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GENERAL MILLS INC - Annual Report: 2023 (Form 10-K)

10-K
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
☑
 
ANNUAL REPORT PURSUANT
 
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR
THE FISCAL YEAR ENDED
MAY 28, 2023
☐
 
TRANSITION REPORT PURSUANT
 
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
 
OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number:
001-01185
________________
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
 
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
 
including area code)
Securities registered pursuant to Section 12(b)
 
of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $.10 par value
 
GIS
 
New York Stock Exchange
0.125% Notes due 2025
GIS25A
New York Stock Exchange
0.450% Notes due 2026
 
GIS26
 
New York Stock Exchange
1.500% Notes due 2027
 
GIS27
 
New York Stock Exchange
3.907% Notes due 2029
GIS29
New York Stock Exchange
Securities registered pursuant to Section 12(g)
 
of the Act: None
Indicate by check mark if the registrant is a well-known seasoned
 
issuer, as defined in Rule 405 of the Securities Act.
Yes
☑
 
No
☐
Indicate by check mark if the registrant is not required to file reports pursuant
 
to Section 13 or Section 15(d) of the Act. Yes
☐
No
☑
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
 
Securities
Exchange Act of 1934
 
during the preceding 12
 
months (or for such shorter
 
period that the registrant
 
was required to file
 
such reports),
and (2) has been subject to such filing requirements for the past 90 days.
 
Yes
☑
 
No
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
has
 
submitted
 
electronically
 
every
 
Interactive
 
Data
 
File
 
required
 
to
 
be
 
submitted
pursuant to Rule
 
405 of Regulation
 
S-T during
 
the preceding 12
 
months (or for
 
such shorter period
 
that the registrant
 
was required
 
to
submit such files).
Yes
☑
 
No
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
is
 
a
 
large
 
accelerated
 
filer,
 
an
 
accelerated
 
filer,
 
a
 
non-accelerated
 
filer,
 
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. (Check one):
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 has filed
 
a report on and
 
attestation to its management’s
 
assessment of the effectiveness
of its
 
internal control
 
over financial
 
reporting under
 
Section 404(b)
 
of the
 
Sarbanes-Oxley Act
 
(15 U.S.C.
 
7262(b)) by
 
the registered
public accounting firm that prepared or issued its audit report.
☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check
 
mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously
 
issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements
 
that required a recovery analysis of incentive-based
compensation received by any of the registrant’s
 
executive officers during the relevant recovery period pursuant
 
to § 240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the Act).
Yes
☐
 
No
☑
Aggregate
 
market value
 
of Common
 
Stock held
 
by non-affiliates
 
of the
 
registrant, based
 
on the
 
closing price
 
of $82.97
 
per share
 
as
reported on
 
the New
 
York
 
Stock Exchange
 
on November
 
27, 2022
 
(the last
 
business day
 
of the
 
registrant’s
 
most recently
 
completed
second fiscal quarter): $
48,920
 
million.
Number
 
of
 
shares
 
of
 
Common
 
Stock
 
outstanding
 
as
 
of
 
June
 
14,
 
2023:
585,182,745
 
(excluding
169,430,583
 
shares
 
held
 
in
 
the
treasury).
DOCUMENTS INCORPORATED
 
BY REFERENCE
Portions of the registrant’s Proxy
 
Statement for its 2023 Annual Meeting of Shareholders are incorporated by reference
 
into Part III.
4
PART
 
I
ITEM 1 - Business
 
COMPANY OVERVIEW
For more than
 
150 years, General
 
Mills has been making
 
food the world
 
loves. We
 
are a leading
 
global manufacturer and
 
marketer of
branded consumer
 
foods with more
 
than 100 brands
 
in 100 countries
 
across six continents.
 
In addition to
 
our consolidated operations,
we
 
have
 
50
 
percent
 
interests
 
in
 
two
 
strategic
 
joint
 
ventures
 
that
 
manufacture
 
and
 
market
 
food
 
products
 
sold
 
in
 
approximately
 
130
countries worldwide.
We
 
manage and
 
review the
 
financial results
 
of our
 
business under
 
four operating
 
segments: North
 
America Retail;
 
International; Pet;
and
 
North
 
America
 
Foodservice.
 
See
 
Management’s
 
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
 
Operations
(MD&A) in Item 7 of this report for a description of our segments.
We offer
 
a variety of human and pet food products that provide great
 
taste, nutrition, convenience, and value for consumers around
 
the
world. Our business is focused on the following large, global categories:
●
snacks, including grain, fruit and savory snacks, nutrition bars, and
 
frozen hot snacks;
●
ready-to-eat cereal;
●
convenient meals, including meal kits, ethnic meals, pizza, soup, side dish mixes,
 
frozen breakfast, and frozen entrees;
●
wholesome natural pet food;
●
refrigerated and frozen dough;
●
baking mixes and ingredients;
●
yogurt; and
●
super-premium ice cream.
Our Cereal Partners Worldwide
 
(CPW) joint venture with Nestlé
 
S.A. (Nestlé) competes in the
 
ready-to-eat cereal category in markets
outside North
 
America, and
 
our Häagen-Dazs
 
Japan, Inc.
 
(HDJ) joint
 
venture
 
competes in
 
the super-premium
 
ice cream
 
category
 
in
Japan. For net sales contributed
 
by each class of similar
 
products, please see Note 17
 
to the Consolidated Financial
 
Statements in Item
8 of this report.
The terms
 
“General Mills,”
 
“Company,”
 
“registrant,” “we,”
 
“us,” and
 
“our” mean
 
General Mills, Inc.
 
and all
 
subsidiaries included
 
in
the Consolidated Financial Statements in Item 8 of this report unless the context
 
indicates otherwise.
 
Certain terms used throughout this report are defined in a glossary in Item 8 of
 
this report.
Customers
Our
 
primary
 
customers
 
are
 
grocery
 
stores,
 
mass
 
merchandisers,
 
membership
 
stores,
 
natural
 
food
 
chains,
 
drug,
 
dollar
 
and
 
discount
chains, e-commerce
 
retailers, commercial
 
and noncommercial
 
foodservice distributors
 
and operators,
 
restaurants, convenience
 
stores,
and
 
pet
 
specialty
 
stores.
 
We
 
generally
 
sell
 
to
 
these
 
customers
 
through
 
our
 
direct
 
sales
 
force.
 
We
 
use
 
broker
 
and
 
distribution
arrangements for certain products and to serve certain
 
types of customers and certain markets. For further
 
information on our customer
credit
 
and
 
product
 
return practices,
 
please
 
refer
 
to Note
 
2
 
to the
 
Consolidated
 
Financial Statements
 
in
 
Item 8
 
of this
 
report.
 
During
fiscal 2023,
 
Walmart Inc.
 
and its affiliates (Walmart)
 
accounted for 21 percent of our consolidated
 
net sales and 28 percent of net sales
of our
 
North America
 
Retail segment.
 
No other
 
customer accounted
 
for 10
 
percent or
 
more of
 
our consolidated
 
net sales.
 
For further
information on significant customers, please refer to Note 8 to the Consolidated
 
Financial Statements in Item 8 of this report.
Competition
The
 
human
 
and
 
pet
 
food
 
categories
 
are
 
highly
 
competitive,
 
with
 
numerous
 
manufacturers
 
of
 
varying
 
sizes in
 
the
 
United
 
States and
throughout the
 
world. The categories
 
in which
 
we participate
 
also are
 
very competitive.
 
Our principal
 
competitors in
 
these categories
are manufacturers, as
 
well as retailers with
 
their own branded
 
products. Competitors market
 
and sell their products
 
through brick-and-
mortar stores
 
and e-commerce.
 
All our
 
principal competitors
 
have substantial
 
financial, marketing,
 
and other
 
resources. Competition
in
 
our
 
product
 
categories
 
is
 
based
 
on
 
product
 
innovation,
 
product
 
quality,
 
price,
 
brand
 
recognition
 
and
 
loyalty,
 
effectiveness
 
of
marketing,
 
promotional
 
activity,
 
convenient
 
ordering
 
and
 
delivery
 
to
 
the consumer,
 
and the
 
ability
 
to
 
identify
 
and
 
satisfy
 
consumer
preferences.
 
Our
 
principal
 
strategies
 
for
 
competing
 
in
 
each
 
of
 
our
 
segments
 
include
 
unique
 
consumer
 
insights,
 
effective
 
customer
relationships, superior
 
product quality,
 
innovative advertising,
 
product promotion,
 
product innovation
 
aligned with consumers’
 
needs,
an efficient
 
supply chain, and
 
price. In most
 
product categories, we
 
compete not only
 
with other widely
 
advertised, branded
 
products,
but also
 
with regional
 
brands and
 
with generic
 
and private
 
label products
 
that are
 
generally sold
 
at lower
 
prices. Internationally,
 
we
compete with both multi-national and local manufacturers, and each
 
country includes a unique group of competitors.
5
Raw materials, ingredients, and packaging
The
 
principal
 
raw
 
materials
 
that
 
we
 
use
 
are
 
grains
 
(wheat,
 
oats,
 
and
 
corn),
 
dairy
 
products,
 
meat,
 
vegetable
 
oils,
 
sugar,
 
vegetables,
fruits,
 
nuts,
 
and
 
other
 
agricultural
 
products.
 
We
 
also
 
use
 
substantial
 
quantities
 
of
 
carton
 
board,
 
corrugated,
 
plastic,
 
and
 
metal
packaging
 
materials,
 
operating
 
supplies,
 
and
 
energy.
 
Most
 
of
 
these
 
inputs
 
for
 
our
 
domestic
 
and
 
Canadian
 
operations
 
are
 
purchased
from suppliers
 
in the
 
United States. In
 
our other
 
international operations,
 
inputs that
 
are not locally
 
available in
 
adequate supply
 
may
be imported
 
from other
 
countries. The
 
cost of
 
these inputs
 
may fluctuate
 
widely due
 
to external
 
conditions such
 
as weather,
 
climate
change,
 
product
 
scarcity,
 
limited
 
sources
 
of
 
supply,
 
commodity
 
market
 
fluctuations,
 
currency
 
fluctuations,
 
trade
 
tariffs,
 
pandemics,
war,
 
and
 
changes
 
in
 
governmental
 
agricultural
 
and
 
energy
 
policies
 
and
 
regulations.
 
We
 
believe
 
that
 
we
 
will
 
be
 
able
 
to
 
obtain
 
an
adequate supply
 
of needed
 
inputs. Occasionally
 
and where
 
possible, we
 
make advance
 
purchases of
 
items significant
 
to our
 
business
in order to ensure continuity of operations. Our objective
 
is to procure materials meeting both our quality standards and our
 
production
needs
 
at
 
price
 
levels
 
that
 
allow
 
a
 
targeted
 
profit
 
margin.
 
Since
 
these
 
inputs
 
generally
 
represent
 
the
 
largest
 
variable
 
cost
 
in
manufacturing our products, to the extent possible, we
 
often manage the risk associated with adverse
 
price movements for some inputs
using a
 
variety of
 
risk management
 
strategies. We
 
also have
 
a grain
 
merchandising operation
 
that provides
 
us efficient
 
access to,
 
and
more informed
 
knowledge of,
 
various commodity
 
markets, principally
 
wheat and
 
oats. This
 
operation holds
 
physical inventories
 
that
are carried at net realizable value and uses derivatives to manage its net inventory
 
position and minimize its market exposures.
TRADEMARKS AND PATENTS
Our
 
products
 
are
 
marketed
 
under
 
a
 
variety
 
of
 
valuable
 
trademarks.
 
