10-Q 1 d584889d10q.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
FEBRUARY 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
________________
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
 
March
 
13,
 
2024:
564,548,763
 
(excluding
190,080,991
 
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
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net sales
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2
Cost of sales
3,391.8
3,461.1
9,899.5
10,246.6
Selling, general, and administrative expenses
790.9
946.9
2,460.7
2,632.5
Divestitures gain, net
-
(13.7)
-
(444.6)
Restructuring, impairment, and other exit costs
5.8
1.4
130.6
14.1
Operating profit
910.7
730.2
2,652.5
2,615.6
Benefit plan non-service income
(18.6)
(21.6)
(55.7)
(65.0)
Interest, net
121.7
98.3
356.5
277.5
Earnings before income taxes and after-tax earnings
 
from
 
 
joint ventures
807.6
653.5
2,351.7
2,403.1
Income taxes
149.3
108.3
458.5
471.5
After-tax earnings from joint ventures
18.0
12.7
65.7
57.9
Net earnings, including earnings attributable to
 
noncontrolling interests
676.3
557.9
1,958.9
1,989.5
Net earnings attributable to noncontrolling interests
6.2
4.8
19.8
10.5
Net earnings attributable to General Mills
$
670.1
$
553.1
$
1,939.1
$
1,979.0
Earnings per share – basic
$
1.18
$
0.94
$
3.35
$
3.32
Earnings per share – diluted
$
1.17
$
0.92
$
3.33
$
3.28
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net earnings, including earnings attributable to
 
noncontrolling interests
$
676.3
$
557.9
$
1,958.9
$
1,989.5
Other comprehensive income (loss), net of tax:
Foreign currency translation
2.4
12.5
(38.0)
(98.7)
Other fair value changes:
Hedge derivatives
(6.9)
(5.7)
(7.3)
(23.2)
Reclassification to earnings:
Foreign currency translation
-
-
-
(7.4)
Hedge derivatives
(0.1)
18.9
(2.3)
18.5
Amortization of losses and prior service costs
9.1
13.9
27.4
42.2
Other comprehensive income (loss), net of tax
4.5
39.6
(20.2)
(68.6)
Total comprehensive
 
income
 
680.8
597.5
1,938.7
1,920.9
Comprehensive income attributable to noncontrolling
 
interests
6.0
4.9
20.0
9.9
Comprehensive income attributable to General Mills
$
674.8
$
592.6
$
1,918.7
$
1,911.0
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
 
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Feb. 25, 2024
May 28, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
588.6
$
585.5
Receivables
1,771.1
1,683.2
Inventories
1,828.0
2,172.0
Prepaid expenses and other current assets
466.8
735.7
Total current
 
assets
4,654.5
5,176.4
Land, buildings, and equipment
3,643.6
3,636.2
Goodwill
14,433.7
14,511.2
Other intangible assets
6,957.2
6,967.6
Other assets
1,171.5
1,160.3
Total assets
$
30,860.5
$
31,451.7
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,613.5
$
4,194.2
Current portion of long-term debt
812.2
1,709.1
Notes payable
686.7
31.7
Other current liabilities
1,949.5
1,600.7
Total current
 
liabilities
7,061.9
7,535.7
Long-term debt
11,015.1
9,965.1
Deferred income taxes
2,023.5
2,110.9
Other liabilities
1,068.7
1,140.0
Total liabilities
21,169.2
20,751.7
Stockholders’ equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,210.3
1,222.4
Retained earnings
20,416.7
19,838.6
Common stock in treasury,
 
at cost, shares of
190.1
 
and
168.0
(9,968.4)
(8,410.0)
Accumulated other comprehensive loss
(2,297.3)
(2,276.9)
Total stockholders’
 
equity
9,436.8
10,449.6
Noncontrolling interests
254.5
250.4
Total equity
9,691.3
10,700.0
Total liabilities and equity
$
30,860.5
$
31,451.7
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
Consolidated Statements of Total
 
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Feb. 25, 2024
Feb. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
9,631.9
$
10,372.1
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,201.8
1,155.3
Stock compensation plans
(11.1)
21.9
Unearned compensation related to stock unit awards
1.8
(14.8)
Earned compensation
17.8
28.7
Ending balance
1,210.3
1,191.1
Retained earnings:
Beginning balance
20,080.9
18,991.9
Net earnings attributable to General Mills
670.1
553.1
Cash dividends declared ($
0.59
 
and $
0.54
 
per share)
(334.3)
(318.5)
Ending balance
20,416.7
19,226.5
Common stock in treasury:
Beginning balance
(185.7)
(9,677.4)
(164.4)
(8,023.5)
Shares purchased, including excise tax of $
2.8
 
and
 
$
0.4
 
million
(4.7)
(303.1)
(2.9)
(251.0)
Stock compensation plans
0.3
12.1
1.1
54.4
Ending balance
(190.1)
(9,968.4)
(166.2)
(8,220.1)
Accumulated other comprehensive loss:
Beginning balance
(2,302.0)
(2,078.0)
Other comprehensive income
4.7
39.5
Ending balance
(2,297.3)
(2,038.5)
Noncontrolling interests:
Beginning balance
253.1
250.9
Comprehensive income
6.0
4.9
Distributions to noncontrolling interest holders
(4.6)
(6.6)
Ending balance
254.5
249.2
Total equity,
 
ending balance
$
9,691.3
$
10,483.7
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
Consolidated Statements of Total
 
