10-Q 1 d874379d10q.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
AUGUST 25, 2024
 
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
3.650% Notes due 2030
GIS 30A
New York Stock Exchange
3.850% Notes due 2034
GIS 34
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,
 
a
 
smaller
reporting
 
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer,”
 
“smaller
reporting company,” and
 
“emerging growth company” in Rule 12b-2 of the Exchange Act.
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
 
September 11,
 
2024:
555,158,898
 
(excluding
199,454,430
 
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
Aug. 25, 2024
Aug. 27, 2023
Net sales
$
4,848.1
$
4,904.7
Cost of sales
3,159.3
3,134.2
Selling, general, and administrative expenses
855.1
839.3
Restructuring, impairment, and other exit costs
2.2
1.2
Operating profit
831.5
930.0
Benefit plan non-service income
(13.9)
(17.0)
Interest, net
123.6
117.0
Earnings before income taxes and after-tax earnings
 
from joint ventures
721.8
830.0
Income taxes
157.4
173.2
After-tax earnings from joint ventures
19.2
23.5
Net earnings, including earnings attributable to noncontrolling interests
583.6
680.3
Net earnings attributable to noncontrolling interests
3.7
6.8
Net earnings attributable to General Mills
$
579.9
$
673.5
Earnings per share – basic
$
1.03
$
1.15
Earnings per share – diluted
$
1.03
$
1.14
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Net earnings, including earnings attributable to
 
noncontrolling interests
$
583.6
$
680.3
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(61.9)
(18.1)
Other fair value changes:
Hedge derivatives
(6.0)
(2.3)
Reclassification to earnings:
Hedge derivatives
-
0.2
Amortization of losses and prior service costs
11.6
9.1
Other comprehensive loss, net of tax
(56.3)
(11.1)
Total comprehensive
 
income
 
527.3
669.2
Comprehensive income attributable to noncontrolling
 
interests
4.2
6.9
Comprehensive income attributable to General Mills
$
523.1
$
662.3
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Aug. 25, 2024
May 26, 2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
468.1
$
418.0
Receivables
1,843.8
1,696.2
Inventories
1,996.4
1,898.2
Prepaid expenses and other current assets
505.3
568.5
Total current
 
assets
4,813.6
4,580.9
Land, buildings, and equipment
3,776.3
3,863.9
Goodwill
14,787.7
14,750.7
Other intangible assets
6,982.8
6,979.9
Other assets
1,408.8
1,294.5
Total assets
$
31,769.2
$
31,469.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,823.4
$
3,987.8
Current portion of long-term debt
1,640.0
1,614.1
Notes payable
249.1
11.8
Other current liabilities
1,576.9
1,419.4
Total current
 
liabilities
7,289.4
7,033.1
Long-term debt
11,431.3
11,304.2
Deferred income taxes
2,195.3
2,200.6
Other liabilities
1,326.6
1,283.5
Total liabilities
22,242.6
21,821.4
Stockholders’ equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,164.6
1,227.0
Retained earnings
21,213.9
20,971.8
Common stock in treasury,
 
at cost, shares of
198.8
 
and
195.5
(10,601.9)
(10,357.9)
Accumulated other comprehensive loss
(2,576.5)
(2,519.7)
Total stockholders’
 
equity
9,275.6
9,396.7
Noncontrolling interests
251.0
251.8
Total equity
9,526.6
9,648.5
Total liabilities and equity
$
31,769.2
$
31,469.9
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Consolidated Statements of Total
 
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
9,648.5
$
10,700.0
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,227.0
1,222.4
Stock compensation plans
(5.2)
7.3
Unearned compensation related to stock unit awards
(77.1)
(79.4)
Earned compensation
19.9
35.4
Ending balance
1,164.6
1,185.7
Retained earnings:
Beginning balance
20,971.8
19,838.6
Net earnings attributable to General Mills
579.9
673.5
Cash dividends declared ($
0.60
 
and $
0.59
 
per share)
(337.8)
(348.5)
Ending balance
21,213.9
20,163.6
Common stock in treasury:
Beginning balance
(195.5)
(10,357.9)
(168.0)
(8,410.0)
Shares purchased, including excise tax of $
2.2
 
and
 
$
4.2
 
million
(4.5)
(302.2)
(6.4)
(504.7)
Stock compensation plans
1.2
58.2
1.0
40.4
Ending balance
(198.8)
(10,601.9)
(173.4)
(8,874.3)
Accumulated other comprehensive loss:
Beginning balance
(2,519.7)
(2,276.9)
Comprehensive loss
(56.8)
(11.2)
Ending balance
(2,576.5)
(2,288.1)
Noncontrolling interests:
Beginning balance
251.8
250.4
Comprehensive income
4.2
6.9
Distributions to noncontrolling interest holders
(5.0)
(4.3)
Ending balance
251.0
253.0
Total equity,
 
ending balance
$
9,526.6
$
10,515.4
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
583.6
$
680.3
Adjustments to reconcile net earnings to net cash provided by operating
 
activities:
Depreciation and amortization
139.6
137.2
After-tax earnings from joint ventures
(19.2)
(23.5)
Distributions of earnings from joint ventures
23.1
15.8
Stock-based compensation
20.3
35.3
Deferred income taxes
16.2
(14.5)
Pension and other postretirement benefit plan contributions
(7.5)
(7.4)
Pension and other postretirement benefit plan costs
(3.2)
(5.3)
Restructuring, impairment, and other exit costs
0.2
2.4
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(107.6)
(457.4)
Other, net
(21.3)
15.2
Net cash provided by operating activities
624.2
378.1
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(140.3)
(141.7)
Acquisition, net of cash acquired
(7.7)
-
Proceeds from disposal of land, buildings, and equipment
0.6
-
Other, net
(0.6)
6.2
Net cash used by investing activities
(148.0)
(135.5)
Cash Flows - Financing Activities
Change in notes payable
238.0
551.8
Proceeds from common stock issued on exercised options
9.4
4.5
Purchases of common stock for treasury
(300.0)
(500.5)
Dividends paid
(337.8)
(348.5)
Distributions to noncontrolling interest holders
(5.0)
(4.3)
Other, net
(34.0)
(37.2)
Net cash used by financing activities
(429.4)
(334.2)
Effect of exchange rate changes on cash and cash equivalents
3.3
(3.0)
Increase (decrease) in cash and cash equivalents
50.1
(94.6)
Cash and cash equivalents - beginning of year
418.0
585.5
Cash and cash equivalents - end of period
$
468.1
$
490.9
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(145.6)
$
(104.4)
Inventories
(95.7)
(54.3)
Prepaid expenses and other current assets
59.7
140.9
Accounts payable
(76.4)
(443.8)
Other current liabilities
150.4
4.2
Changes in current assets and liabilities
$
(107.6)
$
(457.4)
See accompanying notes to consolidated financial statements.
 
9
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO 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
 
August
 
25,
 
2024,
 
are
 
not
necessarily indicative of the results that may be expected for the fiscal year ending
 
May 25, 2025.
 
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
 
26, 2024. 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) Acquisition and Divestiture
During the fourth quarter
 
of fiscal 2024, we acquired
 
a pet food business in Europe,
 
for a purchase price of $
434.1
 
million, net of cash
acquired.
 
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
we
 
paid
 
$
7.7
 
million
 
related
 
to
 
a
 
purchase
 
price
 
holdback
 
after
 
certain
 
closing
conditions
 
were
 
met.
We
financed
 
the
 
transaction
 
with
 
cash
 
on
 
hand.
 
We
 
consolidated
 
the
 
business
 
into
 
our
 
Consolidated
 
Balance
Sheets
 
and
 
recorded
 
goodwill
 
of
 
$
317.7
 
million,
 
an
 
indefinite-lived
 
brand
 
intangible
 
asset
 
of
 
$
118.4
 
million
 
and
 
a
 
finite-lived
customer
 
relationship
 
asset
 
of
 
$
14.2
 
million.
 