Some
 
of
 
the
 
more
 
important
 
trademarks
 
used
 
in
 
our
 
global
operations
 
(set
 
forth
 
in
 
italics
 
in
 
this
 
report)
 
include
Annie’s
,
 
Betty
 
Crocker
,
Bisquick
,
Blue
 
Buffalo
,
Blue
 
Basics
,
Blue
 
Freedom
,
Bugles
,
Cascadian
Farm
,
Cheerios
,
Chex
,
Cinnamon Toast
 
Crunch
,
Cocoa Puffs
,
Cookie Crisp
,
EPIC
,
Fiber One
,
Fruit by
 
the Foot
,
Fruit
 
Gushers
,
Fruit
 
Roll-Ups
,
Gardetto's
,
Gold
 
Medal
,
Golden
 
Grahams
,
Häagen-Dazs
,
Kitano
,
Kix
,
Lärabar
,
Latina
,
Lucky
Charms
,
Muir Glen
,
Nature
 
Valley
,
Nudges, Oatmeal
 
Crisp
,
Old El
 
Paso
,
Pillsbury
,
Progresso
,
Raisin Nut
 
Bran
,
Total
,
Top
 
Chews
Naturals,
 
Totino’s
,
Trix
,
True
 
Chews,
 
Wanchai
 
Ferry
,
Wheaties
,
Wilderness
,
 
and
Yoki
.
 
We
 
protect
 
these
 
trademarks
 
as
 
appropriate
through registrations in the
 
United States and other jurisdictions.
 
Depending on the jurisdiction,
 
trademarks are generally valid
 
as long
as they are in use
 
or their registrations are properly
 
maintained and they have
 
not been found to have
 
become generic. Registrations of
trademarks can also generally be renewed indefinitely for
 
as long as the trademarks are in use.
 
Some
 
of
 
our
 
products
 
are
 
marketed
 
under
 
or
 
in
 
combination
 
with
 
trademarks
 
that
 
have
 
been
 
licensed
 
from
 
others
 
for
 
both
 
long-
standing
 
products
 
(e.g.,
Reese’s
 
Puffs
 
for
 
cereal,
Green
 
Giant
for vegetables
 
in certain
 
countries, and
Yoplait
and related
 
brands for
fresh dairy
 
in the
 
United States
 
and Canada),
 
and shorter
 
term promotional
 
products (e.g.,
 
fruit snacks
 
sold under
 
various third
 
party
equities).
Our cereal
 
trademarks
 
are licensed
 
to CPW
 
and
 
may be
 
used in
 
association
 
with the
Nestlé
trademark.
 
Nestlé licenses
 
certain
 
of its
trademarks
 
to
 
CPW,
 
including
 
the
Nestlé
 
and
Uncle
 
Toby’s
 
trademarks.
 
The
Häagen-Dazs
 
trademark
 
is
 
licensed
 
royalty-free
 
and
exclusively
 
to
 
Nestlé
 
and
 
authorized
 
sublicensees
 
for
 
ice
 
cream
 
and
 
other
 
frozen dessert
 
products
 
in
 
the
 
United
 
States and
 
Canada.
 
The
Häagen-Dazs
 
trademark is
 
also licensed
 
to HDJ
 
in Japan.
 
The
Pillsbury
 
brand and
 
the
Pillsbury Doughboy
 
character are
 
subject
to an exclusive, royalty-free
 
license that was granted to
 
a third party and its successors
 
in the dessert mix and
 
baking mix categories in
the United States and under limited circumstances in Canada and Mexico.
 
We
 
continue
 
our
 
focus
 
on
 
developing
 
and
 
marketing
 
innovative,
 
proprietary
 
products,
 
many
 
of
 
which
 
use
 
proprietary
 
expertise,
recipes and formulations. We
 
consider the collective rights under our various patents, which
 
expire from time to time, a valuable asset,
but we do not believe that our businesses are materially dependent upon any
 
single patent or group of related patents.
SEASONALITY
In
 
general,
 
demand
 
for
 
our
 
products
 
is
 
evenly
 
balanced
 
throughout
 
the
 
year.
 
However,
 
within
 
our
 
North
 
America
 
Retail
 
segment
demand
 
for
 
refrigerated
 
dough,
 
frozen
 
baked
 
goods,
 
and
 
baking
 
products
 
is
 
stronger
 
in
 
the
 
fourth
 
calendar
 
quarter.
 
Demand
 
for
Progresso
soup is higher
 
during the
 
fall and winter
 
months. Within
 
our International
 
segment, demand
 
for
Häagen-Dazs
ice cream is
higher during
 
the summer
 
months and
 
demand for
 
baking mix
 
increases during
 
winter months.
 
Due to
 
the offsetting
 
impact of
 
these
demand
 
trends,
 
as well
 
as the
 
different
 
seasons
 
in
 
the
 
northern
 
and
 
southern
 
hemispheres,
 
our
 
International
 
segment’s
 
net
 
sales are
generally evenly balanced throughout the year.
QUALITY AND SAFETY REGULATION
The
 
manufacture
 
and
 
sale
 
of
 
human
 
and
 
pet
 
food
 
products
 
is
 
highly
 
regulated.
 
In
 
the
 
United
 
States,
 
our
 
activities
 
are
 
subject
 
to
regulation by
 
various federal
 
government agencies,
 
including the
 
Food and
 
Drug Administration,
 
Department of
 
Agriculture, Federal
Trade
 
Commission,
 
Department
 
of
 
Commerce,
 
Occupational
 
Safety
 
and
 
Health
 
Administration,
 
and
 
Environmental
 
Protection
Agency,
 
as
 
well
 
as
 
various
 
federal,
 
state,
 
and
 
local
 
agencies
 
relating
 
to
 
the
 
production,
 
packaging,
 
labelling,
 
marketing,
 
storage,
distribution, quality,
 
and safety of food
 
and pet products and
 
the health and safety
 
of our employees.
 
Our business is also
 
regulated by
similar agencies outside of the United States.
 
6
ENVIRONMENTAL
 
MATTERS
As
 
of
 
May
 
28,
 
2023,
 
we
 
were
 
involved
 
with
 
two
 
response
 
actions
 
associated
 
with
 
the
 
alleged
 
or
 
threatened
 
release
 
of
 
hazardous
substances or wastes located in Minneapolis, Minnesota and Moonachie, New
 
Jersey.
 
Our
 
operations
 
are
 
subject
 
to
 
the
 
Clean
 
Air
 
Act,
 
Clean
 
Water
 
Act,
 
Resource
 
Conservation
 
and
 
Recovery
 
Act,
 
Comprehensive
Environmental
 
Response,
 
Compensation,
 
and
 
Liability
 
Act,
 
and
 
the
 
Federal
 
Insecticide,
 
Fungicide,
 
and
 
Rodenticide
 
Act,
 
and
 
all
similar state, local, and foreign environmental laws and regulations applicable
 
to the jurisdictions in which we operate.
Based on current
 
facts and circumstances,
 
we believe that
 
neither the
 
results of our
 
environmental proceedings
 
nor our compliance
 
in
general
 
with
 
environmental
 
laws
 
or
 
regulations
 
will
 
have
 
a
 
material
 
adverse
 
effect
 
upon
 
our
 
capital
 
expenditures,
 
earnings,
 
or
competitive position.
HUMAN CAPITAL MANAGEMENT
 
Recruiting, developing, engaging, and protecting our
 
workforce is critical to executing our strategy and achieving
 
business success. As
of
 
May
 
28,
 
2023,
 
we
 
had
 
approximately
 
34,000
 
employees
 
around
 
the
 
globe,
 
with
 
approximately
 
16,000
 
in
 
the
 
U.S.
 
and
approximately 18,000
 
located in our
 
markets outside
 
of the U.S.
 
Our workforce
 
is divided
 
between approximately
 
13,000 employees
dedicated to the production of our products and approximately 21,
 
000 non-production employees.
 
The
 
efficient
 
production
 
of
 
high-quality
 
products
 
and
 
successful
 
execution
 
of
 
our
 
strategy
 
requires
 
a
 
talented,
 
skilled,
 
and
 
engaged
team of employees. We
 
work to equip our employees with
 
critical skills and expand their contributions
 
over time by providing a range
of training and career
 
development opportunities, including
 
hands-on experiences via
 
challenging work assignments and
 
job rotations,
coaching
 
and mentoring
 
opportunities, and
 
training programs.
 
To
 
foster employee
 
engagement and
 
commitment, we
 
follow a
 
robust
process
 
to
 
listen
 
to
 
employees,
 
take
 
action,
 
and
 
measure
 
our
 
progress
 
with
 
on-going
 
employee
 
conversations,
 
transparent
communications, and employee engagement surveys.
We
 
believe that
 
fostering a culture
 
of inclusion and
 
belonging strengthens
 
our ability to
 
recruit talent and
 
allows all of
 
our employees
to thrive
 
and succeed.
 
We
 
actively cultivate
 
a culture
 
that acknowledges,
 
respects, and
 
values all
 
dimensions of
 
diversity –
 
including
gender, race,
 
sexual orientation, ability,
 
backgrounds, and
 
beliefs. Ensuring
 
diversity of input
 
and perspectives
 
is core to
 
our business
strategy,
 
and
 
we
 
are
 
committed
 
to
 
recruiting,
 
retaining,
 
developing,
 
and
 
advancing
 
a
 
workforce
 
that
 
reflects
 
the
 
diversity
 
of
 
the
consumers we
 
serve. This
 
commitment starts
 
with our
 
company leadership
 
where women
 
represent approximately
 
47 percent
 
of our
officer
 
and
 
director
 
population,
 
and
 
approximately
 
22
 
percent
 
of
 
our
 
officers
 
and
 
directors
 
are
 
racially
 
or
 
ethnically
 
diverse.
 
We
embed our culture of inclusion and
 
belonging into our day-to-day ways
 
of working through a number of programs
 
to foster discussion,
build empathy, and
 
increase understanding.
We
 
are
 
committed
 
to
 
maintaining
 
a
 
safe
 
and
 
secure
 
workplace
 
for
 
our
 
employees.
 
We
 
set
 
specific
 
safety
 
standards
 
to
 
identify
 
and
manage critical risks.
 
We
 
use global safety
 
management systems and
 
employee training to
 
ensure consistent implementation
 
of safety
protocols and
 
accurate measurement
 
and tracking of
 
incidents. To
 
provide a safe
 
and secure working
 
environment for our
 
employees,
we prohibit workplace
 
discrimination, and
 
we do not
 
tolerate abusive conduct
 
or harassment. Our
 
attention to the
 
health and safety
 
of
our workforce extends to the workers and communities in our supply chain.
 
We believe that respect
 
for human rights is fundamental to
our strategy and to our commitment to ethical business conduct.
 
INFORMATION ABOUT
 
OUR EXECUTIVE OFFICERS
The section below provides information regarding our executive officers
 
as of June 28, 2023.
Kofi A. Bruce
, age 53, is Chief Financial
 
Officer. Mr.
 
Bruce joined General Mills in 2009 as
 
Vice President,
 
Treasurer after serving
 
in
a
 
variety
 
of
 
senior
 
management
 
positions
 
with
 
Ecolab
 
and
 
Ford
 
Motor
 
Company.
 
He
 
served
 
as
 
Treasurer
 
until
 
2010
 
when
 
he
 
was
named Vice
 
President, Finance for
 
Yoplait.
 
Mr. Bruce
 
reassumed his role
 
as Vice
 
President, Treasurer
 
from 2012 until
 
2014 when
 
he
was named
 
Vice
 
President, Finance
 
for Convenience
 
Stores &
 
Foodservice. He
 
was named
 
Vice
 
President, Controller
 
in 2017,
 
Vice
President, Financial Operations in September 2019, and to his present position
 
in February 2020.
Paul J. Gallagher
,
age
55, is Chief
 
Supply Chain Officer.
 
Mr.
 
Gallagher joined General
 
Mills in April
 
2019 as Vice
 
President, North
America
 
Supply Chain from Diageo plc. He began his career at Diageo
 
where he spent 25 years serving in a variety of leadership
 
roles
in manufacturing,
 
procurement, planning,
 
customer service,
 
and engineering
 
before becoming
 
President, North
 
America Supply
 
from
2013 to March 2019. He was named to his current position in July 2021.
Jeffrey L.
 
Harmening
, age
 
56, is
 
Chairman of
 
the Board
 
and Chief
 
Executive Officer.
 
Mr.
 