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,700.0
$
10,788.0
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,222.4
1,182.9
Stock compensation plans
(10.3)
23.8
Unearned compensation related to stock unit awards
(78.1)
(100.6)
Earned compensation
76.3
85.0
Ending balance
1,210.3
1,191.1
Retained earnings:
Beginning balance
19,838.6
18,532.6
Net earnings attributable to General Mills
1,939.1
1,979.0
Cash dividends declared ($
2.36
 
and $
2.16
 
per share)
(1,361.0)
(1,285.1)
Ending balance
20,416.7
19,226.5
Common stock in treasury:
Beginning balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
Shares purchased, including excise tax of $
15.0
 
and
 
 
$
0.4
 
million
(23.5)
(1,616.6)
(15.0)
(1,152.3)
Stock compensation plans
1.4
58.2
4.5
210.3
Ending balance
(190.1)
(9,968.4)
(166.2)
(8,220.1)
Accumulated other comprehensive loss:
Beginning balance
(2,276.9)
(1,970.5)
Other comprehensive loss
(20.4)
(68.0)
Ending balance
(2,297.3)
(2,038.5)
Noncontrolling interests:
Beginning balance
250.4
245.6
Comprehensive income
20.0
9.9
Distributions to noncontrolling interest holders
(16.6)
(11.4)
Change in ownership interest
0.7
-
Divestiture
-
5.1
Ending balance
254.5
249.2
Total equity,
 
ending balance
$
9,691.3
$
10,483.7
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
1,958.9
$
1,989.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
412.2
411.0
After-tax earnings from joint ventures
(65.7)
(57.9)
Distributions of earnings from joint ventures
31.4
36.6
Stock-based compensation
76.7
86.7
Deferred income taxes
(85.5)
(71.2)
Pension and other postretirement benefit plan contributions
(20.0)
(20.2)
Pension and other postretirement benefit plan costs
(20.2)
(20.2)
Divestitures gain, net
-
(444.6)
Restructuring, impairment, and other exit costs
119.7
(14.6)
Changes in current assets and liabilities, excluding the effects of
 
 
acquisitions and divestitures
(9.6)
21.3
Other, net
41.0
110.6
Net cash provided by operating activities
2,438.9
2,027.0
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(485.6)
(351.3)
Acquisition, net of cash acquired
(25.5)
(251.5)
Proceeds from divestitures, net of cash divested
-
633.1
Investments in affiliates, net
(1.5)
(30.8)
Proceeds from disposal of land, buildings, and equipment
0.2
0.8
Other, net
4.8
(6.4)
Net cash used by investing activities
(507.6)
(6.1)
Cash Flows - Financing Activities
Change in notes payable
654.5
159.2
Issuance of long-term debt
1,000.0
501.8
Payment of long-term debt
(900.0)
(600.0)
Proceeds from common stock issued on exercised options
11.1
168.0
Purchases of common stock for treasury
(1,601.6)
(1,152.3)
Dividends paid
(1,028.0)
(967.4)
Distributions to noncontrolling interest holders
(16.6)
(11.4)
Other, net
(47.0)
(53.5)
Net cash used by financing activities
(1,927.6)
(1,955.6)
Effect of exchange rate changes on cash and cash equivalents
(0.6)
(16.0)
Increase in cash and cash equivalents
3.1
49.3
Cash and cash equivalents - beginning of year
585.5
569.4
Cash and cash equivalents - end of period
$
588.6
$
618.7
Cash Flow from changes in current assets and liabilities, excluding the effects
 
of
 
 
acquisitions and divestitures:
Receivables
$
(83.8)
$
(132.4)
Inventories
347.8
(237.0)
Prepaid expenses and other current assets
269.4
151.5
Accounts payable
(543.7)
(41.6)
Other current liabilities
0.7
280.8
Changes in current assets and liabilities
$
(9.6)
$
21.3
See accompanying notes to consolidated financial statements.
 
10
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
 
FINANCIAL STATEMENTS
(Unaudited)
 
(1) Background
The accompanying
 
Consolidated Financial
 
Statements of
 
General Mills,
 
Inc. (we,
 
us, our,
 
General Mills,
 
or the Company)
 
have been
prepared in
 
accordance with
 
accounting principles
 
generally accepted
 
in the
 
United States
 
(GAAP) for
 
interim financial
 
information
and with
 
the rules
 
and regulations
 
for reporting
 
on Form
 
10-Q. Accordingly,
 
they do
 
not include
 
certain information
 
and disclosures
required
 
for
 
comprehensive
 
financial
 
statements.
 
In
 
the
 
opinion
 
of
 
management,
 
all
 
adjustments
 
considered
 
necessary
 
for
 
a
 
fair
presentation have
 
been included
 
and are
 
of a
 
normal recurring
 
nature, including
 
the elimination
 
of all
 
intercompany transactions
 
and
any
 
noncontrolling
 
interests’
 
share
 
of
 
those
 
transactions.
 
Operating
 
results
 
for
 
the
 
fiscal
 
quarter
 
ended
 
February
 
25,
 
2024,
 
are
 
not
necessarily indicative of the results that may be expected for the fiscal year ending
 
May 26, 2024.
 
These
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
Consolidated
 
Financial
 
Statements
 
and
 
footnotes
 
included
 
in
 
our
 
Annual
Report on Form
 
10-K for the fiscal
 
year ended May
 
28, 2023. The
 
accounting policies used
 
in preparing these
 
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
 
Statements in that Form 10-K with the exception of
new requirements adopted in the first quarter of fiscal 2024.
In the first quarter
 
of fiscal 2024, we
 
adopted optional accounting guidance
 
to ease the burden
 
in accounting for reference
 
rate reform.
The new
 
standard provides
 
temporary expedients
 
and exceptions
 
to existing
 
accounting requirements
 
for contract
 
modifications
 
and
hedge accounting
 
related to transitioning
 
from discontinued
 
reference rates.
 
