
fair
 
value
 
of
 
Sodiaal’s
49
 
percent
 
euro-denominated
 
interest
 
in
 
Yoplait
 
SAS
 
as
 
a
 
redeemable
 
interest
 
on
 
our
 
Consolidated
 
Balance
Sheets. Sodiaal had
 
the right to
 
put all or
 
a portion of
 
its redeemable interest
 
to us at
 
fair value until
 
the divestiture closed
 
in the third
quarter of
 
fiscal 2022.
 
In connection
 
with the
 
divestiture, cumulative
 
adjustments made
 
to the
 
redeemable
 
interest related
 
to the
 
fair
value put feature were
 
reversed against additional paid-in
 
capital, where changes in the
 
redemption amount were historically recorded,
and the resulting carrying value of the noncontrolling interests were included
 
in the calculation of the gain on divestiture.
A
subsidiary of Yoplait
 
SAS had an exclusive
 
milk supply agreement
 
for its European operations
 
with Sodiaal through
 
November 28,
2021. Net purchases totaled $
99.5
 
million for the six-month period ended November 28, 2021.
Our noncontrolling interests contain restrictive covenants. As of November 27, 2022, we were in compliance with all of these
covenants.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
(9) Stockholders’ Equity
 
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Nov. 27, 2022
Nov. 28, 2021
General Mills
Noncontrolling
Interests
 
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net
Net earnings, including earnings
 
 
attributable to redeemable and
 
 
noncontrolling interests
 
$
605.9
$
2.4
$
597.2
$
1.9
$
9.3
Other comprehensive (loss) income:
Foreign currency translation
$
(144.7)
$
29.1
(115.6)
0.6
$
(29.0)
$
27.8
(1.2)
(13.8)
(23.5)
Other fair value changes:
Hedge derivatives
26.8
(6.0)
20.8
-
29.1
(11.0)
18.1
-
0.6
Reclassification to earnings:
Hedge derivatives (a)
1.8
(0.8)
1.0
-
(12.1)
6.0
(6.1)
-
(0.3)
Amortization of losses and
 
prior service costs (b)
18.3
(4.1)
14.2
-
29.2
(6.4)
22.8
-
-
Other comprehensive (loss) income
$
(97.8)
$
18.2
(79.6)
0.6
$
17.2
$
16.4
33.6
(13.8)
(23.2)
Total comprehensive income (loss)
$
526.3
$
3.0
$
$
630.8
$
(11.9)
$
(13.9)
(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. 27, 2022
Nov. 28, 2021
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net
Net earnings, including earnings
 
attributable to redeemable and
 
noncontrolling interests
 
$
1,425.9
$
5.7
$
$
1,224.2
$
4.9
$
17.5
Other comprehensive (loss) income:
Foreign currency translation
$
(86.7)
$
(23.8)
(110.5)
(0.7)
$
(40.9)
$
50.5
9.6
(25.0)
(47.0)
Other fair value changes:
Hedge derivatives
(23.0)
5.5
(17.5)
-
31.9
(12.0)
19.9
-
0.5
Reclassification to earnings:
Foreign currency translation (a)
(7.4)
-
(7.4)
-
-
-
-
-
-
Hedge derivatives (b)
(0.1)
(0.3)
(0.4)
-
(0.1)
4.5
4.4
-
(0.2)
Amortization of losses and
 
prior service costs (c)
 
36.5
(8.2)
28.3
-
40.0
(8.8)
31.2
-
-
Other comprehensive (loss) income
$
(80.7)
$
(26.8)
(107.5)
(0.7)
$
30.9
$
34.2
65.1
(25.0)
(46.7)
Total comprehensive income (loss)
$
1,318.4
$
5.0
$
$
1,289.3
$
(20.1)
$
(29.2)
(a)
 
Gain reclassified from AOCI into earnings is reported in the divestitures gain, net.
(b)
 
(Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(c)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,
 
were as follows:
 