The
 
goodwill
 
is
 
included
 
in
 
the
 
International
 
segment
 
and
 
is
 
not
 
deductible
 
for
 
tax
purposes. The pro forma effects
 
of this acquisition were not
 
material. We
 
have conducted a preliminary assessment
 
of the fair value of
the acquired
 
assets and
 
liabilities of
 
the business
 
and we
 
are continuing
 
our review
 
of 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
 
those
 
items.
 
The
 
consolidated
 
results
 
are
 
reported
 
in
 
our
International operating segment on a one-month lag beginning in fiscal 2025.
On
 
September
 
12,
 
2024,
 
subsequent
 
to
 
the
 
end
 
of
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
we
 
entered
 
into
 
definitive
 
agreements
 
to
 
sell
 
our
North
 
American
 
Yogurt
 
businesses
 
to
 
affiliates
 
of
 
Groupe
 
Lactalis
 
S.A.
 
(Lactalis)
 
and
 
Sodiaal
 
International
 
(Sodiaal)
 
for
approximately
 
$
2.1
 
billion.
 
We
 
expect
 
to
 
close
 
these
 
divestitures
 
in
 
calendar
 
year
 
2025,
 
subject
 
to
 
regulatory
 
approvals
 
and
 
other
customary closing conditions.
 
(3) Restructuring, Impairment, and Other Exit Costs
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
we
 
did
 
not
 
undertake
 
any
 
new
 
restructuring
 
actions.
 
We
 
recorded
 
$
2.9
 
million
 
of
 
restructuring
charges
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
and
 
$
9.8
 
million
 
of
 
restructuring
 
charges
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024
 
related
 
to
restructuring actions previously announced.
 
We expect these actions to
 
be completed by the end of fiscal 2026.
We
 
paid net $
2.7
 
million of cash in
 
the first quarter
 
of fiscal 2025
 
related to restructuring
 
actions. We
 
paid net $
7.4
 
million of cash
 
in
the same period of fiscal 2024.
Restructuring and impairment charges and project-related
 
costs are recorded in our Consolidated Statements of Earnings as follows:
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Restructuring, impairment, and other exit costs
$
2.2
$
1.2
Cost of sales
0.7
8.6
Total restructuring
 
charges
$
2.9
$
9.8
Project-related costs classified in cost of sales
$
0.1
$
0.8
 
 
 
 
 
 
10
 
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
Aug. 25, 2024
May 26, 2024
Goodwill
$
14,787.7
$
14,750.7
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,735.9
6,728.6
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
402.9
402.2
Less accumulated amortization
(156.0)
(150.9)
Intangible assets subject to amortization, net
246.9
251.3
Other intangible assets
6,982.8
6,979.9
Total
$
21,770.5
$
21,730.6
Based on
 
the carrying
 
value of
 
finite-lived intangible
 
assets as
 
of August
 
25, 2024,
 
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 first quarter of fiscal 2025
 
were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
North
America
Retail
North
America
Pet
North
America
Foodservice
International
(a)
Corporate
and Joint
Ventures
Total
Balance as of May 26, 2024
$
6,541.9
$
6,062.8
$
805.5
$
917.1
$
423.4
$
14,750.7
Other activity, primarily
 
 
foreign currency translation
1.4
-
-
23.0
12.6
37.0
Balance as of Aug. 25, 2024
$
6,543.3
$
6,062.8
$
805.5
$
940.1
$
436.0
$
14,787.7
(a)
The carrying amounts of goodwill within the International segment as of
 
May 26, 2024, and August 25, 2024, were net of
accumulated impairment losses of $
117.1
 
million.
The changes in the carrying amount of other intangible assets during the first quarter
 
of fiscal 2025 were as follows:
 
 
 
 
 
 
In Millions
Total
Balance as of May 26, 2024
$
6,979.9
Foreign currency translation, net of amortization
2.9
Balance as of Aug. 25, 2024
$
6,982.8
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal 2024. As a
 
result of lower future profitability
 
projections for our Latin
 
America reporting unit, we
 
determined that the
 
fair value
of the
 
reporting
 
unit was
 
less than
 
its book
 
value
 
and
 
recorded a
 
$
117.1
 
million non-cash
 
goodwill
 
impairment
 
charge.
 
In addition,
during the
 
fourth quarter
 
of fiscal
 
2024, we
 
executed our
 
fiscal 2025
 
planning process
 
and preliminary
 
long-range planning
 
process,
which resulted in
 
lower future sales and
 
profitability projections for
 
the businesses supporting
 
our
Top
 
Chews
,
True Chews
, and
EPIC
brand intangible assets.
 
As a result of
 
this triggering event,
 
we performed an
 
interim impairment assessment
 
of these assets
 
as of May
26, 2024,
 
and determined
 
that the
 
fair value
 
of these
 
brand intangible
 
assets no
 
longer exceeded
 
the carrying
 
values of
 
the respective
assets, resulting in $
103.1
 
million of non-cash impairment charges.
 
We recorded
 
impairment charges in restructuring,
 
impairment, and
other exit
 
costs in
 
our Consolidated
 
Statements of
 
Earnings. Our
 
estimates of
 
the fair
 
values were
 
determined based
 
on a
 
discounted
cash flow model
 
using inputs which
 
included our long-range
 
cash flow projections
 
for the businesses,
 
royalty rates, weighted
 
-average
cost of capital rates, and tax rates. These fair values are Level 3 assets in the fair value hierarchy.
All other intangible
 
asset fair values
 
were substantially
 
in excess of
 
the carrying
 
values, except for
 
the
Uncle Toby’s
 
brand intangible
asset. In
 
addition,
 
while having
 
significant
 
coverage as
 
of our
 
fiscal 2024
 
assessment date,
 
the
Progresso
,
Nudges
, and
True
 
Chews
brand intangible assets had risk of decreasing coverage. We
 
will continue to monitor these businesses for potential impairment.
 
 
11
 
(5) Inventories
The components of inventories were as follows:
 
 
 
 
 
 
 
 
 
 
 
In Millions
Aug. 25, 2024
May 26, 2024
Finished goods
$
1,975.1
$
1,827.7
Raw materials and packaging
488.4
500.5
Grain
79.3
111.1
Excess of FIFO over LIFO cost
(546.4)
(541.1)
Total
$
1,996.4
$
1,898.2
 
 
(6) Risk Management Activities
 
Many commodities 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 ended August 25, 2024, and
 
August 27, 2023, included:
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net (loss) gain on mark-to-market valuation of certain
 
 
commodity positions
$
(37.7)
$
28.4
Net loss on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
17.2
3.2
Net mark-to-market revaluation of certain grain inventories
(8.3)
13.3
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
(28.8)
$
44.9
 
As
 
of
 
August
 
25,
 
2024,
 
the
 
net
 
notional
 
value
 
of
 
commodity
 
derivatives
 
was
 
$
233.4
 
million,
 
of
 
which
 
$
118.6
 
million
 
related
 
to
agricultural inputs and $
114.8
 
million related to energy 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
 
August 25,
 
2024, we
 
hedged a
 
portion
 
of
these investments with €
3,979.4
 
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
 
August 25, 2024,
 
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.
 
 
 
12
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 August
 
25, 2024,
 
$
1,421.6
 
million of
 
our total
 
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.
 
As of
 
May 26,
 
2024, $
1,404.4
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aug. 25, 2024
May 26, 2024
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
U.S. commercial paper
$
205.0
5.4
%
$
-
-
%
Financial institutions
44.1
7.7
11.8
8.8
Total
$
249.1
5.8
%
$
11.8
8.8
%
To ensure 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 August 25, 2024:
 
 
 
 
 
 
 
 
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committed
 
and uncommitted credit facilities
$
3.4
$
-
The
 
credit
 
facilities
 
contain
 
covenants,
 
including
 
a
 
requirement
 
to
 
maintain
 
a
 
fixed
 
charge
 
coverage
 
ratio
 
of
 
at
 
least
2.5
 
times.
We
were in compliance with all credit facility covenants as of August 25, 2024.
Long-Term
 
Debt
 
The fair values
 
and carrying
 
amounts of long-term
 
debt, including
 
the current portion,
 
were $
12,653.5
 
million and $
13,071.3
 
million,
respectively,
 
as
 
of
 
August
 
25,
 
2024.
 