This resulted in
 
modifying contracts,
 
where necessary,
 
to
apply a new reference rate,
 
primarily SOFR. The adoption of
 
this accounting guidance did not
 
have a material impact on our results
 
of
operations or financial position.
In the
 
first quarter
 
of fiscal
 
2024, we adopted
 
new requirements
 
for enhanced
 
disclosures related
 
to supplier
 
financing programs.
 
The
new standard requires
 
disclosure of the
 
key terms of
 
the program and
 
a rollforward of
 
the related obligation
 
during the annual
 
period,
including
 
the
 
amount
 
of
 
obligations
 
confirmed
 
and
 
obligations
 
subsequently
 
paid.
 
We
 
have
 
historically
 
presented
 
the
 
key
 
terms
 
of
these programs
 
and the
 
associated obligation
 
outstanding
 
(please see
 
Note 6).
 
The rollforward
 
requirement is
 
effective
 
for us
 
in our
fiscal 2025. The adoption did not have a material impact on our financial
 
statements and related disclosures.
Certain terms used throughout this report are defined in the “Glossary” section below.
 
 
(2) Acquisition and Divestiture
During
 
the first
 
quarter
 
of fiscal
 
2023,
 
we
 
acquired
 
TNT Crust,
 
a
 
manufacturer
 
of high-quality
 
frozen pizza
 
crusts
 
for
 
regional
 
and
national pizza
 
chains, foodservice
 
distributors, and
 
retail outlets,
 
for a
 
purchase price
 
of $
253.0
 
million. We
 
financed the
 
transaction
with U.S. commercial paper.
 
We consolidated
 
the TNT Crust business into
 
our Consolidated Balance Sheets
 
and recorded goodwill
 
of
$
156.7
 
million. The
 
goodwill is
 
included in
 
the North
 
America Foodservice
 
segment and
 
is not
 
deductible for
 
tax purposes.
 
The pro
forma effects of this acquisition were not material.
 
During the
 
first quarter
 
of fiscal
 
2023,
 
we completed
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly
 
Salad side
 
dishes business
 
to
Eagle Family Foods Group for $
606.8
 
million and recorded a pre-tax gain of $
442.2
 
million.
 
(3) Restructuring, Impairment, and Other Exit Costs
Restructuring and impairment charges were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Goodwill impairment
$
-
$
-
$
117.1
$
-
Commercial strategy actions
9.0
-
14.1
-
(Recoveries) charges associated with restructuring actions
 
previously announced
(3.1)
2.1
16.4
16.0
Total
 
$
5.9
$
2.1
$
147.6
$
16.0
In
 
the
 
third
 
quarter
 
of
 
fiscal
 
2024,
 
we
 
did
 
not
 
undertake
 
any
 
new
 
restructuring
 
actions.
 
We
 
recorded
 
$
9.0
 
million
 
of
 
restructuring
charges
 
in
 
the
 
third
 
quarter
 
of
 
fiscal
 
2024
 
and
 
$
14.1
 
million
 
of
 
restructuring
 
charges
 
in
 
the
 
nine-month
 
period
 
ended
 
February
 
25,
2024, related to commercial strategy
 
actions approved in the second quarter
 
of fiscal 2024. We
 
recorded a $
3.1
 
million net recovery of
restructuring
 
charges
 
in
 
the
 
third
 
quarter
 
of
 
fiscal
 
2024
 
and
 
$
16.4
 
million
 
of
 
restructuring
 
charges
 
in
 
the
 
nine-month
 
period
 
ended
 
 
 
11
February
 
25,
 
2024,
 
related
 
to
 
restructuring
 
actions
 
previously
 
announced.
 
We
 
recorded
 
$
2.1
 
million
 
of
 
restructuring
 
charges
 
in
 
the
third quarter
 
of fiscal
 
2023
 
and $
16.0
 
million of
 
restructuring charges
 
in the
 
nine-month period
 
ended February
 
26, 2023,
 
related to
restructuring actions previously announced.
 
We expect these actions to
 
be completed by the end of fiscal 2026.
In the third
 
quarter of fiscal
 
2024, we decreased
 
the estimate of
 
restructuring charges
 
that we expect
 
to incur related
 
to our previously
announced
 
actions
 
to enhance
 
the
 
efficiency
 
of our
 
global
 
supply
 
chain
 
structure.
 
We
 
expect to
 
incur
 
approximately
 
$
44
 
million
 
of
restructuring charges and project-related costs related
 
to these actions, of which approximately $
25
 
million will be cash. These charges
are
 
expected
 
to
 
consist
 
of
 
approximately
 
$
24
 
million
 
of
 
severance
 
and
 
$
20
 
million
 
of
 
other
 
costs,
 
primarily
 
$
8
 
million
 
of
 
asset
impairment and $
13
 
million of asset write-offs. We
 
expect these actions to be completed by the end of fiscal 2025.
 
We
 
paid
 
net
 
$
27.9
 
million
 
of cash
 
in
 
the
 
nine-month
 
period
 
ended
 
February
 
25,
 
2024,
 
related
 
to
 
restructuring
 
actions.
 