Harmening joined
 
General Mills
 
in 1994
and
 
served
 
in
 
various
 
marketing
 
roles
 
in
 
the
 
Betty
 
Crocker,
 
Yoplait,
 
and
 
Big
 
G
 
cereal
 
divisions.
 
He
 
was
 
named
 
Vice
 
President,
7
Marketing
 
for
 
CPW
 
in
 
2003
 
and
 
Vice
 
President
 
of
 
the
 
Big
 
G
 
cereal
 
division
 
in
 
2007.
 
In
 
2011,
 
he
 
was
 
promoted
 
to
 
Senior
 
Vice
President
 
for
 
the
 
Big
 
G
 
cereal
 
division.
 
Mr.
 
Harmening
 
was
 
appointed
 
Senior
 
Vice
 
President,
 
Chief
 
Executive
 
Officer
 
of
 
CPW
 
in
2012. Mr.
 
Harmening returned from CPW
 
in 2014 and was
 
named Executive Vice
 
President, Chief Operating Officer,
 
U.S. Retail. He
became
 
President,
 
Chief
 
Operating
 
Officer
 
in 2016.
 
He
 
was named
 
Chief
 
Executive
 
Officer
 
in
 
2017
 
and
 
Chairman
 
of the
 
Board
 
in
2018. Mr. Harmening is a director of
 
The Toro Company.
Dana
 
M.
 
McNabb
,
age
 
47,
is
 
Chief
 
Strategy
 
&
 
Growth
 
Officer.
 
Ms.
 
McNabb
 
joined
 
General
 
Mills
 
in
 
1999
 
and
 
held
 
a
 
variety
 
of
marketing roles
 
in Cereal,
 
Snacks, Meals,
 
and New
 
Products before
 
becoming Vice
 
President, Marketing
 
for CPW
 
in 2011
 
and Vice
President, Marketing
 
for the Circle
 
of Champions
 
Business Unit
 
in 2015. She
 
became President,
 
U.S. Cereal
 
Operating Unit
 
in 2016,
Group President, Europe & Australia in January 2020, and was named to her present
 
position in July 2021.
Jaime
 
Montemayor
,
 
age
 
59,
 
is
 
Chief
 
Digital
 
and
 
Technology
 
Officer.
 
He
 
spent
 
21
 
years
 
at
 
PepsiCo,
 
Inc.,
 
serving
 
in
 
roles
 
of
increasing
 
responsibility,
 
including
 
most
 
recently
 
as
 
Senior
 
Vice
 
President
 
and
 
Chief
 
Information
 
Officer
 
of
 
PepsiCo’s
 
Americas
Foods segment
 
from 2013
 
to 2015, and
 
Senior Vice
 
President and
 
Chief Information
 
Officer,
 
Digital Innovation,
 
Data and Analytics,
PepsiCo from
 
2015 to
 
2016. Mr.
 
Montemayor served
 
as Chief
 
Technology
 
Officer of
 
7-Eleven Inc.
 
in 2017.
 
He assumed
 
his current
role in February 2020 after founding and operating a digital technology
 
consulting company from 2017 until January 2020.
Jon J. Nudi
, age 53,
 
is Group President,
 
North America
 
Retail. Mr.
 
Nudi joined
 
General Mills in
 
1993 as
 
a Sales Representative
 
and
held a
 
variety of
 
roles in
 
Consumer Foods
 
Sales. In
 
2005, he
 
moved into
 
marketing roles
 
in the
 
Meals division
 
and was
 
elected Vice
President
 
in
 
2007.
 
Mr.
 
Nudi
 
was
 
named
 
Vice
 
President;
 
President,
 
Snacks,
 
in
 
2010,
 
Senior
 
Vice
 
President,
 
President,
Europe/Australasia in 2014, and Senior Vice
 
President; President, U.S. Retail in 2016. He was named to his present position in
 
2017.
Shawn
 
P.
 
O’Grady
,
 
age
 
59,
 
is
 
Group
 
President,
 
North
 
America
 
Foodservice.
 
Mr.
 
O’Grady
 
joined
 
General
 
Mills
 
in
 
1990
 
and
 
held
several
 
marketing
 
roles
 
in
 
the
 
Snacks,
 
Meals,
 
and
 
Big
 
G
 
cereal
 
divisions.
 
He
 
was
 
promoted
 
to
 
Vice
 
President
 
in
 
1998
 
and
 
held
marketing positions in the
 
Betty Crocker and Pillsbury USA
 
divisions. In 2004, he moved into
 
Consumer Foods Sales, becoming
 
Vice
President, President, U.S. Retail Sales
 
in 2007, Senior Vice
 
President, President, Consumer Foods
 
Sales Division in 2010, Senior
 
Vice
President,
 
President,
 
Sales &
 
Channel
 
Development
 
in
 
2012,
 
and
 
Group
 
President,
 
Convenience
 
Stores
 
&
 
Foodservice
 
in
 
2017.
 
He
was named to his current position in December 2021.
Mark A. Pallot,
age 50,
 
is Vice
 
President, Chief
 
Accounting Officer.
 
Mr.
 
Pallot joined
 
General Mills in
 
2007 and
 
served as
Director,
Financial
 
Reporting
 
until
 
2017,
 
when
 
he was
 
named
 
Vice
 
President,
 
Assistant
 
Controller.
 
He
 
was elected
 
to
 
his
 
present
 
position
 
in
February
 
2020.
 
Prior
 
to
 
joining
 
General
 
Mills,
 
Mr.
 
Pallot
 
held
 
accounting
 
and
 
financial
 
reporting
 
positions
 
at
 
Residential
 
Capital,
LLC, Metris, Inc., CIT Group Inc., and Ernst & Young,
 
LL
P.
Bethany
 
Quam
,
 
age
 
52,
 
is
 
Group
 
President,
 
Pet.
 
Ms.
 
Quam
 
joined
 
General
 
Mills
 
in
 
1993
 
and
 
held
 
a
 
variety
 
of
 
positions
 
before
becoming
 
Vice
 
President,
 
Strategic
 
Planning
 
in
 
2007.
 
She
 
was
 
promoted
 
to
 
Vice
 
President,
 
Field
 
Sales,
 
Channels
 
in
 
2012,
 
Vice
President; President,
 
Convenience Stores
 
& Foodservice
 
in 2014,
 
and Senior
 
Vice
 
President; President,
 
Europe
 
& Australia
 
in 2016,
and Group President; Europe & Australia in 2017. She was named
 
to her current position in October
 
2019.
Lanette Shaffer Werner
, age 52, is Chief Innovation, Technical
 
and Quality Officer.
 
Ms. Shaffer Werner
 
joined General Mills in 1995
and held various R&D roles
 
in Frozen Desserts and
 
Pillsbury before serving
 
as Director of One Global
 
Dairy and Sr.
 
Director for One
Global Cereal.
 
In July
 
2021, Ms.
 
Shaffer
 
Werner
 
was named
 
as Vice
 
President, Innovation,
 
Technical
 
and Quality,
 
Meals &
 
Baking
Solutions.
 
She was named to her present position in June 2023.
Sean
 
Walker
,
age
 
57,
 
is
 
Group
 
President,
 
International.
 
Mr.
 
Walker
 
joined
 
General
 
Mills
 
in
 
1989
 
and
 
held
 
a
 
variety
 
of
 
positions
before becoming
 
Vice
 
President, President
 
of Latin
 
America in
 
2009. He
 
was named
 
Senior Vice
 
President, President
 
Latin America
in 2012,
 
Senior Vice
 
President, Corporate
 
Strategy
 
in 2016,
 
and Group
 
President,
 
Asia &
 
Latin America
 
in February
 
2019.
 
He was
named to his current position in July 2021.
Jacqueline
 
Williams-Roll
,
 
age
 
54,
 
is
 
Chief
 
Human
 
Resources
 
Officer.
 
Ms.
 
Williams-Roll
 
joined
 
General
 
Mills
 
in
 
1995.
 
In
 
this
capacity,
 
she
 
also
 
has
 
responsibility
 
for
 
Corporate
 
Communications.
 
She
 
held
 
human
 
resources
 
leadership
 
roles
 
in
 
Supply
 
Chain,
Finance, Marketing, and Organization Effectiveness,
 
and has also worked a large part of her career on businesses outside
 
of the United
States. She was
 
named Vice
 
President, Human
 
Resources, International
 
in 2010, and
 
then promoted
 
to Senior Vice
 
President, Human
Resources
 
Operations
 
in
 
2013.
 
She
 
was
 
named
 
to
 
her
 
present
 
position
 
in
 
2014.
 
Prior
 
to
 
joining
 
General
 
Mills,
 
she
 
held
 
sales
 
and
management roles with Jenny Craig International.
Karen Wilson
 
Thissen
, age
 
56, is
 
General Counsel
 
and Secretary.
 
Ms. Wilson
 
Thissen joined
 
General Mills
 
in June
 
2022.
 
Prior to
joining
 
General
 
Mills, she
 
spent
 
17 years
 
at Ameriprise
 
Financial,
 
Inc.,
 
serving in
 
roles of
 
increasing
 
responsibility,
 
including
 
most
recently as Executive Vice
 
President and General Counsel
 
from 2017 to June
 
2022, and Executive Vice
 
President and Deputy General
Counsel from
 
2014 to
 
2017.
 
Before
 
joining
 
Ameriprise Financial,
 
Inc., she
 
was a
 
partner at
 
the law
 
firm of
 
Faegre &
 
Benson LLP
(now Faegre Drinker Biddle & Reath LLP).
 
8
WEBSITE ACCESS
Our
 
website
 
is
 
https://www.generalmills.com.
We
 
make
 
available,
 
free
 
of
 
charge
 
in
 
the
 
“Investors”
 
portion
 
of
 
this
 
website,
 
annual
reports
 
on
 
Form
 
10-K,
 
quarterly
 
reports
 
on
 
Form
 
10-Q,
 
current
 
reports
 
on
 
Form
 
8-K,
 
and
 
amendments
 
to
 
those
 
reports
 
filed
 
or
furnished pursuant to Section 13(a)
 
or 15(d) of the Securities Exchange
 
Act of 1934 (1934 Act) as soon
 
as reasonably practicable after
we
 
electronically
 
file
 
such
 
material
 
with,
 
or
 
furnish
 
it
 
to,
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
(SEC).
 
All
 
such
 
filings
 
are
available
 
on the
 
SEC’s
 
website
 
at https://www.sec.gov.
 
Reports
 
of beneficial
 
ownership filed
 
pursuant
 
to Section
 
16(a) of
 
the 1934
Act are also available on our website.
ITEM 1A - Risk Factors
 
Our
 
business
 
is
 
subject
 
to
 
various
 
risks
 
and
 
uncertainties.
 
Any
 
of
 
the
 
risks
 
described
 
below
 
could
 
materially,
 
adversely
 
affect
 
our
business, financial condition, and results of operations.
Business and Industry Risks
 
The
 
categories
 
in
 
which
 
we
 
participate
 
are
 
very
 
competitive,
 
and
 
if
 
we
 
are
not
 
able
 
to
 
compete
 
effectively,
 
our
 
results
 
of
operations could be adversely
affected.
 
The
 
human
 
and
 
pet
 
food
 
categories
 
in
 
which
 
we
 
participate
 
are
 
very
 
competitive.
 
Our principal
 
competitors
 
in
 
these
 
categories
 
are
manufacturers,
 
as
 
well
 
as
 
retailers
 
with
 
their
 
own
 
branded
 
and
 
private
 
label
 
products.
 
Competitors
 
market
 
and
 
sell
 
their
 
products
through
 
brick-and-mortar
 
stores
 
and
 
e-commerce.
 
All
 
of
 
our
 
principal
 
competitors
 
have
 
substantial
 
financial,
 
marketing,
 
and
 
other
resources.
 
In
 
most
 
product
 
categories,
 
we
 
compete
 
not
 
only
 
with
 
other
 
widely
 
advertised
 
branded
 
products,
 
but
 
also
 
with
 
regional
brands
 
and
 
with
 
generic
 
and
 
private
 
label
 
products
 
that
 
are generally
 
sold
 
at
 
lower prices.
 