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
 
fourth quarter
 
of fiscal 2024,
 
we issued €
500.0
 
million of
3.65
 
percent fixed-rate
 
notes due
October 23, 2030
. We
 
used the
 
net
proceeds for general corporate purposes.
In
 
the fourth
 
quarter
 
of fiscal
 
2024,
 
we issued
 
500.0
 
million
 
of
3.85
 
percent
 
fixed-rate notes
 
due
April 23, 2034
.
 
We
 
used
 
the net
proceeds for general corporate purposes.
In
 
the
 
third
 
quarter of
 
fiscal
 
2024,
 
we
 
issued
 
$
500.0
 
million
 
of
4.7
 
percent
 
fixed-rate
 
notes due
January 30, 2027
. We
 
used
 
the
 
net
proceeds to repay $
500.0
 
million of
3.65
 
percent fixed-rate notes due
February 15, 2024
.
 
In the second
 
quarter of fiscal 2024,
 
we issued €
250.0
 
million of floating-rate
 
notes due
November 8, 2024
. We
 
used the net proceeds
to repay €
250.0
 
million of floating-rate notes due
November 10, 2023
.
 
In the
 
second quarter
 
of fiscal
 
2024, we
 
issued $
500.0
 
million of
5.5
 
percent fixed-rate
 
notes due
October 17, 2028
. We
 
used the
 
net
proceeds to repay $
400.0
 
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
 
In the first
 
quarter of fiscal
 
2024, we issued
 
500.0
 
million of floating-rate
 
notes due
November 8, 2024
. We
 
used the net proceeds
 
to
repay €
500.0
 
million of floating-rate notes due
July 27, 2023
.
 
 
 
 
13
Certain
 
of
 
our
 
long-term
 
debt
 
agreements
 
contain
 
restrictive
 
covenants.
As of August 25, 2024, 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).
 
On
 
June
 
1,
 
2024,
 
the
 
floating
 
preferred
 
return
 
rate
 
on
 
GMC’s
Class A Interests was reset to the sum of the
three-month Term SOFR
 
plus
261
 
basis points. The preferred return rate is adjusted
 
every
three years
 
through a negotiated agreement with the Class A Interest holder or through a remarketing
 
auction.
Our noncontrolling interests contain restrictive covenants. As of August 25, 2024, we were in compliance with all of these covenants.
 
(9) Stockholders’ Equity
 
The following tables provide details of total comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
General Mills
Noncontrolling
Interests
 
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
 
 
attributable to noncontrolling interests
 
$
579.9
$
3.7
$
673.5
$
6.8
Other comprehensive (loss) income:
Foreign currency translation
$
(93.9)
$
31.5
(62.4)
0.5
$
(22.0)
$
3.8
(18.2)
0.1
Other fair value changes:
Hedge derivatives
(7.5)
1.5
(6.0)
-
(2.7)
0.4
(2.3)
-
Reclassification to earnings:
Hedge derivatives (a)
(0.4)
0.4
-
-
(1.3)
1.5
0.2
-
Amortization of losses and
 
prior service costs (b)
14.5
(2.9)
11.6
-
11.5
(2.4)
9.1
-
Other comprehensive (loss) income
$
(87.3)
$
30.5
(56.8)
0.5
$
(14.5)
$
3.3
(11.2)
0.1
Total comprehensive income
$
523.1
$
4.2
$
662.3
$
6.9
(a)
 
Loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,
 
were as follows:
 
 
 
 
 
 
 
 
 
 
In Millions
Aug. 25, 2024
May 26, 2024
Foreign currency translation adjustments
$
(857.7)
$
(795.3)
Unrealized (loss) gain from hedge derivatives
(5.8)
0.2
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,790.8)
(1,806.3)
Prior service credits
77.8
81.7
Accumulated other comprehensive loss
$
(2,576.5)
$
(2,519.7)
 
 
(10) Stock Plans
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 26, 2024.
Compensation expense related to stock-based payments recognized
 
in the Consolidated Statements of Earnings was as follows:
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Compensation expense related to stock-based payments
$
20.3
$
35.3
 
 
 
 
14
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings were as follows:
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Windfall tax benefits from stock-based payments
$
2.8
$
8.4
As
 
of
 
August
 
25,
 
2024,
 
unrecognized
 
compensation
 
expense
 
related
 
to
 
non-vested
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
performance share units was $
185.9
 
million. This expense will be recognized over
26
 
months, on average.
Net cash proceeds from the exercise of stock options
 
less shares used for withholding taxes and the intrinsic
 
value of options exercised
were as follows:
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net cash proceeds
$
9.4
$
4.5
Intrinsic value of options exercised
$
1.9
$
2.1
We estimate the fair value of each option on the grant date using a Black-Scholes option-pricing model, which requires us to make
predictive assumptions regarding future stock price volatility, employee exercise behavior, dividend yield, and the forfeiture rate. We
estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of
volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We also have considered, but did
not use, implied volatility in our estimate, because trading activity in options on our stock, especially those with tenors of greater than
6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting the other valuation assumptions
is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year
ended May 26, 2024.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Estimated fair values of stock options granted
 
$
13.20
$
17.47
Assumptions:
Risk-free interest rate
4.5
%
4.0
%
Expected term
8.5
years
8.5
years
Expected volatility
21.6
%
21.4
%
Dividend yield
3.8
%
2.8
%
The total grant date fair value of restricted stock unit awards that vested during
 
the period was as follows:
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Total grant date fair
 
value
$
90.8
$
104.8
 
 
 
 
15
 
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions, Except per Share Data
Aug. 25, 2024
Aug. 27, 2023
Net earnings attributable to General Mills
$
579.9
$
673.5
Average number
 
of common shares – basic EPS
560.5
586.3
Incremental share effect from: (a)
Stock options
1.5
2.8
Restricted stock units and performance share units
1.8
2.3
Average number
 
of common shares – diluted EPS
563.8
591.4
Earnings per share – basic
$
1.03
$
1.15
Earnings per share – diluted
$
1.03
$
1.14
(a)
 
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
In Millions
Aug. 25, 2024
Aug. 27, 2023
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
4.4
1.6
 
 
(12) Share Repurchases
Share repurchases were as follows:
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Shares of common stock
4.5
6.4
Aggregate purchase price
$
302.2
$
504.7
 
 
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net cash interest payments
$
83.7
$
83.9
Net income tax payments
$
18.7
$
13.7
 
 
16
 
(14) Retirement and Postemployment Benefits
Components of net periodic benefit expense (income) are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined Benefit
Pension Plans
Other Postretirement
 
Benefit Plans
Postemployment
Benefit Plans
Quarter Ended
Quarter Ended
Quarter Ended
In Millions
Aug. 25,
2024
Aug. 27,
2023
Aug. 25,
2024
Aug. 27,
2023
Aug. 25,
2024
Aug. 27,
2023
Service cost
$
13.0
$
14.2
$
1.1
$
1.2
$
1.8
$
1.8
Interest cost
76.7
74.2
5.3
5.3
1.0
1.0
Expected return on plan assets
(105.0)
(102.9)
(9.0)
(8.7)
-
-
Amortization of losses (gains)
25.1
21.5
(5.2)
(5.1)
0.1
-
Amortization of prior service costs (credits)
0.3
0.4
(5.5)
(5.4)
(0.3)
0.1
Other adjustments
-
-
-
-
2.6
2.6
Net expense (income)
$
10.1
$
7.4
$
(13.3)
$
(12.7)
$
5.2
$
5.5
 
 
(15) Income Taxes
During 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.
In
 
December
 
2021,
 
the
 
Organization
 
for
 
Economic
 
Cooperation
 
and
 
Development
 
(OECD)
 
established
 
a
 
framework,
 
referred
 
to
 
as
Pillar
 
2,
 
designed
 
to
 
ensure
 
large
 
multinational
 
enterprises
 
pay
 
a
 
minimum
 
15
 
percent
 
level
 
of
 
tax
 
on
 
the
 
income
 
arising
 
in
 
each
jurisdiction
 
in
 
which
 
they
 
operate.
 