We
 
paid
 
net
$
30.6
 
million of cash in the same period of fiscal 2023.
In the second
 
quarter of fiscal
 
2024, we recorded
 
a $
117.1
 
million non-cash goodwill
 
impairment charge
 
related to our Latin
 
America
reporting unit. Please see Note 4 for additional information.
Restructuring and impairment charges and project-related
 
costs are recorded in our Consolidated Statements of Earnings as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Restructuring, impairment, and other exit costs
$
5.8
$
1.4
$
130.6
$
14.1
Cost of sales
0.1
0.7
17.0
1.9
Total restructuring
 
and impairment charges
$
5.9
$
2.1
$
147.6
$
16.0
Project-related costs classified in cost of sales
$
0.5
$
-
$
1.6
$
-
The roll forward of our restructuring and other exit cost reserves, included
 
in other current liabilities, is as follows:
 
 
 
 
 
 
In Millions
Total
Reserve balance as of May 28, 2023
$
47.7
Fiscal 2024 net recoveries, including foreign currency translation
(0.1)
Utilized in fiscal 2024
(27.7)
Reserve balance as of Feb. 25, 2024
$
19.9
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
Feb. 25, 2024
May 28, 2023
Goodwill
$
14,433.7
$
14,511.2
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,715.7
6,712.4
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
387.0
386.3
Less accumulated amortization
(145.5)
(131.1)
Intangible assets subject to amortization, net
241.5
255.2
Other intangible assets
6,957.2
6,967.6
Total
$
21,390.9
$
21,478.8
 
 
 
12
Based on the
 
carrying value of
 
finite-lived intangible assets
 
as of February
 
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 nine-month period
 
ended February 25, 2024, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In Millions
North America
Retail
Pet
North America
Foodservice
International
Corporate and
Joint Ventures
Total
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
Acquisition
-
-
-
-
26.9
26.9
Impairment charge
-
-
-
(117.1)
-
(117.1)
Other activity, primarily
 
 
foreign currency translation
1.0
-
(0.1)
8.3
3.5
12.7
Balance as of Feb. 25, 2024
$
6,543.4
$
6,062.8
$
805.5
$
599.6
$
422.4
$
14,433.7
The changes in the carrying amount of other intangible assets during the nine-month
 
period ended February 25, 2024, were as follows:
 
 
 
 
 
 
In Millions
Total
Balance as of May 28, 2023
$
6,967.6
Amortization, net of foreign currency translation
(10.4)
Balance as of Feb. 25, 2024
$
6,957.2
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal 2024. As a
 
result of lower future profitability
 
projections for our Latin
 
America reporting unit, we
 
determined that the fair
 
value
of the reporting unit was
 
less than its book value and
 
recorded a $
117.1
 
million non-cash goodwill impairment
 
charge in restructuring,
impairment,
 
and
 
other
 
exit
 
costs
 
in
 
our
 
Consolidated
 
Statements
 
of
 
Earnings.
 
Our
 
estimates
 
of
 
fair
 
value
 
for
 
goodwill
 
impairment
testing were determined based on a discounted cash flow model and
 
the fair value is a Level 3 asset in the fair value hierarchy.
All other intangible
 
asset fair values
 
were substantially
 
in excess of
 
the carrying
 
values, except for
 
the
True Chews
 
and
Uncle Toby’s
brand intangible
 
assets. In
 
addition, while
 
having significant
 
coverage as
 
of our
 
fiscal 2024
 
assessment date,
 
the
Progresso
,
Nudges
,
Top
 
Chews
,
 
and
EPIC
 
brand
 
intangible
 
assets
 
had
 
risk
 
of
 
decreasing
 
coverage.
 
We
 
will
 
continue
 
to
 
monitor
 
these
 
businesses
 
for
potential impairment.
 
(5) Inventories
The components of inventories were as follows:
 
 
 
 
 
 
 
 
 
 
 
In Millions
Feb. 25, 2024
May 28, 2023
Finished goods
$
1,772.1
$
2,066.9
Raw materials and packaging
501.2
572.2
Grain
103.3
133.8
Excess of FIFO over LIFO cost
(548.6)
(600.9)
Total
$
1,828.0
$
2,172.0
 
 
(6) Risk Management Activities
 
Many commodities we
 
use in the
 
production and distribution
 
of our products
 
are exposed to
 
market price risks.
 
We
 
utilize derivatives
to manage price risk for our principal
 
ingredients and energy costs, including
 
grains (oats, wheat, and corn), oils
 
(principally soybean),
dairy products, natural
 
gas, and diesel fuel.
 
Our primary objective
 
when entering into
 
these derivative contracts
 
is to achieve
 
certainty
with
 
regard
 
to
 
the
 
future
 
price
 
of
 
commodities
 
purchased
 
for
 
use
 
in
 
our
 
supply
 
chain.
 
We
 
manage
 
our
 
exposures
 
through
 
a
combination of purchase orders, long-term
 
contracts with suppliers, exchange-traded
 
futures and options, and over-the-counter
 
options
and swaps.
 
We
 
offset
 
our exposures
 
based on
 
current and
 
projected market
 
conditions and
 
generally seek
 
to acquire
 
the inputs
 
at as
close as possible to or below our planned cost.
We
 
use derivatives
 
to manage
 
our exposure
 
to changes
 
in commodity
 
prices. We
 
do not
 
perform the
 
assessments required
 
to achieve
hedge
 
accounting
 
for
 
commodity
 
derivative
 
positions.
 
Accordingly,
 
the
 
changes
 
in
 
the
 
values
 
of
 
these
 
derivatives
 
are
 
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
 
 
13
Although we do
 
not meet the
 
criteria for
 
cash flow hedge
 
accounting, we believe
 
that these instruments
 
are effective
 
in achieving our
objective of providing certainty
 
in the future price of commodities purchased
 
for use in our supply chain.
 