Competition
 
in
 
our
 
product
 
categories
 
is
based on
 
product
 
innovation, product
 
quality,
 
price,
 
brand recognition
 
and loyalty,
 
effectiveness
 
of marketing,
 
promotional
 
activity,
convenient
 
ordering
 
and
 
delivery
 
to
 
the
 
consumer,
 
and
 
the
 
ability
 
to
 
identify
 
and
 
satisfy
 
consumer
 
preferences.
 
If
 
our
 
large
competitors
 
were
 
to
 
seek
 
an
 
advantage
 
through
 
pricing
 
or
 
promotional
 
changes,
 
we
 
could
 
choose
 
to
 
do
 
the
 
same,
 
which
 
could
adversely affect
 
our margins
 
and profitability.
 
If we
 
did not
 
do the
 
same, our
 
revenues and
 
market share
 
could be
 
adversely affected.
Our market share
 
and revenue growth
 
could also be
 
adversely impacted if
 
we are not
 
successful in introducing
 
innovative products
 
in
response
 
to
 
changing
 
consumer
 
demands
 
or by
 
new product
 
introductions
 
of our
 
competitors.
 
If
 
we
 
are unable
 
to build
 
and
 
sustain
brand
 
equity
 
by
 
offering
 
recognizably
 
superior
 
product
 
quality,
 
we
 
may
 
be
 
unable
 
to
 
maintain
 
premium
 
pricing
 
over
 
generic
 
and
private label products.
 
We may be unable to maintain our profit
 
margins in the face of a consolidating retail environment.
 
There has
 
been significant
 
consolidation in
 
the grocery industry,
 
resulting in
 
customers with increased
 
purchasing power.
 
In addition,
large
 
retail
 
customers
 
may
 
seek
 
to
 
use
 
their
 
position
 
to
 
improve
 
their
 
profitability
 
through
 
improved
 
efficiency,
 
lower
 
pricing,
increased
 
reliance
 
on
 
their
 
own
 
brand
 
name
 
products,
 
increased
 
emphasis
 
on
 
generic
 
and
 
other
 
economy
 
brands,
 
and
 
increased
promotional
 
programs.
 
If we
 
are
 
unable
 
to use
 
our
 
scale, marketing
 
expertise,
 
product
 
innovation,
 
knowledge
 
of consumers’
 
needs,
and category
 
leadership positions
 
to respond
 
to these
 
demands, our
 
profitability and
 
volume growth
 
could be
 
negatively impacted.
 
In
addition, the loss
 
of any large
 
customer could
 
adversely affect our
 
sales and profits.
 
In fiscal 2023,
 
Walmart
 
accounted for 21
 
percent
of our
 
consolidated net
 
sales and
 
28 percent
 
of net
 
sales of
 
our North
 
America Retail
 
segment.
 
For more
 
information on
 
significant
customers, please see Note 8 to the Consolidated Financial Statements in Item 8 of this report.
 
Price
 
changes
 
for
 
the
 
commodities
 
we
 
depend
 
on
 
for
 
raw
 
materials,
 
packaging,
and
 
energy
 
may
 
adversely
 
affect
 
our
profitability.
 
The
 
principal
 
raw
 
materials
 
that
 
we
 
use
 
are
 
commodities
 
that
 
experience
 
price
 
volatility
 
caused
 
by
 
external
 
conditions
 
such
 
as
weather,
 
climate
 
change,
 
product
 
scarcity,
 
limited
 
sources
 
of
 
supply,
 
commodity
 
market
 
fluctuations,
 
currency
 
fluctuations,
 
trade
tariffs, pandemics, war (including international
 
sanctions imposed on Russia for its invasion of Ukraine),
 
and changes in governmental
agricultural and
 
energy policies
 
and regulations.
 
Commodity prices
 
have become,
 
and may continue
 
to be, more
 
volatile. Commodity
price
 
changes
 
may
 
result
 
in
 
unexpected
 
increases
 
in
 
raw
 
material,
 
packaging,
 
energy,
 
and
 
transportation
 
costs.
 
If
 
we
 
are
 
unable
 
to
increase productivity
 
to offset
 
these increased
 
costs or
 
increase our
 
prices, we
 
may experience
 
reduced margins
 
and profitability.
 
We
do not fully
 
hedge against changes
 
in commodity prices,
 
and the risk management
 
procedures that we
 
do use may
 
not always work
 
as
we intend.
 
 
9
Concerns with the safety and quality of our products could cause consumers
 
to
avoid certain products or ingredients.
 
We
 
could
 
be
 
adversely
 
affected
 
if
 
consumers
 
in
 
our
 
principal
 
markets
 
lose
 
confidence
 
in
 
the
 
safety
 
and
 
quality
 
of
 
certain
 
of
 
our
products
 
or
 
ingredients.
 
Adverse
 
publicity
 
about
 
these
 
types
 
of
 
concerns,
 
whether
 
or
 
not
 
valid,
 
may
 
discourage
 
consumers
 
from
buying our products or cause production and delivery disruptions.
We
 
may be
 
unable to
 
anticipate changes
 
in consumer
 
preferences and
 
trends,
which may
 
result in
 
decreased demand
 
for our
products.
 
Our success
 
depends in
 
part on
 
our ability
 
to anticipate
 
the tastes,
 
eating habits,
 
and purchasing
 
behaviors of
 
consumers and
 
to offer
products
 
that
 
appeal
 
to
 
their
 
preferences
 
in
 
channels
 
where
 
they
 
shop.
 
Consumer
 
preferences
 
and
 
category-level
 
consumption
 
may
change
 
from
 
time to
 
time and
 
can be
 
affected
 
by a
 
number
 
of different
 
trends
 
and other
 
factors.
 
If we
 
fail
 
to anticipate,
 
identify
 
or
react to these changes and trends, such as adapting to emerging
 
e-commerce channels, or to introduce new and improved products on
 
a
timely basis, we
 
may experience reduced
 
demand for our products,
 
which would in turn
 
cause our revenues and
 
profitability to suffer.
Similarly, demand
 
for our products could be affected by consumer concerns regarding
 
the health effects of ingredients such as sodium,
trans fats, genetically
 
modified organisms,
 
sugar, processed
 
wheat, grain-free
 
or legume-rich pet
 
food, or other
 
product ingredients
 
or
attributes.
 
We may be unable to grow
 
our market share or add products that are
 
in faster
growing and more profitable categories.
 
The
 
food
 
industry’s
 
growth
 
potential
 
is
 
constrained
 
by
 
population
 
growth.
 
Our
 
success
 
depends
 
in
 
part
 
on
 
our
 
ability
 
to
 
grow
 
our
business faster than
 
populations are growing
 
in the markets
 
that we serve.
 
One way to
 
achieve that growth
 
is to enhance
 
our portfolio
by adding innovative
 
new products in faster
 
growing and more
 
profitable categories. Our future
 
results will also depend
 
on our ability
to
 
increase
 
market
 
share
 
in
 
our
 
existing
 
product
 
categories.
 
If
 
we
 
do
 
not
 
succeed
 
in
 
developing
 
innovative
 
products
 
for
 
new
 
and
existing categories,
 
our growth and profitability could be adversely affected.
Our results may be negatively impacted if consumers do not maintain
 
their favorable perception of our brands.
 
Maintaining and continually
 
enhancing the value
 
of our many
 
iconic brands is critical
 
to the success of
 
our business. The
 
value of our
brands
 
is
 
based
 
in
 
large
 
part
 
on
 
the
 
degree
 
to
 
which
 
consumers
 
react
 
and
 
respond
 
positively
 
to
 
these
 
brands.
 
Brand
 
value
 
could
diminish
 
significantly
 
due
 
to
 
a
 
number
 
of
 
factors,
 
including
 
consumer
 
perception
 
that
 
we
 
have
 
acted
 
in
 
an
 
irresponsible
 
manner,
adverse
 
publicity
 
about
 
our
 
products,
 
our
 
failure
 
to
 
maintain
 
the
 
quality
 
of
 
our
 
products,
 
the
 
failure
 
of
 
our
 
products
 
to
 
deliver
consistently
 
positive
 
consumer
 
experiences,
 
concerns
 
about
 
food
 
safety,
 
or
 
our
 
products
 
becoming
 
unavailable
 
to
 
consumers.
Consumer demand
 
for our
 
products may
 
also be
 
impacted by
 
changes in
 
the level
 
of advertising
 
or promotional
 
support. The
 
use of
social
 
and
 
digital
 
media
 
by
 
consumers,
 
us,
 
and
 
third
 
parties
 
increases
 
the
 
speed
 
and
 
extent
 
that
 
information
 
or
 
misinformation
 
and
opinions can
 
be shared.
 
Negative posts
 
or comments
 
about us,
 
our brands,
 
or our
 
products on
 
social or
 
digital media
 
could seriously
damage
 
our
 
brands
 
and
 
reputation.
 
If
 
we
 
do
 
not
 
maintain
 
the
 
favorable
 
perception
 
of
 
our
 
brands,
 
our
 
business
 
results
 
could
 
be
negatively impacted.
Operating Risks
If
 
we
 
are
 
not
 
efficient
 
in
 
our
 
production,
 
our
 
profitability
 
could
 
suffer
 
as
 
a
result
 
of
 
the
 
highly
 
competitive
 
environment
 
in
which we operate.
 
Our future success and
 
earnings growth depend in
 
part on our ability to
 
be efficient in the
 
production and manufacture of
 
our products
in
 
highly
 
competitive
 
markets.
 
Gaining
 
additional
 
efficiencies
 
may
 
become
 
more
 
difficult
 
over
 
time.
 
Our
 
failure
 
to
 
reduce
 
costs
through
 
productivity
 
gains
 
or
 
by
 
eliminating
 
redundant
 
costs
 
resulting
 
from
 
acquisitions
 
or
 
divestitures
 
could
 
adversely
 
affect
 
our
profitability
 
and
 
weaken
 
our
 
competitive
 
position.
 
Many
 
productivity
 
initiatives
 
involve
 
complex
 
reorganization
 
of
 
manufacturing
facilities
 
and
 
production
 
lines.
 
Such
 
manufacturing
 
realignment
 
may
 
result
 
in
 
the
 
interruption
 
of
 
production,
 
which
 
may
 
negatively
impact
 
product
 
volume
 
and
 
margins.
 
We
 
periodically
 
engage
 
in
 
restructuring
 
and
 
cost
 
savings
 
initiatives
 
designed
 
to
 
increase
 
our
efficiency
 
and
 
reduce
 
expenses.
 
If
 
we
 
are
 
unable
 
to
 
execute
 
those
 
initiatives
 
as
 
planned,
 
we
 
may
 
not
 
realize
 
all
 
or
 
any
 
of
 
the
anticipated benefits, which could adversely affect our business and results of
 
operations.
Disruption of our supply chain could adversely affect our business.
 
Our
 
ability
 
to
 
make,
 
move,
 
and
 
sell
 
products
 
is
 
critical
 
to
 
our
 
success.
 
Damage
 
or
 
disruption
 
to
 
raw
 
material
 
supplies
 
or
 
our
manufacturing
 
or
 
distribution
 
capabilities
 
due
 
to
 
weather,
 
climate
 
change,
 
natural
 
disaster,
 
fire,
 
terrorism,
 
cyber-attack,
 
pandemics,
war,
 
governmental
 
restrictions
 
or
 
mandates,
 
labor
 
shortages,
 
strikes,
 
import/export
 
restrictions,
 
or
 
other
 
factors
 
could
 
impair
 
our
ability to
 
manufacture or
 
sell our
 
products. Many
 
of our
 
product lines
 
are manufactured
 
at a
 
single location
 
or sourced
 
from a
 
single
supplier.
 