Numerous
 
countries
 
have
 
already
 
enacted
 
the
 
OECD
 
model
 
rules
 
effective
 
for
 
taxable
 
years
beginning
 
after
 
December
 
31,
 
2023,
 
which
 
for
 
us
 
is
 
fiscal
 
2025.
 
There
 
was
 
no
 
material
 
impact
 
on
 
our
 
consolidated
 
financial
statements.
 
Several
 
other
 
countries
 
have
 
enacted
 
or
 
drafted
 
legislation
 
that
 
is
 
not
 
yet
 
effective
 
for
 
us,
 
and
 
we
 
do
 
not
 
expect
 
this
legislation
 
to
 
have
 
a
 
material
 
impact
 
on
 
our
 
consolidated
 
financial
 
statements.
 
We
 
will
 
continue
 
to monitor
 
for
 
new
 
legislation
 
and
guidance and evaluate potential impact on our consolidated financial
 
statements.
 
 
(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 August 25, 2024, we are unable to estimate
any possible loss and have not recorded a loss contingency for this matter.
 
 
 
 
 
(17) Business Segment and Geographic Information
We
 
operate
 
in
 
the
 
packaged
 
foods
 
industry.
 
Our
 
operating
 
segments
 
are
 
as
 
follows:
 
North
 
America
 
Retail,
 
International,
 
North
America Pet,
 
and North
 
America Foodservice.
 
In the
 
first quarter
 
of fiscal
 
2025, we
 
renamed the
 
Pet segment
 
to the
 
North America
Pet segment to reflect that
 
pet food results outside
 
North America are recorded
 
in the International segment.
 
There were no changes to
the
 
composition
 
of
 
our
 
reportable
 
segments
 
or
 
information
 
reviewed
 
by
 
our
 
chief
 
operating
 
decision
 
maker
 
and
 
no
 
impact
 
on
 
our
historical segment operating results.
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.
 
 
17
 
 
 
 
 
 
 
Our North
 
America 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, life-stages,
 
flavors, product
 
functions,
 
and textures
 
and
cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
sell are branded
 
to the consumer
and nearly
 
all are
 
branded to
 
our customers.
 
We
 
sell to
 
distributors and
 
operators in
 
many customer
 
channels including
 
foodservice,
vending, and supermarket bakeries.
Operating profit
 
for these
 
segments excludes
 
unallocated corporate
 
items, gain
 
or loss
 
on divestitures,
 
and restructuring,
 
impairment,
and other
 
exit costs.
 
Results from
 
certain businesses
 
managed by
 
our Gold
 
Medal Ventures
 
entity are
 
included within
 
corporate and
other net
 
sales and
 
unallocated corporate
 
items within
 
operating
 
profit. Unallocated
 
corporate items
 
also include
 
corporate overhead
expenses,
 
variances
 
to
 
planned
 
North
 
American
 
employee
 
benefits
 
and
 
incentives,
 
certain
 
charitable
 
contributions,
 
restructuring
initiative
 
project-related
 
costs,
 
gains
 
and
 
losses
 
on
 
corporate
 
investments,
 
and
 
other
 
items
 
that
 
are
 
not
 
part
 
of
 
our
 
measurement
 
of
segment operating performance.
 
These include gains and
 
losses arising from the
 
revaluation of certain grain
 
inventories and gains
 
and
losses
 
from
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
until
 
passed
 
back
 
to
 
our
 
operating
 
segments.
 
These
 
items
affecting
 
operating
 
profit
 
are
 
centrally
 
managed
 
at
 
the
 
corporate
 
level
 
and
 
are
 
excluded
 
from
 
the
 
measure
 
of
 
segment
 
profitability
reviewed
 
by executive
 
management.
 
Under our
 
supply chain
 
organization,
 
our manufacturing,
 
warehouse,
 
and distribution
 
activities
are
 
substantially
 
integrated
 
across
 
our
 
operations
 
in
 
order
 
to
 
maximize
 
efficiency
 
and
 
productivity.
 
As
 
a
 
result,
 
fixed
 
assets
 
and
depreciation and amortization expenses are neither maintained nor available
 
by operating segment.
Our operating segment results were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Net sales:
North America Retail
$
3,016.6
$
3,073.0
International
717.0
715.8
North America Pet
576.1
579.9
North America Foodservice
536.2
536.0
Total segment net
 
sales
$
4,845.9
$
4,904.7
Corporate and other
2.2
-
Total net sales
$
4,848.1
$
4,904.7
Operating profit:
North America Retail
$
745.7
$
798.2
International
20.9
50.0
North America Pet
119.4
111.2
North America Foodservice
71.5
59.1
Total segment operating
 
profit
$
957.5
$
1,018.5
Unallocated corporate items
123.8
87.3
Restructuring, impairment, and other exit costs
2.2
1.2
Operating profit
$
831.5
$
930.0
 
 
 
 
 
 
18
Net sales for our North America Retail operating units were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
U.S. Meals & Baking Solutions
$
946.3
$
941.9
U.S. Snacks
910.5
954.5
U.S. Morning Foods
902.9
927.8
Canada
256.9
248.8
Total
$
3,016.6
$
3,073.0
Net sales by class of similar products were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 25, 2024
Aug. 27, 2023
Snacks
$
1,106.8
$
1,136.7
Cereal
793.1
817.9
Convenient meals
678.9
665.5
Pet
604.6
579.9
Dough
517.8
534.9
Baking mixes and ingredients
457.1
466.5
Yogurt
371.9
368.4
Super-premium ice cream
212.9
224.0
Other
105.0
110.9
Total
$
4,848.1
$
4,904.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
Item 2.
 
Management’s Discussion and 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
 
26,
 
2024,
 
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.
Our
 
key
 
priorities
 
in
 
fiscal
 
2025
 
are
 
to
 
accelerate
 
our
 
organic
 
net
 
sales
 
growth,
 
create
 
fuel
 
for
 
investment,
 
and
 
drive
 
strong
 
cash
generation.
 
Amid
 
a
 
continued
 
uncertain
 
macroeconomic
 
backdrop
 
for
 
consumers,
 
we
 
expect
 
volume
 
trends
 
in
 
our
 
categories
 
will
gradually improve
 
over the
 
course of
 
the year,
 
though full-year
 
category dollar
 
growth is expected
 
to be below
 
our long-term
 
growth
projections. We
 
expect to increase
 
our organic
 
net sales growth
 
by delivering remarkable
 
experiences across
 
our leading
 
food brands,
resulting
 
in
 
improved
 
household
 
penetration
 
and
 
stronger
 
market
 
share
 
trends
 
versus
 
the
 
prior
 
year.
 
Our
 
fiscal
 
2025
 
plan
 
calls
 
for
product
 
news
 
and
 
innovation
 
focused
 
on
 
taste,
 
health,
 
convenience,
 
and
 
value,
 
supported
 
with
 
strong
 
brand
 
campaigns
 
and
omnichannel visibility.
 
We
 
expect to
 
generate higher
 
levels of Holistic
 
Margin Management
 
(HMM) cost savings
 
to more
 
than offset
input
 
cost inflation
 
in fiscal
 
2025. We
 
expect to
 
reinvest in
 
the business,
 
including plans
 
for increased
 
brand-building
 
investment
 
in
fiscal 2025 to drive improved volume performance.
CONSOLIDATED
 
RESULTS
 
OF OPERATIONS
First Quarter Results
In the first quarter
 
of fiscal 2025, net
 
sales and organic
 
net sales decreased 1
 
percent compared to the
 
same period last year.
 