Accordingly, for
 
purposes of
measuring
 
segment
 
operating
 
performance,
 
these
 
gains
 
and
 
losses
 
are
 
reported
 
in
 
unallocated
 
corporate
 
items
 
outside
 
of
 
segment
operating results
 
until such time
 
that the exposure
 
we are managing
 
affects earnings.
 
At that time,
 
we reclassify
 
the gain or
 
loss from
unallocated
 
corporate
 
items
 
to
 
segment
 
operating
 
profit,
 
allowing
 
our
 
operating
 
segments
 
to
 
realize
 
the
 
economic
 
effects
 
of
 
the
derivative without experiencing any resulting mark-to-market volatility,
 
which remains in unallocated corporate items.
 
Unallocated corporate items for the quarters and nine-month periods ended
 
February 25, 2024, and February 26, 2023, included:
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net loss on mark-to-market valuation of certain
 
 
commodity positions
$
(24.5)
$
(30.2)
$
(34.3)
$
(123.4)
Net loss (gain) on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
11.7
(21.5)
29.5
(85.0)
Net mark-to-market revaluation of certain grain inventories
(12.9)
(14.9)
(1.1)
(58.0)
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
(25.7)
$
(66.6)
$
(5.9)
$
(266.4)
 
As
 
of
 
February
 
25,
 
2024,
 
the
 
net
 
notional
 
value
 
of
 
commodity
 
derivatives
 
was
 
$
306.3
 
million,
 
of
 
which
 
$
124.2
 
million
 
related
 
to
energy inputs and $
182.1
 
million related to agricultural inputs. These contracts relate to inputs that generally
 
will be utilized within the
next
12
 
months.
In
 
the
 
third
 
quarter
 
of
 
fiscal
 
2024,
 
in
 
advance
 
of
 
our
 
$
500.0
 
million
 
debt
 
issuance,
 
we
 
entered
 
into
 
and
 
settled
 
$
250.0
 
million
 
of
treasury locks, resulting in a gain of $
0.3
 
million.
 
We
 
also have net
 
investments in
 
foreign subsidiaries
 
that are denominated
 
in euros. As
 
of February
 
25, 2024, we
 
hedged a portion
 
of
these investments with €
2,967.5
 
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 February 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.
 
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 February
 
25, 2024, $
1,348.9
 
million of our total accounts
 
payable were payable to
 
suppliers who utilize these third-
party services.
 
As of
 
May 28,
 
2023, $
1,430.1
 
million of
 
our total
 
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.
 
(7) Debt
The components of notes payable were as follows:
 
 
 
 
 
 
 
 
 
 
In Millions
Feb. 25, 2024
May 28, 2023
U.S. commercial paper
$
683.3
$
-
Financial institutions
3.4
31.7
Total
$
686.7
$
31.7
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
 
14
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of February 25, 2024:
 
 
 
 
 
 
 
 
 
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 February 25, 2024.
Long-Term
 
Debt
 
The fair values
 
and carrying
 
amounts of long-term
 
debt, including
 
the current portion,
 
were $
11,112.5
 
million and $
11,827.3
 
million,
respectively,
 
as of
 
February
 
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
 
third
 
quarter of
 
fiscal
 
2024,
 
we
 
issued
 
$
500.0
 
million
 
of
4.7
 
percent
 
fixed-rate
 
notes due
January 30, 2027
. We
 
used
 
the
 
net
proceeds to repay $
500.0
 
million of
3.65
 
percent fixed-rate notes due
February 15, 2024
.
 
In the second
 
quarter of fiscal 2024,
 
we issued €
250.0
 
million of floating-rate
 
notes due
November 8, 2024
. We
 
used the net proceeds
to repay €
250.0
 
million of floating-rate notes due
November 10, 2023
.
 
In the
 
second quarter
 
of fiscal
 
2024, we
 
issued $
500.0
 
million of
5.5
 
percent fixed-rate
 
notes due
October 17, 2028
. We
 
used the
 
net
proceeds to repay $
400.0
 
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
 
In the first
 
quarter of fiscal
 
2024, we issued
 
500.0
 
million of floating-rate
 
notes due
November 8, 2024
. We
 
used the net proceeds
 
to
repay €
500.0
 
million of floating-rate notes due
July 27, 2023
.
 
In the fourth quarter
 
of fiscal 2023, we
 
issued €
250.0
 
million of floating-rate notes
 
due
November 10, 2023
. We
 
used the net proceeds
to repay €
250.0
 
million of floating-rate notes due
May 16, 2023
.
In the
 
fourth quarter
 
of fiscal
 
2023, we
 
issued €
750.0
 
million of
3.907
 
percent fixed-rate
 
notes due
April 13, 2029
. We
 
used the
 
net
proceeds to repay €
500.0
 
million of
1.0
 
percent fixed-rate notes due
April 27, 2023
, and €
250.0
 
million of floating-rate notes due
May
16, 2023
.
In the fourth
 
quarter of fiscal
 
2023, we
 
issued $
1,000.0
 
million of
4.95
 
percent fixed-rate
 
notes due
March 29, 2033
. We
 
used the net
proceeds to repay our outstanding commercial paper and for general
 
corporate purposes.
In the second quarter of fiscal 2023, we issued $
500.0
 
million of
5.241
 
percent fixed-rate notes due
November 18, 2025
. We used the
net proceeds to repay a portion of our outstanding commercial paper and for general
 
corporate purposes.
In the second quarter of fiscal 2023, we issued €
250.0
 
million of floating-rate notes due
May 16, 2023
. We used the net proceeds
 
to
repay €
250.0
 
million of
0.0
 
percent fixed-rate notes due
November 11, 2022
.
In the second quarter of fiscal 2023, we repaid $
500.0
 
million of
2.6
 
percent fixed-rate notes due
October 12, 2022
, using proceeds
from the issuance of commercial paper.
Certain of
 
our long-term
 
debt agreements
 
contain restrictive
 
covenants.
As of February 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). The
 
floating preferred return
 
rate on GMC’s
 
Class A Interests is
the
 
sum
 
of
 
the
three-month Term SOFR
 
plus
186
 
basis
 
points.
 