The
 
failure
 
of
 
third
 
parties
 
on
 
which
 
we
 
rely,
 
including
 
those
 
third
 
parties
 
who
 
supply
 
our
 
ingredients,
 
packaging,
 
capital
equipment
 
and
 
other
 
necessary
 
operating
 
materials,
 
contract
 
manufacturers,
 
commercial
 
transport,
 
distributors,
 
contractors,
 
and
 
 
 
10
external business partners, to meet
 
their obligations to us, or significant
 
disruptions in their ability to do
 
so, may negatively impact our
operations. Our
 
suppliers’ policies
 
and practices
 
can damage
 
our reputation
 
and the quality
 
and safety
 
of our
 
products. Disputes
 
with
significant suppliers,
 
including disputes regarding
 
pricing or performance,
 
could adversely
 
affect our
 
ability to supply
 
products to our
customers and
 
could materially
 
and adversely
 
affect our
 
sales, financial
 
condition, and
 
results of
 
operations. Failure
 
to take
 
adequate
steps
 
to
 
mitigate
 
the
 
likelihood
 
or
 
potential
 
impact
 
of
 
such
 
events,
 
or
 
to
 
effectively
 
manage
 
such
 
events
 
if
 
they
 
occur,
 
particularly
when a
 
product is
 
sourced from
 
a single
 
location or
 
supplier,
 
could adversely
 
affect our
 
business and
 
results of
 
operations, as
 
well as
require additional resources to restore our supply chain.
 
Short term or
 
sustained increases in
 
consumer demand at
 
our retail customers
 
may exceed our
 
production capacity or
 
otherwise strain
our supply chain. Our failure to meet the demand for our products could
 
adversely affect our business and results of operations.
 
Our international operations are subject to political and economic
 
risks.
 
In fiscal
 
2023, 19
 
percent of
 
our consolidated
 
net sales
 
were generated
 
outside of
 
the United
 
States. We
 
are accordingly
 
subject to
 
a
number of risks relating to doing business internationally,
 
any of which could significantly harm our business. These risks include:
 
●
political and economic instability;
●
exchange controls and currency exchange rates;
●
tariffs on products and ingredients that we import and export;
●
nationalization or government control of operations;
●
compliance with anti-corruption regulations;
●
foreign tax treaties and policies; and
●
restriction on the transfer of funds to and from foreign countries, including
 
potentially negative tax consequences.
 
Our financial performance
 
on a U.S. dollar
 
denominated basis is subject
 
to fluctuations in currency
 
exchange rates. These fluctuations
could cause material
 
variations in our results
 
of operations. Our principal
 
exposures are to the
 
Australian dollar,
 
Brazilian real, British
pound sterling,
 
Canadian dollar,
 
Chinese renminbi,
 
euro, Japanese
 
yen, Mexican
 
peso, and
 
Swiss franc.
 
From time
 
to time,
 
we enter
into
 
agreements
 
that
 
are
 
intended
 
to
 
reduce
 
the
 
effects
 
of
 
our
 
exposure
 
to
 
currency
 
fluctuations,
 
but
 
these
 
agreements
 
may
 
not
 
be
effective in significantly reducing our exposure.
 
A
 
strengthening
 
in
 
the
 
U.S.
 
dollar
 
relative
 
to
 
other
 
currencies
 
in
 
the
 
countries
 
in
 
which
 
we
 
operate
 
would
 
negatively
 
affect
 
our
reported results of operations and financial results due to currency translation losses and
 
currency transaction losses.
Our business operations could be disrupted if our information technology
 
systems fail to perform adequately or are breached.
 
Information
 
technology
 
serves
 
an
 
important
 
role
 
in
 
the
 
efficient
 
and
 
effective
 
operation
 
of
 
our
 
business.
 
We
 
rely
 
on
 
information
technology networks
 
and systems, including
 
the internet, to
 
process, transmit,
 
and store electronic
 
information to
 
manage a variety
 
of
business processes and
 
to comply with
 
regulatory,
 
legal, and tax requirements.
 
Our information technology
 
systems and infrastructure
are
 
critical
 
to
 
effectively
 
manage
 
our
 
key
 
business
 
processes
 
including
 
digital
 
marketing,
 
order
 
entry
 
and
 
fulfillment,
 
supply
 
chain
management,
 
finance,
 
administration,
 
and
 
other
 
business
 
processes.
 
These
 
technologies
 
enable
 
internal
 
and
 
external
 
communication
among
 
our
 
locations, employees,
 
suppliers,
 
customers,
 
and others
 
and
 
include the
 
receipt and
 
storage of
 
personal information
 
about
our employees,
 
consumers, and
 
proprietary business
 
information. Our
 
information technology
 
systems, some
 
of which
 
are dependent
on services
 
provided
 
by third
 
parties, may
 
be vulnerable
 
to damage,
 
interruption,
 
or shutdown
 
due to
 
any number
 
of causes
 
such as
catastrophic events,
 
natural disasters, fires,
 
power outages, systems
 
failures, telecommunications
 
failures, security breaches,
 
computer
viruses, hackers, employee error
 
or malfeasance, and other
 
causes. Increased cyber-security threats
 
pose a potential risk to
 
the security
and
 
viability
 
of
 
our
 
information
 
technology
 
systems,
 
as
 
well
 
as
 
the
 
confidentiality,
 
integrity,
 
and
 
availability
 
of
 
the
 
data
 
stored
 
on
those systems. The
 
failure of our
 
information technology
 
systems to perform
 
as we anticipate
 
could disrupt
 
our business and
 
result in
transaction
 
errors,
 
processing
 
inefficiencies,
 
data
 
loss,
 
legal
 
claims
 
or
 
proceedings,
 
regulatory
 
penalties,
 
and
 
the
 
loss
 
of
 
sales
 
and
customers. Any
 
interruption of
 
our information
 
technology systems
 
could have
 
operational, reputational,
 
legal, and
 
financial impacts
that may have a material adverse effect on our business.
Our failure to successfully integrate acquisitions into our
 
existing operations could adversely affect our financial results.
 
From
 
time
 
to
 
time,
 
we
 
evaluate
 
potential
 
acquisitions
 
or
 
joint
 
ventures
 
that
 
would
 
further
 
our
 
strategic
 
objectives.
 
Our
 
success
depends, in part,
 
upon our ability
 
to integrate acquired
 
and existing operations.
 
If we are
 
unable to successfully
 
integrate acquisitions,
our financial
 
results could
 
suffer.
 
Additional potential
 
risks associated
 
with acquisitions
 
include
 
additional debt
 
leverage, the
 
loss of
key
 
employees
 
and
 
customers
 
of
 
the
 
acquired
 
business,
 
the
 
assumption
 
of
 
unknown
 
liabilities,
 
the
 
inherent
 
risk
 
associated
 
with
entering a geographic area or line of business in which we have
 
no or limited prior experience, failure to achieve anticipated synergies,
and the impairment of goodwill or other acquisition-related intangible assets.
 
11
Legal and Regulatory Risks
If
 
our
 
products
 
become
 
adulterated,
 
misbranded,
 
or
 
mislabeled,
 
we
 
might
need
 
to
 
recall
 
those
 
items
 
and
 
may
 
experience
product liability claims if
consumers or their pets are injured.
 
We may need
 
to recall some of our products if they become adulterated,
 
misbranded, or mislabeled. A widespread product recall could
result in
 
significant losses
 
due to
 
the costs
 
of a
 
recall, the
 
destruction of
 
product inventory,
 
and lost
 
sales due
 
to the
 
unavailability of
product for a period of time.
 
We could
 
also suffer losses from a
 
significant product liability judgment
 
against us. A significant product
recall or
 
product liability
 
case could
 
also result
 
in adverse
 
publicity,
 
damage to
 
our reputation,
 
and a
 
loss of
 
consumer confidence
 
in
our products, which could have an adverse effect on our business results and the
 
value of our brands.
New regulations or regulatory-based claims could adversely
 
affect our business.
 
Our facilities and
 
products are subject
 
to many laws and
 
regulations administered by
 
the United States Department
 
of Agriculture, the
Federal Food and Drug
 
Administration, the Occupational
 
Safety and Health Administration,
 
and other federal, state, local,
 
and foreign
governmental agencies
 
relating to
 
the production,
 
packaging, labelling,
 
storage, distribution,
 
quality,
 
and safety
 
of food
 
products and
the
 
health
 
and
 
safety
 
of
 
our
 
employees.
 
Our
 
failure
 
to
 
comply
 
with
 
such
 
laws
 
and
 
regulations
 
could
 
subject
 
us
 
to
 
lawsuits,
administrative
 
penalties,
 
and civil
 
remedies,
 
including fines,
 
injunctions,
 
and recalls
 
of our
 
products.
 
We
 
advertise our
 
products and
could be
 
the target
 
of claims
 
relating to
 
alleged false
 
or deceptive
 
advertising
 
under federal,
 
state, and
 
foreign laws
 
and regulations.
We may also be
 
subject to new laws or regulations restricting our right to advertise our products,
 
including restrictions on the audience
to whom
 
products are
 
marketed. Changes
 
in laws
 
or regulations
 
that impose
 
additional regulatory
 
requirements on
 
us could
 
increase
our cost of doing business or restrict our actions, causing our results of operations
 
to be adversely affected.
 
We
 
are
 
subject
 
to
 
various
 
federal,
 
state,
 
local,
 
and
 
foreign
 
environmental
 
laws
 
and
 
regulations.
 
Our
 
failure
 
to
 
comply
 
with
environmental laws and regulations could subject us
 
to lawsuits, administrative penalties, and civil remedies.
 
We are currently
 
party to
a variety of
 
environmental remediation obligations.
 
Due to regulatory
 
complexities, uncertainties inherent
 
in litigation, and
 
the risk of
unidentified contaminants
 
on current and
 
former properties of
 
ours, the potential
 
exists for remediation,
 
liability,
 
indemnification, and
compliance
 
costs
 
to
 
differ
 
from
 
our
 
estimates.
 
We
 
cannot
 
guarantee
 
that
 
our
 
costs
 
in
 
relation
 
to
 
these
 
matters,
 
or
 
compliance
 
with
environmental
 
laws
 
in
 
general,
 
will
 
not
 
exceed
 
our
 
established
 
liabilities
 
or
 
otherwise
 
have
 
an
 
adverse
 
effect
 
on
 
our
 
business
 
and
results of operations.
Climate change and other sustainability matters could adversely affect
 
our business.
There is
 
growing concern
 
that carbon
 
dioxide and
 
other greenhouse
 
gases in
 
the earth’s
 
atmosphere may
 
have an
 
adverse impact
 
on
global temperatures, weather patterns, and the frequency
 
and severity of extreme weather and natural disasters.
 
If such climate change
has a negative effect on agricultural productivity,
 
we may experience decreased availability and higher pricing for certain commodities
that are necessary
 
for our
 
products. Increased
 
frequency or
 
severity of
 
extreme weather
 
could also impair
 
our production
 
capabilities,
disrupt our
 
supply chain,
 
impact demand
 
for our
 
products, and
 
increase our
 
insurance and
 
other operating
 
costs.
 
Increasing concern
over
 
climate
 
change
 
or
 
other
 
sustainability
 
issues
 
also
 
may
 
adversely
 
impact
 
demand
 
for
 
our
 
products
 
due
 
to
 
changes
 
in
 
consumer
preferences or
 
negative consumer
 
reaction to
 
our commitments
 
and actions
 
to address
 
these issues.
 
We
 
may also
 
become subject
 
to
additional
 
legal
 
and
 
regulatory
 
requirements
 
relating
 
to
 
climate
 
change
 
or
 
other
 
sustainability
 
issues,
 
including
 
greenhouse
 
gas
emission
 
regulations
 
(e.g.,
 
carbon
 
taxes),
 
energy
 
policies,
 
sustainability
 
initiatives
 
(e.g.,
 
single-use
 
plastic
 
limits),
 
and
 
disclosure
obligations.
 
If additional legal
 
and regulatory
 
requirements are
 
enacted and
 
are more aggressive
 
than the sustainability
 
measures that
we are currently
 
undertaking to reduce
 
our emissions and
 
improve our energy
 
efficiency and
 
other sustainability goals,
 
or if we
 
chose
to take actions to achieve more aggressive goals, we may experience significant
 
increases in our costs of operations.
We
 
have announced goals
 
and commitments to
 
reduce our carbon footprint.
 