Operating
profit
 
decreased
 
11
 
percent
 
to
 
$832
 
million,
 
primarily
 
driven
 
by
 
an
 
unfavorable
 
change
 
in
 
the
 
mark-to-market
 
valuation
 
of
 
certain
commodity
 
positions
 
and
 
grain
 
inventories,
 
unfavorable
 
net
 
price
 
realization
 
and
 
mix,
 
and
 
an
 
increase
 
in
 
selling,
 
general
 
and
administrative
 
(SG&A)
 
expenses, partially
 
offset
 
by lower
 
input
 
costs. Operating
 
profit margin
 
of 17.2
 
percent decreased
 
180
 
basis
points.
 
Adjusted
 
operating profit
 
of $865
 
million
 
decreased 4
 
percent on
 
a constant-currency
 
basis, primarily
 
driven by
 
unfavorable
net
 
price
 
realization
 
and
 
mix
 
and
 
an
 
increase
 
in
 
SG&A
 
expenses,
 
partially
 
offset
 
by
 
lower
 
input
 
costs.
 
Adjusted
 
operating
 
profit
margin decreased 50
 
basis points to 17.8
 
percent. Diluted earnings per
 
share of $1.03 decreased 10
 
percent in the first
 
quarter of fiscal
2025.
 
Adjusted diluted
 
earnings per
 
share of
 
$1.07 decreased
 
2 percent
 
on a
 
constant-currency basis
 
compared to
 
the first
 
quarter of
fiscal 2024.
 
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 first quarter of
 
fiscal 2025 follows:
 
Quarter Ended Aug. 25, 2024
In millions,
except per share
Quarter Ended
Aug. 25, 2024 vs.
Aug. 27, 2023
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
 
$
4,848.1
(1)
%
Operating profit
831.5
(11)
%
17.2
%
Net earnings attributable to General Mills
579.9
(14)
%
Diluted earnings per share
$
1.03
(10)
%
Organic net sales growth rate (a)
(1)
%
Adjusted operating profit (a)
865.3
(4)
%
17.8
%
(4)
%
Adjusted diluted earnings per share (a)
$
1.07
(2)
%
(2)
%
(a)
 
See the “Non-GAAP Measures” section below for our use of measures not defined by
 
GAAP.
Consolidated
net sales
 
were as follows:
 
Quarter Ended
Aug. 25, 2024
Aug. 25, 2024 vs.
 
Aug. 27, 2023
Aug. 27, 2023
Net sales (in millions)
$
4,848.1
(1)
%
$
4,904.7
Contributions from volume growth (a)
Flat
Net price realization and mix
(1)
pt
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
Net sales in
 
the first quarter
 
of fiscal 2025
 
decreased 1 percent
 
compared to the
 
same period in
 
fiscal 2024, driven
 
by unfavorable net
price realization and mix.
Components of organic net sales growth are shown in the following
 
table:
 
 
Quarter Ended Aug. 25, 2024 vs.
Quarter Ended Aug. 27, 2023
Contributions from organic volume growth (a)
Flat
Organic net price realization and mix
(1)
pt
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Acquisition
Flat
Net sales growth
(1)
pt
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
Organic
 
net
 
sales
 
decreased
 
1
 
percent
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2024,
 
driven
 
by
unfavorable organic net price realization and mix.
Cost of
 
sales
increased $25
 
million to
 
$3,159 million
 
in the
 
first quarter
 
of fiscal
 
2025 compared
 
to the
 
same period
 
in fiscal
 
2024.
The increase included a
 
$7 million increase attributable
 
to volume and a $47
 
million decrease attributable to product
 
rate and mix. We
recorded a
 
$29 million net
 
increase in
 
cost of
 
sales related
 
to the
 
mark-to-market valuation
 
of certain
 
commodity positions
 
and grain
inventories
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
compared
 
to
 
a
 
$45 million
 
net
 
decrease
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024.
 
We
 
also
recorded $1
 
million of
 
restructuring charges
 
in the first
 
quarter of
 
fiscal 2025
 
compared to
 
$9 million
 
of restructuring
 
charges and
 
$1
million of
 
restructuring initiative
 
project-related
 
costs in
 
cost of
 
sales in
 
the first
 
quarter of
 
fiscal 2024
 
(please refer
 
to Note
 
3 to
 
the
Consolidated Financial Statements in Part I, Item 1 of this report).
 
SG&A expenses
increased $16 million
 
to $855 million in
 
the first quarter
 
of fiscal 2025,
 
compared to the
 
same period in
 
fiscal 2024,
primarily driven
 
by increased
 
media and
 
advertising expenses.
 
SG&A expenses
 
as a
 
percent of
 
net sales
 
in the
 
first quarter
 
of fiscal
2025 increased 50 basis points compared to the first quarter of fiscal 2024.
Restructuring, impairment,
 
and other exit
 
costs
totaled $2 million
 
in the first
 
quarter of fiscal
 
2025,
 
compared to $1
 
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 $14 million
 
in the
 
first quarter
 
of fiscal
 
2025, compared
 
to $17 million
 
in the
 
same period
last year, primarily reflecting higher
 
amortization of losses.
 
Interest,
 
net
for
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
totaled
 
$124 million,
 
up
 
$7 million
 
from
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
primarily
driven by higher average long-term debt levels.
The
effective tax rate
 
for the first quarter of fiscal
 
2025 was 21.8 percent compared
 
to 20.9 percent for the first
 
quarter of fiscal 2024.
The
 
0.9
 
percentage
 
point
 
increase
 
was
 
primarily
 
due
 
to
 
certain
 
nonrecurring
 
discrete
 
tax benefits
 
in
 
the
 
first
 
quarter
 
of fiscal
 
2024,
partially
 
offset
 
by
 
favorable
 
earnings
 
mix
 
by
 
jurisdiction
 
in the
 
first
 
quarter
 
of
 
fiscal
 
2025.
 
Our
 
effective
 
tax
 
rate
 
excluding
 
certain
items affecting comparability was
 
21.9 percent in the first quarter
 
of fiscal 2025, 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 0.8
 
percentage
point
 
increase
 
was
 
primarily
 
due
 
to
 
certain
 
nonrecurring
 
discrete
 
tax
 
benefits
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
partially
 
offset
 
by
favorable earnings mix by jurisdiction in the first quarter of fiscal 2025.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
After-tax earnings
 
from
 
joint ventures
 
for the
 
first quarter
 
of fiscal
 
2025
decreased to
 
$19 million compared
 
to $24 million
 
in the
same period in fiscal 2024, primarily
 
due to favorable discrete tax items
 
in the first quarter of fiscal 2024,
 
higher SG&A expenses, and
a
 
decrease
 
in
 
volume
 
at
 
Cereal
 
Partners
 
Worldwide
 
(CPW),
 
partially
 
offset
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix at
 
CPW
 
and
lower
 
SG&A
 
expenses
 
at
 
Häagen-Dazs
 
Japan,
 
Inc.
 
(HDJ).
 