The
 
preferred
 
return
 
rate
 
is
 
adjusted
 
every
three years
 
through
 
a
negotiated agreement with the Class A Interest holder or through
 
a remarketing auction.
 
 
 
15
Our noncontrolling interests contain restrictive covenants. As of February 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
Feb. 25, 2024
Feb. 26, 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
 
$
670.1
$
6.2
$
553.1
$
4.8
Other comprehensive income (loss):
Foreign currency translation
$
10.7
$
(8.1)
2.6
(0.2)
$
3.4
$
9.0
12.4
0.1
Other fair value changes:
Hedge derivatives
(8.8)
1.9
(6.9)
-
(6.3)
0.6
(5.7)
-
Reclassification to earnings:
Hedge derivatives (a)
(0.3)
0.2
(0.1)
-
23.1
(4.2)
18.9
-
Amortization of losses and
 
prior service costs (b)
11.5
(2.4)
9.1
-
18.1
(4.2)
13.9
-
Other comprehensive income (loss)
$
13.1
$
(8.4)
4.7
(0.2)
$
38.3
$
1.2
39.5
0.1
Total comprehensive income
$
674.8
$
6.0
$
592.6
$
4.9
(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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 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
 
$
1,939.1
$
19.8
$
1,979.0
$
10.5
Other comprehensive (loss) income:
Foreign currency translation
$
(43.7)
$
5.5
(38.2)
0.2
$
(83.3)
$
(14.8)
(98.1)
(0.6)
Other fair value changes:
Hedge derivatives
(9.0)
1.7
(7.3)
-
(29.3)
6.1
(23.2)
-
Reclassification to earnings:
Foreign currency translation (a)
-
-
-
-
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(5.0)
2.7
(2.3)
-
23.0
(4.5)
18.5
-
Amortization of losses and
 
prior service costs (c)
34.5
(7.1)
27.4
-
54.6
(12.4)
42.2
-
Other comprehensive (loss) income
$
(23.2)
$
2.8
(20.4)
0.2
$
(42.4)
$
(25.6)
(68.0)
(0.6)
Total comprehensive income
$
1,918.7
$
20.0
$
1,911.0
$
9.9
(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
Feb. 25, 2024
May 28, 2023
Foreign currency translation adjustments
$
(746.8)
$
(708.6)
Unrealized (loss) gain from hedge derivatives
(3.7)
5.9
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,630.1)
(1,670.6)
Prior service credits
83.3
96.4
Accumulated other comprehensive loss
$
(2,297.3)
$
(2,276.9)
 
 
(10) Stock Plans
We
 
have various
 
stock-based compensation
 
programs under
 
which awards,
 
including stock
 
options, restricted
 
stock, restricted
 
stock
units, and performance
 
awards, may be granted
 
to employees and non-employee
 
directors. These programs
 
and related accounting
 
are
described in Note
 
12 to the
 
Consolidated Financial
 
Statements included
 
in our Annual
 
Report on Form
 
10-K for the
 
fiscal year ended
May 28, 2023.
 
 
 
 
 
16
Compensation expense related to stock-based payments recognized
 
in the Consolidated Statements of Earnings was as follows:
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Compensation expense related to stock-based payments
$
18.2
$
29.1
$
76.7
$
86.7
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Windfall tax benefits from stock-based payments
$
1.2
$
6.2
$
10.1
$
24.6
As
 
of
 
February
 
25,
 
2024,
 
unrecognized
 
compensation
 
expense
 
related
 
to
 
non-vested
 
stock
 
options,
 
restricted
 
stock
 
units,
 
and
performance share units was $
130.7
 
million. This expense will be recognized over
21
 
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:
 
 
 
 
 
 
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Net cash proceeds
$
11.1
$
168.0
Intrinsic value of options exercised
$
3.4
$
81.8
We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-
pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and
dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,
excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We
also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially
those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting
the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 28, 2023.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended
Feb. 25, 2024
Feb. 26, 2023
Estimated fair values of stock options granted
 
$
17.47
$
14.16
Assumptions:
Risk-free interest rate
4.0
%
3.3
%
Expected term
8.5
years
8.5
years
Expected volatility
21.5
%
20.9
%
Dividend yield
2.8
%
3.1
%
The total grant date fair value of restricted stock unit awards that vested during
 
the period was as follows:
 
 
 
 
 
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Total grant date fair
 
value
$
91.1
$
105.4
 
 
 