If we fail to
 
achieve or improperly
 
report on our progress
toward
 
achieving
 
our
 
carbon
 
emissions
 
reduction
 
goals
 
and
 
commitments,
 
then
 
the
 
resulting
 
negative
 
publicity
 
could
 
harm
 
our
reputation and adversely affect demand for our products.
Financial and Economic Risks
Volatility
 
in
 
the
 
market
 
value
 
of
 
derivatives
 
we
 
use
 
to
 
manage
 
exposures
 
to
 
fluctuations
 
in
 
commodity
 
prices
 
may
 
cause
volatility in our gross margins and net earnings.
 
We
 
utilize derivatives
 
to manage
 
price risk
 
for some
 
of our
 
principal ingredient
 
and energy
 
costs, including
 
grains (oats,
 
wheat, and
corn), oils (principally soybean),
 
dairy products, natural gas, and diesel
 
fuel. Changes in the values
 
of these derivatives are recorded
 
in
earnings currently,
 
which may result in
 
volatility in both
 
gross margin and
 
net earnings. These gains
 
and losses are reported
 
in cost of
sales in
 
our
 
Consolidated
 
Statements
 
of
 
Earnings
 
and in
 
unallocated
 
corporate
 
items outside
 
our
 
segment
 
operating
 
results until
 
we
utilize
 
the
 
underlying
 
input
 
in
 
our
 
manufacturing
 
process,
 
at
 
which
 
time
 
the
 
gains
 
and
 
losses
 
are
 
reclassified
 
to
 
segment
 
operating
 
 
 
12
profit. We also
 
record our grain inventories at net realizable value. We
 
may experience volatile earnings as a result of these accounting
treatments.
Economic downturns could limit consumer demand for our products.
 
The
 
willingness
 
of
 
consumers
 
to
 
purchase
 
our
 
products
 
depends
 
in
 
part
 
on
 
local
 
economic
 
conditions.
 
In
 
periods
 
of
 
economic
uncertainty,
 
consumers
 
may
 
purchase
 
more
 
generic,
 
private
 
label,
 
and
 
other
 
economy
 
brands
 
and
 
may
 
forego
 
certain
 
purchases
altogether.
 
In those circumstances,
 
we could experience
 
a reduction in sales
 
of higher margin
 
products or a shift
 
in our product mix
 
to
lower margin
 
offerings.
 
In addition,
 
as a
 
result of
 
economic conditions
 
or competitive
 
actions, we
 
may be
 
unable to
 
raise our
 
prices
sufficiently to
 
protect margins.
 
Consumers may
 
also reduce the
 
amount of food
 
that they consume
 
away from home
 
at customers that
purchase products
 
from our
 
North America
 
Foodservice segment.
 
Any of
 
these events
 
could have
 
an adverse
 
effect on
 
our results
 
of
operations.
 
We
 
have
 
a
 
substantial
 
amount
 
of
 
indebtedness,
 
which
 
could
 
limit
 
financing
 
and
 
other
 
options
 
and
 
in
 
some
 
cases
 
adversely
affect our ability to pay dividends.
 
As
 
of
 
May
 
28,
 
2023,
 
we
 
had
 
total
 
debt
 
and
 
noncontrolling
 
interests
 
of
 
$12.0
 
billion.
 
The
 
agreements
 
under
 
which
 
we
 
have
 
issued
indebtedness
 
do not
 
prevent us
 
from
 
incurring
 
additional unsecured
 
indebtedness
 
in the
 
future.
 
Our level
 
of indebtedness
 
may
 
limit
our:
 
●
ability to
 
obtain additional
 
financing for
 
working capital,
 
capital expenditures,
 
or general
 
corporate purposes,
 
particularly if
the ratings assigned to our debt securities by rating organizations
 
were revised downward; and
●
flexibility to
 
adjust to
 
changing business
 
and market
 
conditions and
 
may make
 
us more
 
vulnerable to
 
a downturn
 
in general
economic conditions.
 
There are
 
various financial
 
covenants and
 
other restrictions
 
in our
 
debt instruments
 
and noncontrolling
 
interests. If
 
we fail to
 
comply
with any of
 
these requirements, the
 
related indebtedness,
 
and other unrelated
 
indebtedness, could
 
become due and
 
payable prior
 
to its
stated maturity and our ability to obtain additional or alternative financing
 
may also be adversely affected.
 
Our ability
 
to make
 
scheduled payments
 
on or
 
to refinance
 
our debt
 
and other
 
obligations will
 
depend on
 
our operating
 
and financial
performance,
 
which
 
in
 
turn
 
is
 
subject
 
to
 
prevailing
 
economic
 
conditions
 
and
 
to
 
financial,
 
business,
 
and
 
other
 
factors
 
beyond
 
our
control.
We
 
depend
 
on stable,
 
liquid
 
and
 
well-functioning
 
capital and
 
credit markets
 
to fund
 
our operations.
 
Our financial
 
performance,
 
our
credit ratings,
 
interest rates,
 
the stability
 
of financial
 
institutions with
 
which we
 
partner, and
 
the liquidity
 
of the
 
overall global
 
capital
markets could affect our access to, and the availability,
 
terms and conditions, and cost of capital.
 
Volatility
 
in the
 
securities markets,
 
interest
 
rates,
 
and other
 
factors could
 
substantially
 
increase
 
our defined
 
benefit
pension,
other postretirement benefit, and postemployment
 
benefit costs.
 
We
 
sponsor
 
a number
 
of defined
 
benefit plans
 
for employees
 
in the
 
United
 
States, Canada,
 
and various
 
foreign
 
locations, including
defined
 
benefit
 
pension,
 
retiree
 
health
 
and
 
welfare,
 
severance,
 
and
 
other
 
postemployment
 
plans.
 
Our
 
major
 
defined
 
benefit
 
pension
plans are
 
funded with
 
trust assets
 
invested in
 
a globally
 
diversified portfolio
 
of securities
 
and other
 
investments. Changes
 
in interest
rates, mortality
 
rates, health
 
care costs,
 
early
 
retirement rates,
 
investment
 
returns, and
 
the market
 
value of
 
plan
 
assets can
 
affect
 
the
funded status
 
of our
 
defined benefit
 
plans and
 
cause volatility
 
in the
 
net periodic
 
benefit cost
 
and future
 
funding requirements
 
of the
plans.
 
A
 
significant
 
increase
 
in
 
our
 
obligations
 
or
 
future
 
funding
 
requirements
 
could
 
have
 
a
 
negative
 
impact
 
on
 
our
 
results
 
of
operations and cash flows from operations.
 
A
 
change
 
in
 
the
 
assumptions
 
regarding
 
the
 
future
 
performance
 
of
 
our
 
businesses
 
or
 
a
 
different
 
weighted-average
 
cost
 
of
capital
 
used
 
to
 
value
 
our
 
reporting
 
units
 
or
 
our
 
indefinite-lived
 
intangible
 
assets
 
could
 
negatively
 
affect
 
our
 
consolidated
results of operations and net worth.
 
As of May
 
28, 2023,
 
we had $21.
 
2
 
billion of
 
goodwill and
 
indefinite-lived intangible
 
assets. Goodwill for
 
each of
 
our reporting
 
units
is tested
 
for impairment
 
annually and
 
whenever events
 
or changes
 
in circumstances
 
indicate that
 
impairment may
 
have occurred.
 
We
compare
 
the
 
carrying
 
value
 
of
 
the
 
reporting
 
unit,
 
including
 
goodwill,
 
to
 
the
 
fair
 
value
 
of
 
the
 
reporting
 
unit.
 
If
 
the
 
fair
 
value
 
of
 
the
reporting unit
 
is less than
 
the carrying
 
value of
 
the reporting
 
unit, including
 
goodwill, impairment
 
has occurred.
 
Our estimates
 
of fair
value are determined
 
based on a
 
discounted cash
 
flow model. Growth
 
rates for sales
 
and profits are
 
determined using inputs
 
from our
long-range planning process. We
 
also make estimates of discount rates, perpetuity growth assumptions,
 
market comparables, and other
factors.
 
If
 
current
 
expectations
 
for
 
growth
 
rates
 
for
 
sales
 
and
 
profits
 
are
 
not
 
met,
 
or
 
other
 
market
 
factors
 
and
 
macroeconomic
conditions were to change,
 
then our reporting units could
 
become significantly impaired. While
 
we currently believe that
 
our goodwill
is not impaired, different assumptions regarding
 
the future performance of our businesses could result in significant impairment
 
losses.
 
13
 
We
 
evaluate
 
the
 
useful
 
lives
 
of
 
our
 
intangible
 
assets,
 
primarily
 
intangible
 
assets
 
associated
 
with
 
the
Blue
 
Buffalo
,
Pillsbury
,
Totino’s
,
Old El
 
Paso
,
 
Progresso
,
Annie’s
,
Nudges
,
and
Häagen-Dazs
 
brands, to
 
determine
 
if they
 
are finite
 
or indefinite-
lived.
 
Reaching
 
a
 
determination
 
on
 
useful
 
life
 
requires
 
significant
 
judgments
 
and
 
assumptions
 
regarding
 
the
 
future
 
effects
 
of
obsolescence,
 
demand,
 
competition,
 
other
 
economic
 
factors
 
(such
 
as
 
the
 
stability
 
of
 
the
 
industry,
 
known
 
technological
 
advances,
legislative action
 
that results
 
in an
 
uncertain or
 
changing regulatory
 
environment, and
 
expected changes
 
in distribution
 
channels), the
level of required maintenance expenditures, and the expected lives of other
 
related groups of assets.
 
Our
 
indefinite-lived
 
intangible
 
assets
 
are
 
also
 
tested
 
for
 
impairment
 
annually
 
and
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
indicate
 
that impairment
 
may have
 
occurred.
 
Our estimate
 
of the
 
fair value
 
of the
 
brands is
 
based on
 
a discounted
 
cash flow
 
model
using inputs
 
including projected
 
revenues from
 
our long-range
 
plan, assumed
 
royalty rates which
 
could be
 
payable if we
 
did not
 
own
the brands, and
 
a discount rate.
 
If current expectations
 
for growth
 
rates for sales
 
and margins
 
are not met,
 
or other market
 
factors and
macroeconomic
 
conditions
 
were
 
to
 
change,
 
then
 
our
 
indefinite-lived
 
intangible
 
assets
 
could
 
become
 
significantly
 
impaired.
Our
Progresso
,
EPIC
, and
Uncle Toby’s
 
brands had risk of decreasing coverage and we continue to monitor these businesses.
 
For further information
 
on goodwill and intangible
 
assets, please refer to
 
Note 6 to the Consolidated
 
Financial Statements in Item
 
8 of
this report.
ITEM 1B - Unresolved Staff Comments
 
None.
 
ITEM 2 - Properties
 
We
 
own
 
our
 
principal
 
executive
 
offices
 
and
 
main research
 
facilities,
 
which
 
are
 
located
 
in the
 
Minneapolis,
 
Minnesota
 
metropolitan
area. We
 
operate numerous
 
manufacturing facilities
 
and maintain many
 
sales and administrative
 
offices, warehouses,
 
and distribution
centers around the world.
As of May 28,
 
2023, we operated
 
45 facilities for
 
the production of
 
a wide variety
 
of food products.
 
Of these facilities,
 
27 are located
in the United
 
States, 6 in Latin
 
America and Mexico,
 
5 in Europe/Australia,
 
4 in the Greater
 
China region, 2
 
in Canada (1 of
 
which is
leased)
 
and
 
1
 
in
 
the
 
Asia/Middle
 
East/Africa
 
Region.
 