On
 
a
 
constant-currency
 
basis,
 
after-tax
 
earnings
 
from
 
joint
 
ventures
decreased 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:
 
Quarter Ended Aug. 25, 2024 vs.
Quarter Ended Aug. 27, 2023
CPW
HDJ
Total
Contributions from volume growth (a)
(2)
pts
1
pt
Net price realization and mix
3
pts
(1)
pt
Net sales growth in constant currency
1
pt
Flat
1
pt
Foreign currency exchange
(4)
pts
(8)
pts
(5)
pts
Net sales growth
(4)
pts
(8)
pts
(4)
pts
Note: Table 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
 
28
 
million
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
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,
 
North
 
America
 
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
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
3,016.6
(2)
%
$
3,073.0
Contributions from volume growth (a)
(3)
pts
Net price realization and mix
1
pt
Foreign currency exchange
Flat
Note: Table 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
 
first
 
quarter
 
of
 
fiscal
 
2025
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2024,
driven by a decrease in contributions from volume growth, partially offset
 
by favorable net price realization and mix.
The components of North America Retail organic net
 
sales growth are shown in the following table:
 
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
1
pt
Organic net sales growth
(2)
pts
Foreign currency exchange
Flat
Net sales growth
(2)
pts
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
North
 
America
 
Retail organic
 
net sales
 
decreased
 
2 percent
 
in the
 
first quarter
 
of fiscal
 
2025
 
compared to
 
the same
 
period in
 
fiscal
2024, driven by a decrease
 
in contributions from organic
 
volume growth, partially offset
 
by favorable organic net
 
price realization and
mix.
North America Retail net sales percentage change by operating unit are shown
 
in the following table:
 
Quarter Ended
Aug. 25, 2024
U.S. Snacks
(5)
%
U.S. Morning Foods
(3)
%
Canada (a)
3
%
U.S. Meals & Baking Solutions
Flat
Total
(2)
%
(a)
 
On a constant-currency
 
basis, Canada net
 
sales increased 6 percent
 
in the first quarter
 
of fiscal 2025 compared
 
to the same period
in fiscal 2024. See the “Non-GAAP Measures” section below for our use of
 
this measure not defined by GAAP.
Segment operating
 
profit decreased 7
 
percent to $746 million
 
in the first quarter
 
of fiscal 2025,
 
compared to $798 million
 
in the same
period in
 
fiscal 2024,
 
primarily driven
 
by higher
 
input costs
 
and a
 
decrease in
 
contributions from
 
volume growth,
 
partially offset
 
by
favorable net
 
price realization
 
and mix.
 
Segment operating
 
profit decreased
 
6 percent
 
on a constant
 
-currency basis
 
in the
 
first quarter
of fiscal 2025,
 
compared to the
 
same period in
 
fiscal 2024 (see
 
the “Non-GAAP
 
Measures” section below
 
for our use
 
of this measure
not defined by GAAP).
International Segment Results
International net sales were as follows:
 
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
717.0
Flat
$
715.8
Contributions from volume growth (a)
8
pts
Net price realization and mix
(6)
pts
Foreign currency exchange
(2)
pts
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
International net sales in the first quarter of fiscal 2025 essentially matched
 
the same period in fiscal 2024.
The components of International organic net sales growth
 
are shown in the following table:
 
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
6
pts
Organic net price realization and mix
(7)
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
(2)
pts
Acquisition (b)
3
pts
Net sales growth
Flat
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of a pet food business in Europe in fiscal 2024. Please see Note 2 to
 
the Consolidated Financial Statements in Part I,
 
Item 1 of this report.
International
 
organic
 
net
 
sales
 
decreased
 
1
 
percent
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
compared
 
to
 
the
 
same
 
period
 
in
 
fiscal
 
2024,
driven
 
by
 
unfavorable
 
organic
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
an
 
increase
 
in
 
contributions
 
from
 
organic
 
volume
growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
Segment operating
 
profit decreased
 
58 percent
 
to $21 million
 
in the
 
first quarter
 
of fiscal
 
2025, compared
 
to $50 million
 
in the
 
same
period
 
in
 
fiscal
 
2024,
 
primarily
 
driven
 
by unfavorable
 
net price
 
realization
 
and
 
mix
 
and higher
 
SG&A
 
expenses,
 
partially
 
offset
 
by
lower input
 
costs and an
 
increase in contributions
 
from volume growth.
 
Segment operating
 
profit decreased 64
 
percent on a
 
constant-
currency basis
 
in the first
 
quarter of
 
fiscal 2025,
 
compared to
 
the same
 
period in
 
fiscal 2024 (see
 
the “Non-GAAP
 
Measures” section
below for our use of this measure not defined by GAAP).
North America Pet Segment Results
North America Pet net sales were as follows:
 
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
576.1
(1)
%
$
579.9
Contributions from volume growth (a)
3
pts
Net price realization and mix
(3)
pts
Foreign currency exchange
Flat
Note: Table may
 
not foot due to rounding.
(a)
 
Measured in tons based on the stated weight of our product shipments.
North America Pet
 
net sales decreased
 
1 percent in
 
the first quarter
 
of fiscal 2025,
 
compared to the
 
same period in
 
fiscal 2024, driven
by unfavorable net price realization and mix, partially offset by
 
an increase in contributions from volume growth.
The components of North America Pet organic net sales growth are
 
shown in the following table:
 
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
3
pts
Organic net price realization and mix
(3)
pts
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Net sales growth
(1)
pt
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
North America Pet organic
 
net sales decreased 1 percent
 
in the first quarter of fiscal 2025, compared
 
to the same period in fiscal
 
2024,
driven
 
by
 
unfavorable
 
organic
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
an
 
increase
 
in
 
contributions
 
from
 
organic
 
volume
growth.
Segment operating
 
profit increased 7
 
percent to $119
 
million in the
 
first quarter of
 
fiscal 2025,
 
compared to $111
 
million in the
 
same
period in
 
fiscal 2024,
 
primarily driven
 
by lower
 
input costs
 
and an
 
increase in
 
contributions from
 
volume growth,
 
partially offset
 
by
unfavorable
 
net
 
price
 
realization
 
and
 
mix
 
and
 
higher
 
SG&A expenses
 
.
 
Segment
 
operating
 
profit
 
increased
 
7
 
percent
 
on
 
a
 
constant-
currency basis
 
in the first
 
quarter of
 
fiscal 2025,
 
compared to
 
the same
 
period in
 
fiscal 2024 (see
 
the “Non-GAAP
 
Measures” section
below for our use of this measure not defined by GAAP).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
 
Quarter Ended
Aug. 25,
2024
Aug. 25, 2024 vs
Aug. 27, 2023
Aug. 27,
2023
Net sales (in millions)
$
536.2
Flat
$
536.0
Contributions from volume growth (a)
Flat
Net price realization and mix
Flat
Foreign currency exchange
Flat
Note: Table 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 first quarter of fiscal 2025 essentially
 
matched the same period in fiscal 2024.
The components of North America Foodservice organic
 
net sales growth are shown in the following table:
 
Quarter Ended
Aug. 25, 2024
Contributions from organic volume growth (a)
Flat
Organic net price realization and mix
Flat
Organic net sales growth
Flat
Foreign currency exchange
Flat
Net sales growth
Flat
Note: Table may
 
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
North America Foodservice organic net sales in the
 
first quarter of fiscal 2025 essentially matched the same period in fiscal 2024.
Segment operating
 
profit increased
 
21 percent
 
to $72
 
million in
 
the first
 
quarter of
 
fiscal 2025,
 
compared to
 
$59 million in
 
the same
period
 
in
 
fiscal
 
2024,
 
primarily
 
driven
 
by
 
lower
 
input
 
costs.
 
Segment
 
operating
 
profit
 
increased
 
21
 
percent
 
on
 
a
 
constant-currency
basis in the first
 
quarter of fiscal
 
2025,
 
compared to the
 
same period in
 
fiscal 2024 (see
 
the “Non-GAAP Measures”
 
section below for
our use of this measure not defined by GAAP).
UNALLOCATED
 
CORPORATE
 
ITEMS
Unallocated corporate
 
expenses totaled $124
 
million in the
 
first quarter
 
of fiscal 2025,
 
compared to
 
$87 million in the
 
same period
 
in
fiscal
 
2024.
 
In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
we
 
recorded
 
a
 
$29 million
 
net
 
increase
 
in
 
expense
 
related
 
to
 
the
 
mark-to-market
valuation of certain
 
commodity positions and
 
grain inventories, compared
 
to a $45 million
 
net decrease in
 
expense in the
 
same period
last year.
 