 
17
 
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions, Except per Share Data
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net earnings attributable to General Mills
$
670.1
$
553.1
$
1,939.1
$
1,979.0
Average number
 
of common shares – basic EPS
569.5
592.5
578.6
596.2
Incremental share effect from: (a)
Stock options
1.3
3.7
1.8
3.6
Restricted stock units and performance share units
2.0
2.8
2.1
2.6
Average number
 
of common shares – diluted EPS
572.8
599.0
582.5
602.4
Earnings per share – basic
$
1.18
$
0.94
$
3.35
$
3.32
Earnings per share – diluted
$
1.17
$
0.92
$
3.33
$
3.28
(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
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Anti-dilutive stock options, restricted stock units, and
 
performance share units
 
4.2
0.8
2.6
0.9
 
 
(12) Share Repurchases
Share repurchases were as follows:
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Shares of common stock
4.7
2.9
23.5
15.0
Aggregate purchase price
$
303.1
$
251.0
$
1,616.6
$
1,152.3
 
 
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
 
 
 
 
 
 
 
 
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Net cash interest payments
$
294.6
$
225.6
Net income tax payments
$
462.3
$
538.4
 
 
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
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Service cost
$
14.5
$
17.6
$
1.1
$
1.4
$
1.8
$
2.1
Interest cost
74.1
64.6
5.3
4.5
1.0
0.7
Expected return on plan assets
(104.5)
(105.0)
(8.6)
(7.7)
-
-
Amortization of losses (gains)
21.6
28.3
(5.1)
(4.9)
-
0.1
Amortization of prior service costs (credits)
0.4
0.4
(5.5)
(5.9)
0.1
0.1
Other adjustments
-
-
-
-
2.6
3.2
Net expense (income)
$
6.1
$
5.9
$
(12.8)
$
(12.6)
$
5.5
$
6.2
Defined Benefit
 
Pension Plans
Other Postretirement
 
Benefit Plans
Postemployment
Benefit Plans
Nine-Month
Period Ended
Nine-Month
Period Ended
Nine-Month
Period Ended
In Millions
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Feb. 25,
2024
Feb. 26,
2023
Service cost
$
43.1
$
52.7
$
3.5
$
4.0
$
5.5
$
6.3
Interest cost
222.4
193.8
16.0
13.5
3.0
2.3
Expected return on plan assets
(313.4)
(315.0)
(26.0)
(23.3)
-
-
Amortization of losses (gains)
64.6
85.0
(15.3)
(14.6)
(0.1)
0.2
Amortization of prior service costs (credits)
1.3
1.1
(16.4)
(17.4)
0.4
0.3
Other adjustments
-
-
-
-
7.8
9.1
Curtailment gain
(3.4)
-
-
-
-
-
Net expense (income)
$
14.6
$
17.6
$
(38.2)
$
(37.8)
$
16.6
$
18.2
 
 
 
(15) Income Taxes
During the
 
second quarter
 
of fiscal
 
2024, we
 
received a
 
notice of
 
proposed adjustment
 
from the
 
Internal Revenue
 
Service associated
with a capital loss
 
from fiscal 2019.
 
We
 
believe that we
 
have meritorious defenses
 
against this assessment
 
and will vigorously
 
defend
our
 
position. We
 
do
 
not
 
expect
 
the
 
resolution
 
of
 
the
 
proposed
 
adjustment
 
to
 
have
 
a
 
material
 
impact
 
on
 
our
 
financial
 
position
 
or
liquidity.
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023,
 
the
 
Inflation
 
Reduction
 
Act
 
(IRA)
 
was
 
signed
 
into
 
law.
 
The
 
IRA
 
introduces
 
a
 
Corporate
Alternative Minimum Tax
 
beginning in our fiscal 2024
 
and an excise tax on the
 
repurchase of corporate
 
stock starting after January
 
1,
2023.
 
The
 
IRA
 
does
 
not
 
have
 
a
 
material
 
impact
 
on
 
our
 
financial
 
results,
 
including
 
our
 
annual
 
estimated
 
effective
 
tax
 
rates
 
and
liquidity.
 
(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
 
February
 
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,
 
Pet,
 
and
North America Foodservice.
 
19
 
 
 
 
 
 
 
 
Our North America Retail
 
operating segment reflects business
 
with a wide variety of
 
grocery stores, mass merchandisers, membership
stores,
 
natural
 
food
 
chains,
 
drug,
 
dollar
 
and
 
discount
 
chains,
 
convenience
 
stores,
 
and
 
e-commerce
 
grocery
 
providers.
 
Our
 
product
categories
 
in
 
this
 
business
 
segment
 
include
 
ready-to-eat
 
cereals,
 
refrigerated
 
yogurt,
 
soup,
 
meal
 
kits,
 
refrigerated
 
and
 
frozen
 
dough
products,
 
dessert
 
and
 
baking
 
mixes,
 
frozen
 
pizza
 
and
 
pizza
 
snacks,
 
snack
 
bars,
 
fruit
 
snacks,
 
savory
 
snacks,
 
and
 
a
 
wide
 
variety
 
of
organic products including ready-to-eat cereal, frozen
 
and shelf-stable vegetables, meal kits, fruit snacks, and snack bars.
Our
 
International
 
operating
 
segment
 
consists
 
of
 
retail
 
and
 
foodservice
 
businesses
 
outside
 
of
 
the
 
United
 
States
 
and
 
Canada.
 
Our
product categories include super-premium
 
ice cream and frozen desserts, meal kits, salty snacks,
 
snack bars, dessert and baking mixes,
shelf-stable
 
vegetables,
 
and
 
pet
 
food
 
products.
 