The
 
following
 
is
 
a
 
list
 
of
 
the
 
locations
 
of
 
our
 
principal
 
production
 
facilities,
which primarily support the segment noted:
North America Retail
• St. Hyacinthe, Canada
• Irapuato, Mexico
• Buffalo, New York
• Covington, Georgia
• Reed City, Michigan
• Cincinnati, Ohio
• Belvidere, Illinois
• Fridley, Minnesota
• Wellston, Ohio
• Geneva, Illinois
• Hannibal, Missouri
• Murfreesboro, Tennessee
• Cedar Rapids, Iowa
• Albuquerque, New Mexico
• Milwaukee, Wisconsin
International
• Rooty Hill, Australia
• Recife, Brazil
• Arras, France
• Cambara, Brazil
• Guangzhou, China
• Labatut, France
• Campo Novo do Pareceis, Brazil
• Nanjing, China
• Inofita, Greece
• Paranavai, Brazil
• Sanhe, China
• Nashik, India
• Pouso Alegre, Brazil
• Shanghai, China
• San Adrian, Spain
Pet
• Richmond, Indiana
• Joplin, Missouri
North America Foodservice
• Chanhassen, Minnesota
• Joplin, Missouri
• St. Charles, Missouri
• Green Bay, Wisconsin
We
 
operate
 
numerous
 
grain
 
elevators
 
in
 
the
 
United
 
States
 
in
 
support
 
of
 
our
 
domestic
 
manufacturing
 
activities.
 
We
 
also
 
utilize
approximately
 
16 million
 
square
 
feet
 
of
 
warehouse
 
and
 
distribution
 
space, nearly
 
all of
 
which
 
is leased,
 
that
 
primarily
 
supports
 
our
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
North America
 
Retail
 
and Pet segments.
 
We
 
own and
 
lease a number
 
of dedicated
 
sales and administrative
 
offices around
 
the world,
totaling approximately 2 million square feet. We
 
have additional warehouse, distribution, and office space in
 
our plant locations.
As part
 
of our
 
Häagen-Dazs
 
business in
 
our International
 
segment
 
we operate
 
450 (all
 
leased) and
 
franchise 382
 
branded ice
 
cream
parlors in various countries around the world, all outside of the United States and Canada.
ITEM 3 - Legal Proceedings
 
We are the
 
subject of various pending or threatened legal
 
actions in the ordinary course of our business. All
 
such matters are subject to
many uncertainties and
 
outcomes that are not
 
predictable with assurance.
 
In our opinion,
 
there were no
 
claims or litigation pending
 
as
of
 
May
 
28,
 
2023,
 
that
 
were
 
reasonably
 
likely
 
to
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
our
 
consolidated
 
financial
 
position
 
or
 
results
 
of
operations. See
 
the information
 
contained under
 
the section entitled
 
“Environmental Matters”
 
in Item 1
 
of this report
 
for a discussion
of environmental matters in which we are involved.
ITEM 4 - Mine Safety Disclosures
None.
PART
 
II
ITEM 5 - Market for Registrant’s Common
 
Equity, Related Stockholder Matters
 
and Issuer Purchases of Equity Securities
Our common
 
stock is
 
listed on
 
the New
 
York
 
Stock Exchange
 
under the
 
symbol “GIS.”
 
On June 15,
 
2023, there
 
were approximately
24,200 record holders of our common stock.
 
The
 
following
 
table
 
sets
 
forth
 
information
 
with
 
respect
 
to
 
shares
 
of
 
our
 
common
 
stock
 
that
 
we
 
purchased
 
during
 
the
 
fiscal
 
quarter
ended May 28, 2023:
 
Period
Total
 
Number
of Shares
Purchased (a)
Average Price
Paid Per Share
Total
 
Number of Shares
Purchased as Part of a
Publicly Announced
Program (b)
Maximum Number of
Shares that may yet
be Purchased
Under the Program (b)
February 27, 2023 -
April 2, 2023
1,338,293
$
79.20
1,338,293
86,503,364
April 3, 2023 -
April 30, 2023
846,538
86.88
846,538
85,656,826
May 1, 2023 -
May 28, 2023
793,957
89.58
793,957
84,862,869
Total
2,978,788
$
84.06
2,978,788
84,862,869
(a)
 
The total
 
number of
 
shares purchased
 
includes shares
 
of common
 
stock withheld
 
for the
 
payment of
 
withholding taxes
 
upon the
distribution of deferred option units.
(b)
 
On
 
June
 
27, 2022,
 
our
 
Board of
 
Directors
 
approved
 
a new
 
authorization
 
for
 
the repurchase
 
of
 
up to
 
100,000,000
 
shares of
 
our
common
 
stock
 
and
 
terminated
 
the
 
prior
 
authorization.
 
Purchases
 
can
 
be
 
made
 
in
 
the
 
open
 
market
 
or
 
in
 
privately
 
negotiated
transactions,
 
including
 
the
 
use
 
of
 
call
 
options
 
and
 
other
 
derivative
 
instruments,
 
Rule
 
10b5-1
 
trading
 
plans,
 
and
 
accelerated
repurchase programs. The Board did not specify an expiration date for
 
the authorization.
15
ITEM 7 - Management’s Discussion and Analysis of
 
Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
We
 
are
 
a
 
global packaged
 
foods company.
 
We
 
develop
 
distinctive
 
value-added
 
food
 
products
 
and
 
market
 
them under
 
unique
 
brand
names.
 
We
 
work
 
continuously
 
to
 
improve
 
our
 
core
 
products
 
and
 
to
 
create
 
new
 
products
 
that
 
meet
 
consumers’
 
evolving
 
needs
 
and
preferences.
 
In
 
addition,
 
we
 
build
 
the
 
equity
 
of
 
our
 
brands
 
over
 
time
 
with
 
strong
 
consumer-directed
 
marketing,
 
innovative
 
new
products,
 
and
 
effective
 
merchandising.
 
We
 
believe
 
our
 
brand-building
 
approach
 
is
 
the
 
key
 
to
 
winning
 
and
 
sustaining
 
leading
 
share
positions in markets around the globe.
Our fundamental
 
financial goal is
 
to generate competitively
 
differentiated returns
 
for our shareholders
 
over the long
 
term. We
 
believe
achieving
 
that
 
goal
 
requires
 
us
 
to
 
generate
 
a
 
consistent
 
balance
 
of
 
net
 
sales
 
growth,
 
margin
 
expansion,
 
cash
 
conversion,
 
and
 
cash
return to shareholders over time.
Our long-term growth objectives are to deliver the following performance
 
on average over time:
●
2 to 3 percent annual growth in organic net sales;
●
mid-single-digit annual growth in adjusted operating profit;
●
mid- to high-single-digit annual growth in adjusted diluted earnings per share
 
(EPS);
●
free cash flow conversion of at least 95 percent of adjusted net earnings after
 
tax; and
●
cash return to shareholders of 80 to 90 percent of free cash flow,
 
including an attractive dividend yield.
We
 
are executing
 
our Accelerate
 
strategy to
 
drive sustainable,
 
profitable growth
 
and top-tier
 
shareholder returns
 
over the
 
long term.
 
The
 
strategy
 
focuses
 
on
 
four
 
pillars
 
to
 
create
 
competitive
 
advantages
 
and
 
win:
 
boldly
 
building
 
brands,
 
relentlessly
 
innovating,
unleashing
 
our scale,
 
and
 
being a
 
force for
 
good. We
 
are prioritizing
 
our core
 
markets, global
 
platforms,
 
and
 
local gem
 
brands
 
that
have
 
the
 
best
 
prospects
 
for
 
profitable
 
growth,
 
and
 
we
 
are
 
committed
 
to
 
reshaping
 
our
 
portfolio
 
with
 
strategic
 
acquisitions
 
and
divestitures to further enhance our growth profile.
In
 
fiscal
 
2023,
 
we
 
continued
 
to
 
successfully
 
adapt
 
to
 
the
 
dynamic
 
operating
 
environment
 
and
 
deliver
 
strong
 
performance.
 
This
included
 
growth
 
in
 
organic
 
net
 
sales,
 
adjusted
 
operating
 
profit,
 
and
 
adjusted
 
diluted
 
EPS
 
that
 
was
 
ahead
 
of
 
our
 
initial
 
targets.
 
We
achieved each of the three priorities we established at the beginning of the year:
 
We
 
continued
 
to
 
compete
 
effectively,
 
including
 
holding
 
or
 
growing
 
market
 
share
 
in
 
more
 
than
 
50
 
percent
 
of
 
our
 
global
priority businesses for
 
the fifth consecutive
 
year, when
 
adjusting for an
 
unusual competitive
 
dynamic in cereal
 
in fiscal 2022
and
 
assessing
 
that
 
platform
 
on
 
a
 
2-year
 
basis.
 
We
 
generated
 
organic
 
net
 
sales
 
growth
 
across
 
each
 
of
 
our
 
four
 
operating
segments, fueled by
 
compelling brand building
 
and innovation across our
 
leading brands, and supported
 
with strong levels of
net price realization in response to 13 percent input cost inflation.
We
 
continued
 
to
 
invest
 
for
 
the
 
future,
 
including
 
a
 
17
 
percent
 
increase
 
in
 
media
 
and
 
advertising
 
expense,
 
a
 
double-digit
increase
 
in
 
investment
 
in
 
our
 
digital
 
and
 
technology
 
capability,
 
and
 
a
 
strong
 
increase
 
in
 
capital
 
investment
 
related
 
to
 
new
growth capacity.
We
 
continued
 
to reshape
 
our portfolio,
 
including
 
closing
 
on one
 
acquisition and
 
two divestitures
 
that further
 
improved our
portfolio’s ability to generate profitable
 
growth over the long term.
Our
 
consolidated
 
net
 
sales
 
for
 
fiscal
 
2023
 
rose
 
6
 
percent
 
to
 
$20,094 million.
 
On
 
an
 
organic
 
basis,
 
net
 
sales
 
increased
 
10
 
percent
compared
 
to
 
year-ago
 
levels.
 
Operating
 
profit
 
of
 
$3,434 million
 
was
 
down
 
1
 
percent.
 
Adjusted
 
operating
 
profit
 
of
 
$3,457 million
increased 8 percent on
 
a constant-currency basis.
 
Diluted EPS of $4.31 was
 
down 2 percent compared
 
to fiscal 2022
 
results. Adjusted
diluted
 
EPS
 
of
 
$4.30
 
increased
 
10
 
percent
 
on
 
a
 
constant-currency
 
basis
 
(See
 
the
 
“Non-GAAP
 
Measures”
 
section
 
below
 
for
 
a
description of our use of measures not defined by generally accepted
 
accounting
 
principles (GAAP)).
Net cash
 
provided by
 
operations totaled
 
$2,779 million in
 
fiscal 2023,
 
representing a
 
conversion rate
 
of 106
 
percent of
 
net earnings,
including earnings attributable
 
to redeemable and noncontrolling
 
interests. This cash generation
 
supported capital investments
 
totaling
$690 million, and our resulting free cash flow was $2,089
 
million at a conversion rate of 80 percent of adjusted
 
net earnings, including
earnings attributable
 
to redeemable
 
and noncontrolling
 
interests. We
 
returned cash
 
to shareholders
 
through dividends
 
totaling $1,288
million and net
 
share repurchases totaling
 
$1,171 million. (See
 
the “Non-GAAP Measures”
 
section below for
 
a description of
 
our use
of measures not defined by GAAP).
A
 
detailed
 
review
 
of
 
our
 
fiscal
 
2023
 
performance
 
compared
 
to
 
fiscal
 
2022
 
appears
 
below
 
in
 
the
 
section
 
titled
 
“Fiscal
 
2023
Consolidated Results of Operations.” A detailed review of
 
our fiscal 2022
 
performance compared to our fiscal 2021
 
performance is set
forth
 
in Part
 
II, Item
 
7 of
 
our Form
 
10-K for
 
the fiscal
 
year
 
ended
 
May 30, 2022
 
under the
 
caption
 
“Management’s
 
Discussion and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
Analysis of
 
Financial Condition
 
and Results
 
of Operations
 
– Fiscal
 
2022
 
Results of
 
Consolidated Operations,”
 
which is incorporated
herein by reference.
In fiscal 202
 
4, we expect
 
to build on
 
our positive momentum
 
and continue
 
to advance our
 
Accelerate strategy.
 
Our key priorities
 
are
to
 
continue
 
to
 
compete
 
effectively,
 
to
 
improve
 
our
 
supply
 
chain
 
efficiency,
 
and
 
to
 
maintain
 
our
 
disciplined
 
approach
 
to
 
capital
allocation.
 