Certain compensation
 
and benefits
 
expenses decreased
 
in the
 
first quarter
 
of fiscal
 
2025
 
compared to
 
the same
 
period last
year.
 
We
 
recorded
 
$1
 
million
 
of
 
restructuring
 
charges
 
in
 
cost
 
of
 
sales in
 
the
 
first quarter
 
of
 
fiscal
 
2025,
 
compared
 
to $9
 
million
 
of
restructuring
 
charges
 
in
 
cost
 
of
 
sales
 
in
 
the
 
same
 
period
 
last
 
year.
 
We
 
recorded
 
$3 million
 
of
 
net
 
losses
 
related
 
to
 
valuation
adjustments on certain corporate investments
 
in the first quarter of fiscal 2024.
 
In addition, we recorded $2 million
 
of integration costs
in the first quarter of fiscal 2025 related to our acquisition of a pet food business in
 
Europe in fiscal 2024.
LIQUIDITY
 
AND CAPITAL
 
RESOURCES
During the first quarter of
 
fiscal 2025,
 
cash provided by operations was $624 million
 
compared to $378 million in the same
 
period last
year.
 
The $246
 
million increase
 
was primarily
 
driven by
 
a $350
 
million
 
change in
 
current assets
 
and
 
liabilities, partially
 
offset
 
by a
$97 million
 
decrease in
 
net earnings.
 
The $350
 
million change
 
in current
 
assets and
 
liabilities is
 
primarily
 
driven by
 
a $367
 
million
change in the timing of accounts payable.
Cash used by investing activities during the first quarter
 
of fiscal 2025 was $148 million compared to $136 million
 
for the same period
in
 
fiscal
 
2024.
 
During
 
the
 
first quarter
 
of
 
fiscal
 
2025,
 
we
 
paid
 
$8
 
million
 
related
 
to
 
a purchase
 
price
 
holdback
 
after certain
 
closing
conditions
 
were met
 
for the
 
acquisition of
 
a pet
 
food business
 
in Europe
 
in the
 
fourth
 
quarter of
 
fiscal 2024.
 
In addition,
 
during the
first quarter
 
of fiscal
 
2025, we
 
spent $140
 
million on
 
purchases of
 
land, buildings,
 
and equipment
 
in the
 
first quarter
 
of fiscal
 
2025,
compared to $142 million in the same period last year.
 
 
 
 
 
 
 
 
 
 
 
 
 
25
Cash used by financing
 
activities during the first
 
quarter of fiscal 2025
 
was $429 million compared
 
to $334 million in the same
 
period
in
 
fiscal
 
2024.
 
We
 
had
 
$238
 
million
 
of
 
net
 
debt
 
issuances
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
compared
 
to
 
$552
 
million
 
of net
 
debt
issuances in the same period
 
a year ago. We
 
paid $300 million for purchases
 
of common stock for
 
treasury in the first quarter
 
of fiscal
2025,
 
compared to $500 million in the
 
same period in fiscal 2024. In
 
addition, we paid $338 million of dividends
 
in the first quarter of
fiscal 2025, compared to $348 million in the same period last year.
As of August
 
25, 2024, we had
 
$414 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. 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 August 25, 2024:
 
In Billions
Facility
 
Amount
Borrowed
Amount
Committed credit facility expiring April 2026
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committed
 
and uncommitted credit facilities
$
3.4
$
-
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
Certain
 
of
 
our
 
long-term
 
debt
 
agreements,
 
our
 
credit
 
facilities,
 
and
 
our
 
noncontrolling
 
interests
 
contain
 
restrictive
 
covenants.
 
As
 
of
August 25, 2024, we were in compliance with all of these covenants.
 
We
 
have
 
$1,640
 
million
 
of
 
long-term
 
debt
 
maturing
 
in
 
the
 
next
 
12
 
months
 
that
 
is
 
classified
 
as
 
current,
 
including
 
€750
 
million
 
of
floating-rate notes
 
due November
 
8, 2024,
 
and $800
 
million of
 
4.0 percent
 
fixed-rate notes
 
due April
 
17, 2025.
 
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.
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
 
Cereals,
 
LLC
 
(GMC)
 
Class A
 
Interests
 
receives
 
quarterly
 
preferred
 
distributions
 
from
available net
 
income based
 
on the application
 
of a
 
floating preferred
 
return rate
 
to the
 
holder’s capital
 
account balance
 
established in
the most recent mark-to-market valuation
 
(currently $252 million). On June 1, 2024,
 
the floating preferred return rate on GMC’s
 
Class
A Interests was reset to the
 
sum of the three-month Term
 
SOFR plus 261 basis points.
 
The preferred return rate is adjusted
 
every three
years through a negotiated agreement with the Class A 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.
 
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 26,
 
2024. The
 
accounting policies
 
used in
 
preparing our
 
interim fiscal
 
2025 Consolidated
Financial Statements are the
 
same as those described
 
in our Form 10-K.
 
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, 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
 
August
 
25,
 
2024,
 
are
 
the
 
same
 
as
 
those
 
described
 
in
 
our
 
Annual
Report on Form 10-K for the fiscal year ended May 26, 2024.
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
 
addition,
during the
 
fourth quarter
 
of fiscal
 
2024, we
 
executed our
 
fiscal 2025
 
planning process
 
and preliminary
 
long-range planning
 
process,
which resulted in
 
lower future sales and
 
profitability projections for
 
the businesses supporting
 
our
Top
 
Chews
,
True Chews
, and
EPIC
brand intangible assets.
 
As a result of
 
this triggering event,
 
we performed an
 
interim impairment assessment
 
of these assets
 
as of May
 
26
26, 2024,
 
and determined
 
that the
 
fair value
 
of these
 
brand intangible
 
assets no
 
longer exceeded
 
the carrying
 
values of
 
the respective
assets, resulting
 
in $103
 
million of
 
non-cash impairment
 
charges. We
 
recorded impairment
 
charges in
 
restructuring, impairment,
 
and
other exit
 
costs in
 
our Consolidated
 
Statements of
 
Earnings. Our
 
estimates of
 
the fair
 
values were
 
determined based
 
on a
 
discounted
cash flow model
 
using inputs which
 
included our long-range
 
cash flow projections
 
for the businesses,
 
royalty rates, weighted
 
-average
cost of capital rates, and tax rates. The fair values
 
are Level 3 assets in the fair value hierarchy.
All other intangible
 
asset fair values
 
were substantially
 
in excess of
 
the carrying
 
values, except for
 
the
Uncle Toby’s
 
brand intangible
asset. In
 
addition,
 
while having
 
significant
 
coverage as
 
of our
 
fiscal 2024
 
assessment date,
 
the
Progresso
,
Nudges
, and
True
 
Chews
brand intangible assets had risk of decreasing coverage. We
 
will continue to monitor these businesses for potential impairment.
RECENTLY
 
ISSUED ACCOUNTING PRONOUNCEMENTS
In March 2024, the Securities
 
and Exchange Commission (SEC)
 
issued final rules on the
 
enhancement and standardization
 
of climate-
related disclosures. The rules require
 
disclosure of, among other things:
 
material climate-related risks; activities
 
to mitigate or adapt
 
to
such
 
risks;
 
governance
 
and
 
management
 
of
 
such
 
risks;
 
and
 
material
 
greenhouse
 
gas
 
(GHG)
 
emissions
 
from
 
operations
 
owned
 
or
controlled
 
(Scope
 
1)
 
and/or
 
indirect
 
emissions
 
from
 
purchased
 
energy
 
consumed
 
in
 
operations
 
(Scope
 
2).
 
Additionally,
 
the
 
rules
require disclosure
 
in the
 
notes to
 
the financial
 
statements of
 
the effects
 
of severe
 
weather events
 
and other
 
natural conditions,
 
subject
to
 
certain
 
materiality
 
thresholds.
 