We
 
also
 
sell
 
super-premium
 
ice
 
cream
 
and
 
frozen
 
desserts
 
directly
 
to
 
consumers
through owned
 
retail shops. Our
 
International segment
 
also includes products
 
manufactured in
 
the United States
 
for export, mainly
 
to
Caribbean and Latin American markets, as well as products we
 
manufacture for sale to our international joint ventures. Revenues
 
from
export activities are reported in the region or country where the end customer
 
is located.
Our Pet operating segment includes
 
pet food products sold primarily in the
 
United States and Canada in national
 
pet superstore chains,
e-commerce retailers,
 
grocery stores,
 
regional pet
 
store chains,
 
mass merchandisers,
 
and veterinary
 
clinics and
 
hospitals. Our
 
product
categories include dog and cat food (dry
 
foods, wet foods, and treats) made with
 
whole meats, fruits, vegetables and other
 
high-quality
natural
 
ingredients.
 
Our
 
tailored
 
pet
 
product
 
offerings
 
address
 
specific
 
dietary,
 
lifestyle,
 
and
 
life-stage
 
needs
 
and
 
span
 
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
 
functions,
 
and textures and cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
sell are branded
 
to the consumer
and nearly
 
all are
 
branded to
 
our customers.
 
We
 
sell to
 
distributors and
 
operators in
 
many customer
 
channels including
 
foodservice,
vending, and supermarket bakeries.
Operating profit
 
for these
 
segments excludes
 
unallocated corporate
 
items, gain
 
or loss
 
on divestitures,
 
and restructuring,
 
impairment,
and other
 
exit costs.
 
Results from
 
certain businesses
 
managed by
 
our Gold
 
Medal Ventures
 
entity are
 
included within
 
corporate and
other net
 
sales and
 
unallocated corporate
 
items within
 
operating
 
profit. Unallocated
 
corporate items
 
also include
 
corporate overhead
expenses,
 
variances
 
to
 
planned
 
North
 
American
 
employee
 
benefits
 
and
 
incentives,
 
certain
 
charitable
 
contributions,
 
restructuring
initiative
 
project-related
 
costs,
 
gains
 
and
 
losses
 
on
 
corporate
 
investments,
 
and
 
other
 
items
 
that
 
are
 
not
 
part
 
of
 
our
 
measurement
 
of
segment operating performance.
 
These include gains and
 
losses arising from the
 
revaluation of certain grain
 
inventories and gains
 
and
losses
 
from
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
until
 
passed
 
back
 
to
 
our
 
operating
 
segments.
 
These
 
items
affecting
 
operating
 
profit
 
are
 
centrally
 
managed
 
at
 
the
 
corporate
 
level
 
and
 
are
 
excluded
 
from
 
the
 
measure
 
of
 
segment
 
profitability
reviewed
 
by executive
 
management.
 
Under our
 
supply chain
 
organization,
 
our manufacturing,
 
warehouse,
 
and distribution
 
activities
are
 
substantially
 
integrated
 
across
 
our
 
operations
 
in
 
order
 
to
 
maximize
 
efficiency
 
and
 
productivity.
 
As
 
a
 
result,
 
fixed
 
assets
 
and
depreciation and amortization expenses are neither maintained nor available
 
by operating segment.
 
 
 
 
 
 
 
 
20
 
Our operating segment results were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Net sales:
North America Retail
$
3,242.1
$
3,232.0
$
9,620.1
$
9,593.9
International
680.1
700.6
2,079.0
2,024.8
Pet
624.5
645.5
1,773.7
1,818.3
North America Foodservice
551.7
547.8
1,669.7
1,627.2
Total segment net
 
sales
$
5,098.4
$
5,125.9
$
15,142.5
$
15,064.2
Corporate and other
0.8
-
0.8
-
Total net sales
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2
Operating profit:
North America Retail
$
752.2
$
786.9
$
2,410.3
$
2,401.8
International
18.2
42.4
102.8
95.0
Pet
128.3
102.6
342.0
312.3
North America Foodservice
81.7
82.4
236.3
217.5
Total segment operating
 
profit
$
980.4
$
1,014.3
$
3,091.4
$
3,026.6
Unallocated corporate items
63.9
296.4
308.3
841.5
Divestitures gain, net
-
(13.7)
-
(444.6)
Restructuring, impairment, and other exit costs
5.8
1.4
130.6
14.1
Operating profit
$
910.7
$
730.2
$
2,652.5
$
2,615.6
Net sales for our North America Retail operating units were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
U.S. Meals & Baking Solutions
$
1,168.5
$
1,185.3
$
3,453.7
$
3,456.2
U.S. Morning Foods
940.7
918.6
2,725.4
2,731.1
U.S. Snacks
869.2
883.5
2,660.0
2,663.6
Canada
263.7
244.6
781.0
743.0
Total
$
3,242.1
$
3,232.0
$
9,620.1
$
9,593.9
Net sales by class of similar products were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
In Millions
Feb. 25, 2024
Feb. 26, 2023
Feb. 25, 2024
Feb. 26, 2023
Snacks
$
1,052.4
$
1,065.5
$
3,226.4
$
3,236.7
Cereal
843.4
801.9
2,438.2
2,427.5
Convenient meals
840.2
815.6
2,290.8
2,281.2
Dough
605.1
644.8
1,915.1
1,855.2
Pet
627.6
646.2
1,779.8
1,820.7
Baking mixes and ingredients
507.5
517.7
1,536.3
1,554.9
Yogurt
367.0
378.0
1,100.3
1,081.5
Super-premium ice cream
142.0
148.2
534.3
496.6
Other
114.0
108.0
322.1
309.9
Total
$
5,099.2
$
5,125.9
$
15,143.3
$
15,064.2