In Millions
Nov. 27, 2022
May 29, 2022
Foreign currency translation adjustments
$
(708.6)
$
(590.7)
Unrealized gain from hedge derivatives
5.4
23.3
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,477.0)
(1,513.4)
Prior service credits
102.2
110.3
Accumulated other comprehensive loss
$
(2,078.0)
$
(1,970.5)
(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 29, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
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. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Compensation expense related to stock-based payments
$
24.1
$
13.9
$
57.6
$
47.5
Compensation
 
expense
 
related
 
to
 
stock-based
 
payments
 
recognized
 
in
 
the
 
Consolidated
 
Statements
 
of
 
Earnings
 
includes
 
amounts
recognized in restructuring, impairment, and other exit costs in fiscal 2022.
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Windfall tax benefits from stock-based payments
$
5.6
$
1.6
$
18.4
$
6.3
As
 
of
 
November
 
27,
 
2022,
 
unrecognized
 
compensation
 
expense
 
related
 
to
 
non-vested
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
performance share units was $
147.4
 
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. 27, 2022
Nov. 28, 2021
Net cash proceeds
$
118.5
$
26.1
Intrinsic value of options exercised
$
55.7
$
12.1
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 29, 2022.
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. 27, 2022
Nov. 28, 2021
Estimated fair values of stock options granted
 
$
14.16
$
8.77
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
Expected term
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
Dividend yield
3.1
%
3.4
%
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. 27, 2022
Nov. 28, 2021
Total grant date fair
 
value
$
102.6
$
76.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
(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. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Net earnings attributable to General Mills
$
605.9
$
597.2
$
1,425.9
$
1,224.2
Average number
 
of common shares - basic EPS
595.9
608.6
598.0
609.5
Incremental share effect from: (a)
Stock options
3.7
2.2
3.6
2.1
Restricted stock units and performance share units
2.4
2.2
2.4
2.2
Average number
 
of common shares - diluted EPS
602.0
613.0
604.0
613.8
Earnings per share – basic
$
1.01
$
0.98
$
2.38
$
2.01
Earnings per share – diluted
$
1.01
$
0.97
$
2.36
$
1.99
(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. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
1.0
4.6
1.0
4.7
(12) Share Repurchases
Share repurchases were as follows:
 
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 27, 2022
Nov. 28, 2021
Nov. 27, 2022
Nov. 28, 2021
Shares of common stock
5.2
3.7
12.1
6.2
Aggregate purchase price
$
400.5
$
224.9
$
901.3
$
375.0
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
Six-Month Period Ended
In Millions
Nov. 27, 2022
Nov. 28, 2021
Net cash interest payments
$
154.3
$
185.7
Net income tax payments
$
365.4
$
271.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
(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. 27,
2022
Nov. 28,
2021
Nov. 27,
2022
Nov. 28,
2021
Nov. 27,
2022
Nov. 28,
2021
Service cost
$
17.5
$
23.5
$
1.2
$
1.9
$
2.1
$
1.7
Interest cost
64.6
46.1
4.5
3.1
0.8
0.3
Expected return on plan assets
(105.0)
(102.9)
(7.8)
(6.7)
-
-
Amortization of losses (gains)
28.4
35.5
(4.8)
(2.7)
-
0.7
Amortization of prior service costs (credits)
0.3
0.2
(5.7)
(5.2)
0.1
0.1
Other adjustments
-
-
-
-
2.9
3.8
Curtailment loss (gain)
-
0.5
-
(0.2)
-
-
Net expense (income)
$
5.8
$
2.9
$
(12.6)
$
(9.8)
$
5.9
$
6.6
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. 27,
2022
Nov. 28,
2021
Nov. 27,
2022
Nov. 28,
2021
Nov. 27,
2022
Nov. 28,
2021
Service cost
$
35.1
$
47.2
$
2.6
$
3.8
$
4.2
$
3.5
Interest cost
129.2
92.4
9.0
6.3
1.6
0.7
Expected return on plan assets
(210.0)
(205.7)
(15.6)
(13.4)
-
-
Amortization of losses (gains)
56.7
70.4
(9.7)
(5.4)
0.1
1.5
Amortization of prior service costs (credits)
0.7
0.4
(11.5)
(10.4)
0.2
0.2
Other adjustments
-
-
-
-
5.9
5.7
Curtailment gain
-
(14.3)
-
(5.7)
-
-
Net expense (income)
$
11.7
$
(9.6)
$
(25.2)
$
(24.8)
$
12.0
$
11.6
(15) Income Taxes
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. We
 
do not
 
currently expect the
 
IRA to have
 
a material impact
 
on our financial
 
results, including our
 
annual estimated effective
tax
 
rate,
 
or
 
on
 
our
 
liquidity.
 