The
 
SEC
 
has
 
issued
 
a
 
stay
 
on
 
the
 
final
 
rules
 
due
 
to
 
litigation
 
and
 
the
 
effective
 
date
 
is
 
delayed
indefinitely. We
 
are in the process of analyzing the impact of the rules on our disclosures.
In December 2023, the
 
Financial Accounting Standards Board
 
(FASB) issued
 
Accounting Standards Update (ASU)
 
2023-09 requiring
enhanced
 
income
 
tax
 
disclosures.
 
The
 
ASU
 
requires
 
disclosure
 
of
 
specific
 
categories
 
and
 
disaggregation
 
of
 
information
 
in
 
the
 
rate
reconciliation table. The
 
ASU also requires
 
disclosure of disaggregated
 
information related to
 
income taxes paid,
 
income or loss
 
from
continuing
 
operations
 
before
 
income
 
tax
 
expense
 
or
 
benefit,
 
and
 
income
 
tax
 
expense
 
or
 
benefit
 
from
 
continuing
 
operations.
 
The
requirements
 
of
 
the
 
ASU
 
are
 
effective
 
for
 
annual
 
periods
 
beginning
 
after
 
December
 
15,
 
2024,
 
which
 
for
 
us
 
is
 
fiscal
 
2026.
 
Early
adoption is permitted
 
and the amendments
 
should be applied
 
on a prospective
 
basis. Retrospective application
 
is permitted. We
 
are in
the process of analyzing the impact of the ASU on our related disclosures.
In
 
November
 
2023,
 
the
 
FASB
 
issued
 
ASU
 
2023-07
 
requiring
 
enhanced
 
segment
 
disclosures.
 
The
 
ASU
 
requires
 
disclosure
 
of
significant
 
segment
 
expenses
 
regularly
 
provided
 
to
 
the
 
chief
 
operating
 
decision
 
maker
 
(CODM)
 
included
 
within
 
segment
 
operating
profit
 
or
 
loss.
 
Additionally,
 
the
 
ASU
 
requires
 
a
 
description
 
of
 
how
 
the
 
CODM
 
utilizes
 
segment
 
operating
 
profit
 
or
 
loss
 
to
 
assess
segment performance.
 
The requirements
 
of the
 
ASU are effective
 
for annual
 
periods beginning
 
after December
 
15, 2023,
 
and interim
periods within
 
fiscal years
 
beginning after
 
December 15,
 
2024. For
 
us, annual
 
reporting requirements
 
will be
 
effective for
 
our fiscal
2025 and
 
interim reporting
 
requirements will
 
be effective
 
beginning with
 
our first
 
quarter of
 
fiscal 2026.
 
Early adoption
 
is permitted
and retrospective
 
application is
 
required
 
for all
 
periods presented.
 
We
 
are in
 
the process
 
of analyzing
 
the impact
 
of the
 
ASU on
 
our
related disclosures.
 
 
 
 
 
 
 
 
27
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.
 
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.
Restructuring charges and project-related costs
Restructuring charges and
 
project-related costs related to previously
 
announced restructuring actions recorded
 
in fiscal 2025 and fiscal
2024. Please see Note 3 to the Consolidated Financial Statements in Part I, Item 1
 
of this report.
Acquisition integration costs
Integration
 
costs
 
related
 
to
 
the
 
acquisition
 
of
 
a
 
pet
 
food
 
business
 
in
 
Europe
 
recorded
 
in
 
fiscal
 
2025.
 
Integration
 
costs
 
primarily
resulting from the acquisition of TNT Crust recorded in fiscal 2024.
 
Please see Note 2 to the Consolidated Financial Statements in Part
I, Item 1 of this report.
Investment activity, net
Valuation
 
adjustments of certain corporate investments in fiscal 2025 and fiscal 2024.
 
Product recall
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
 
ice cream products.
 
Organic Net Sales Growth Rates
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
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
Aug. 25, 2024
Aug. 27, 2023
In Millions
Value
Percent of
Net Sales
Value
 
Percent of
Net Sales
Operating profit as reported
$
831.5
17.2
%
$
930.0
19.0
%
Mark-to-market effects
28.8
0.6
%
(44.9)
(0.9)
%
Restructuring charges
2.9
0.1
%
9.8
0.2
%
Acquisition integration costs
1.6
-
%
0.2
-
%
Investment activity, net
0.4
-
%
2.9
0.1
%
Project-related costs
0.1
-
%
0.8
-
%
Product recall
-
-
%
0.2
-
%
Adjusted operating profit
$
865.3
17.8
%
$
899.0
18.3
%
Note: Table may not foot due to rounding.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
Adjusted Operating Profit and Related Constant-currency Growth Rate
This measure is used in reporting
 
to our Board of Directors and
 
executive management and as a
 
component of the measurement of
 
our
performance for
 
incentive compensation purposes.
 
We
 
believe that
 
this measure provides
 
useful information
 
to investors because
 
it is
the
 
operating
 
profit
 
measure
 
we
 
use
 
to
 
evaluate
 
operating
 
profit
 
performance
 
on
 
a
 
comparable
 
year-to-year
 
basis.
 
Additionally,
 
the
measure
 
is
 
evaluated
 
on
 
a
 
constant-currency
 
basis
 
by
 
excluding
 
the
 
effect
 
that
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations
 
have
 
on
year-to-year comparability given the volatility in foreign
 
currency exchange rates.
 
Our adjusted operating profit growth on a constant-currency basis is calculated
 
as follows:
 
Quarter Ended
Aug. 25, 2024
Aug. 27, 2023
Change
Operating profit as reported
$
831.5
$
930.0
(11)
%
Mark-to-market effects
28.8
(44.9)
Restructuring charges
2.9
9.8
Acquisition integration costs
1.6
0.2
Investment activity, net
0.4
2.9
Project-related costs
0.1
0.8
Product recall
-
0.2
Adjusted operating profit
$
865.3
$
899.0
(4)
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
(4)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
Adjusted Diluted EPS and Related Constant-currency Growth Rate
This 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
Per Share Data
Aug. 25, 2024
Aug. 27, 2023
Change
Diluted earnings per share, as reported
$
1.03
$
1.14
(10)
%
Mark-to-market effects
0.04
(0.06)
Restructuring charges
-
0.01
Adjusted diluted earnings per share
$
1.07
$
1.09
(2)
%
Foreign currency exchange impact
Flat
Adjusted diluted earnings per share growth, on a constant-currency
 
basis
(2)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
See our 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.
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 Aug. 25, 2024
(18)
%
(4)
pts
(14)
%
Note: Table may not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-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 Aug. 25, 2024
3
%
(3)
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
Our segments’ operating profit growth rates on a constant-currency
 
basis are calculated as follows:
 
Quarter Ended Aug. 25, 2024
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
(7)
%
Flat
(6)
%
International
(58)
%
6
pts
(64)
%
North America Pet
7
%
Flat
7
%
North America Foodservice
21
%
Flat
21
%
Note: Table may not foot due to rounding.
Adjusted Effective Income 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
 
Aug. 25, 2024
Aug. 27, 2023
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
721.8
$
157.4
$
830.0
$
173.2
Mark-to-market effects
28.8
6.6
(44.9)
(10.3)
Restructuring charges
2.9
0.7
9.8
4.7
Acquisition integration costs
1.6
0.4
0.2
0.1
Investment activity, net
0.4
0.1
2.9
1.0
Project-related costs
0.1
-
0.8
0.3
Product recall
-
-
0.2
0.1
As adjusted
$
755.6
$
165.3
$
799.1
$
169.0
Effective tax rate:
As reported
21.8%
20.9%
As adjusted
21.9%
21.1%
Sum of adjustments to income taxes
$
7.8
$
(4.3)
Average number
 
of common shares - diluted EPS
563.8
591.4
Impact of income tax adjustments on adjusted diluted EPS
$
(0.01)
$
0.01
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
 
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
31
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
 
Diluted EPS adjusted for certain items affecting year-to-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,