We
 
will
 
continue
 
to
 
monitor
 
and
 
assess
 
the
 
impact
 
the
 
IRA
 
may
 
have
 
on
 
our
 
business
 
and
 
financial
results.
During fiscal
 
2022, the
 
Brazilian tax
 
authority,
 
Secretaria da
 
Receita Federal
 
do Brasil
 
(RFB), concluded
 
audits of
 
our 2012
 
through
2018
 
tax
 
return
 
years.
 
These
 
audits
 
included
 
a
 
review
 
of
 
our
 
determinations
 
of
 
amortization
 
of
 
certain
 
goodwill
 
arising
 
from
 
the
acquisition of
 
Yoki
 
Alimentos S.A.
 
The RFB
 
has proposed
 
adjustments that
 
effectively
 
eliminate the
 
goodwill amortization
 
benefits
related to this transaction. We
 
believe we have meritorious defenses and intend to continue to contest the disallowance
 
for all years.
(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
 
27,
 
2022,
 
we
 
are
 
unable
 
to
estimate any possible loss and have not recorded a loss contingency for
 
this matter.
(17) Business Segment and Geographic Information
We
 
operate
 
in
 
the
 
packaged
 
foods
 
industry.
 
In
 
fiscal
 
2022,
 
we
 
completed
 
a
 
new
 
organization
 
structure
 
to
 
streamline
 
our
 
global
operations.
 
This
 
global
 
reorganization
 
required
 
us
 
to
 
reevaluate
 
our
 
operating
 
segments.
 
Under
 
our
 
new
 
organization
 
structure,
 
our
19
chief operating decision maker assesses performance
 
and makes decisions about resources to be allocated to
 
our operating segments as
follows: North America Retail; International; Pet; and North America
 
Foodservice.
 
We
 
have restated
 
our net
 
sales by segment
 
and segment
 
operating profit
 
to reflect our
 
previously reported
 
operating segment
 
change.
These
 
segment
 
changes
 
had
 
no
 
effect
 
on
 
previously
 
reported
 
consolidated
 
net
 
sales,
 
operating
 
profit,
 
net
 
earnings
 
attributable
 
to
General Mills, or earnings per share.
 
Our North America Retail
 
operating segment reflects business
 
with a wide variety of
 
grocery stores, mass merchandisers, membership
stores,
 
natural
 
food
 
chains,
 
drug,
 
dollar
 
and
 
discount
 
chains,
 
convenience
 
stores,
 
and
 
e-commerce
 
grocery
 
providers.
 
Our
 
product
categories
 
in
 
this
 
business
 
segment
 
include
 
ready-to-eat
 
cereals,
 
refrigerated
 
yogurt,
 
soup,
 
meal
 
kits,
 
refrigerated
 
and
 
frozen
 
dough
products,
 
dessert
 
and
 
baking
 
mixes,
 
frozen
 
pizza
 
and
 
pizza
 
snacks,
 
snack
 
bars,
 
fruit
 
snacks,
 
savory
 
snacks,
 
and
 
a
 
wide
 
variety
 
of
organic products
 
including ready-to-eat
 
cereal, frozen
 
and shelf-stable vegetables,
 
meal kits, fruit
 
snacks, snack
 
bars, and
 
refrigerated
yogurt.
Our
 
International
 
operating
 
segment
 
consists
 
of
 
retail
 
and
 
foodservice
 
businesses
 
outside
 
of
 
the
 
United
 
States
 
and
 
Canada.
 
Our
product categories include super-premium
 
ice cream and frozen desserts, meal kits, salty snacks,
 
snack bars, dessert and baking mixes,
and
 
shelf
 
stable