We
 
expect
 
the
 
largest
 
factors
 
impacting
 
our
 
performance
 
in
 
fiscal
 
2024
 
will
 
be
 
the
 
economic
 
health
 
of
 
consumers,
 
the
moderating
 
rate of
 
input cost
 
inflation,
 
and the
 
increasing stability
 
of the
 
supply chain
 
environment. We
 
expect to
 
drive organic
 
net
sales
 
growth
 
in
 
fiscal
 
2024
 
through
 
strong
 
marketing,
 
innovation,
 
in-store
 
support,
 
and
 
net
 
price
 
realization
 
generated
 
through
 
our
Strategic Revenue
 
Management (SRM) capability,
 
most of which
 
will be carried
 
over from SRM
 
actions taken in
 
fiscal 2023. For
 
the
full year,
 
input cost inflation
 
is expected to
 
be approximately
 
5 percent of
 
total cost of
 
goods sold, driven
 
primarily by labor
 
inflation
that
 
continues
 
to
 
impact
 
sourcing,
 
manufacturing,
 
and
 
logistics
 
costs.
 
We
 
expect
 
to
 
generate
 
higher
 
levels
 
of
 
Holistic
 
Margin
Management (HMM) cost savings compared to fiscal 2023.
Based on these assumptions, our key full-year fiscal 2024 targets
 
are summarized below:
●
Organic net sales are expected to increase 3 to 4 percent.
●
Adjusted operating profit
 
is expected to increase
 
4 to 6 percent in
 
constant-currency from the
 
base of $3,457 million
 
reported
in fiscal 2023.
●
Adjusted
 
diluted
 
EPS
 
are
 
expected
 
to
 
range
 
between
 
4
 
to 6
 
percent
 
in
 
constant-currency
 
from
 
the
 
base
 
of
 
$4.30
 
earned
 
in
fiscal 2023.
●
Free cash flow conversion is expected to be at least 95 percent of adjusted after-tax
 
earnings.
See the “Non-GAAP Measures” section below for a description of our use
 
of measures not defined by GAAP.
Certain terms used throughout this report are defined in a glossary in Item 8 of
 
this report.
FISCAL 2023 CONSOLIDATED
 
RESULTS
 
OF OPERATIONS
In fiscal 2023,
 
net sales increased
 
6 percent compared
 
to fiscal 2022
 
and organic net
 
sales increased 10
 
percent compared to
 
last year.
Operating profit decreased 1 percent
 
to $3,434 million primarily driven
 
by higher input costs, a decrease
 
in contributions from volume
growth,
 
an
 
unfavorable
 
change
 
to
 
the
 
mark-to-market
 
valuation
 
of
 
certain
 
commodities
 
positions
 
and
 
grain
 
inventories,
 
and
 
an
increase in selling, general,
 
and administrative (SG&A) expenses,
 
including increased media
 
and advertising expenses,
 
partially offset
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix.
 
Operating
 
profit
 
margin
 
of
 
17.1
 
percent
 
decreased
 
120
 
basis
 
points.
 
Adjusted
 
operating
profit of $3,
 
457 million increased
 
8 percent
 
on a constant-currency
 
basis, primarily
 
driven by
 
favorable net price
 
realization and
 
mix,
partially offset
 
by higher
 
input costs,
 
a decrease
 
in contributions
 
from volume
 
growth and
 
an increase
 
in SG&A
 
expenses, including
increased media and advertising expenses. Adjusted operating profit
 
margin increased 30 basis points to 17.2 percent.
 
Diluted earnings
per share of $4.31 decreased 2 percent compared
 
to fiscal 2022. Adjusted diluted earnings per share
 
of $4.30 increased 10 percent on a
constant-currency
 
basis
 
(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 fiscal 2023 follows:
Fiscal 2023
In millions,
except per
share
Fiscal 2023 vs.
Fiscal 2022
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
20,094.2
6
%
Operating profit
3,433.8
(1)
%
17.1
%
Net earnings attributable to General Mills
2,593.9
(4)
%
Diluted earnings per share
$
4.31
(2)
%
Organic net sales growth rate (a)
10
%
Adjusted operating profit (a)
3,457.3
8
%
17.2
%
8
%
Adjusted diluted earnings per share (a)
$
4.30
9
%
10
%
(a)
 
See the "Non-GAAP Measures" section below for our use of measures not defined by
 
GAAP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
Consolidated
 
net sales
were as follows:
 
Fiscal 2023
Fiscal 2023 vs.
Fiscal 2022
Fiscal 2022
Net sales (in millions)
$
20,094.2
6
%
$
18,992.8
Contributions from volume growth (a)
(8)
pts
Net price realization and mix
15
pts
Foreign currency exchange
(1)
pt
Note: Table may
 
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Net sales in fiscal
 
2023 increased 6
 
percent compared to fiscal
 
2022, driven by favorable
 
net price realization
 
and mix, partially offset
by a decrease in contributions from volume growth and unfavorable
 
foreign currency exchange.
Components of organic net sales growth are shown in the following
 
table:
Fiscal 2023 vs. Fiscal 2022
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
14
pts
Organic net sales growth
10
pts
Foreign currency exchange
(1)
pt
Acquisitions and divestitures
(4)
pts
Net sales growth
6
pts
Note: Table may
 
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Organic
 
net sales
 
in fiscal
 
2023 increased
 
10 percent
 
compared to
 
fiscal 2022,
 
driven by
 
favorable organic
 
net price
 
realization and
mix, partially offset by a decrease in contributions from organic
 
volume growth.
Cost of sales
increased $958 million in fiscal 2023
 
to $13,548 million. The increase was
 
primarily driven by a $1,454 million
 
increase
attributable to
 
product rate and
 
mix, partially offset
 
by a $950
 
million decrease due
 
to lower volume.
 
We
 
recorded a
 
$292 million net
increase
 
in
 
cost
 
of
 
sales
 
related
 
to
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
and
 
grain
 
inventories
 
in
 
fiscal
 
2023,
compared to a net decrease of $133
 
million in fiscal 2022
 
(please see Note 8 to the Consolidated
 
Financial Statements in Item 8 of this
report
 
for
 
additional
 
information).
 
In
 
fiscal
 
2023,
 
we
 
recorded
 
a
 
$25
 
million
 
charge
 
related
 
to
 
a
 
voluntary
 
recall
 
on
 
certain
international
Häagen-Dazs
ice cream
 
products.
 
We
 
also recorded
 
$5 million
 
of restructuring
 
charges and
 
$2 million
 
of restructuring
initiative project-related
 
costs in
 
cost of
 
sales in
 
fiscal 2023
 
compared to
 
$3 million
 
of restructuring
 
charges in
 
cost of
 
sales in
 
fiscal
2022 (please see Note 4 to the Consolidated Financial Statements in Item 8 of this
 
report for additional information).
Gross margin
increased 2 percent
 
in fiscal 2023
 
compared to fiscal
 
2022. Gross margin
 
as a percent
 
of net sales
 
decreased 110
 
basis
points to 32.6 percent compared to fiscal 2022.
 
SG&A expenses
 
increased $353 million to $3,500
 
million in fiscal 2023 compared
 
to fiscal 2022 primarily driven
 
by increased media
and
 
advertising
 
expenses,
 
unfavorable
 
valuation
 
adjustments
 
and
 
the
 
loss
 
on
 
sale
 
of
 
certain
 
corporate
 
investments,
 
an
 
increase
 
in
certain compensation and benefits
 
expenses,
 
and an increase in charitable
 
contributions in fiscal 2023. SG&A
 
expenses as a percent of
net sales in fiscal 2023 increased 80 basis points compared to fiscal 2022.
Divestitures
 
gain, net
 
totaled $445
 
million in
 
fiscal 2023
primarily related
 
to the
 
sale of our
 
Helper main
 
meals and
 
Suddenly Salad
side dishes
 
business.
 
In fiscal
 
2022,
 
we recorded
 
a $194
 
million divestitures
 
gain
 
related
 
to the
 
sale of
 
our
 
interest in
 
Yoplait
 
SAS,
Yoplait
 
marques
 
SNC
 
and
 
Liberté
 
Marques
 
Sàrl
 
and
 
our
 
European
 
dough
 
businesses
 
(please
 
refer
 
to
 
Note
 
3
 
to
 
the
 
Consolidated
Financial Statements in Part I, Item 1 of this report).
Restructuring,
 
impairment,
 
and
 
other
 
exit
 
costs
 
(recoveries)
totaled
 
$56
 
million
 
in
 
fiscal
 
2023
 
compared
 
to
 
$26
 
million
 
of
 
net
recoveries
 
in
 
fiscal
 
2022.
 
In
 
fiscal
 
2023,
 
we
 
approved
 
restructuring
 
actions
 
to
 
enhance
 
the
 
efficiency
 
of
 
our
 
global
 
supply
 
chain
structure and to optimize
 
our Häagen-Dazs shops network,
 
and as a result,
 
we recorded $41 million
 
of charges in
 
fiscal 2023. In fiscal
2022,
 
we
 
approved
 
restructuring
 
actions
 
in the
 
International
 
segment
 
to drive
 
efficiencies
 
in
 
manufacturing
 
and
 
logistics operations
and recorded $12 million
 
of charges.
 
Please see Note 4
 
to the Consolidated Financial
 
Statements in Item 8
 
of this report for
 
additional
information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
Benefit plan
 
non-service income
totaled $89
 
million in
 
fiscal 2023
 
compared to
 
$113 million
 
in fiscal
 
2022, primarily
 
reflecting an
increase in interest costs, partially
 
offset by lower amortization
 
of losses and higher expected
 
return on plan assets (please
 
see Note 14
to the Consolidated Financial Statements in Item 8 of this report
 
for additional information).
Interest, net
for fiscal 2023 totaled $382 million, $2 million higher than fiscal
 
2022.
Our
effective tax rate
for fiscal
 
2023 was 19.5 percent compared to 18.3
 
percent in fiscal 2022. The 1.2 percentage
 
point increase was
primarily
 
driven
 
by
 
a
 
change in
 
the
 
valuation
 
allowance
 
on our
 
capital
 
loss carryforward
 
s
 
in
 
fiscal
 
2022,
 
partially
 
offset
 
by
 
certain
favorable discrete tax
 
items in fiscal 2023
 
.
 
Our adjusted effective
 
tax rate was 20.4
 
percent in fiscal 2023
 
compared to 20.9
 
percent in
fiscal 2022
 
(see the
 
“Non-GAAP Measures”
 
section below
 
for a
 
description of
 
our use
 
of measures
 
not defined
 
by GAAP).
 
The 0.5
percentage point decrease was primarily due to certain favorable discrete tax
 
items in fiscal 2023.
After-tax earnings
 
from
 
joint ventures
decreased to
 
$81 million in
 
fiscal 2023
 
compared to
 
$112
 
million in
 
fiscal 2022,
 
primarily
driven by higher input
 
costs at CPW and
 
HDJ and lower net sales
 
at HDJ,
 
partially offset by
 
favorable net price realization
 
and mix at
CPW.
 
On
 
a
 
constant-currency
 
basis,
 
after-tax
 
earnings
 
from
 
joint
 
ventures
 
decreased
 
18
 
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:
Fiscal 2023 vs. Fiscal 2022
CPW
HDJ
Total
Contributions from volume growth (a)
(10)
pts
(5)
pts
Net price realization and mix
14
pts
Flat
Net sales growth in constant currency
4
pts
(5)
pts
2
pts
Foreign currency exchange
(8)
pts
(15)
pts
(10)
pts
Net sales growth
(5)
pts
(21)
pts
(8)
pts
Note: Table may
 
not foot due to rounding
(a) Measured in tons based on the stated weight of our product shipments.
Net
 
earnings
 
attributable
 
to
 
redeemable
 
and
 
noncontrolling
 
interests
 
decreased
 
to
 
$16
 
million
 
in
 
fiscal
 
2023
 
compared
 
to
 
$28
million in fiscal 2022, primarily driven by the sale of
 
our interests in Yoplait
 
SAS, Yoplait
 
Marques SNC, and Liberté Marques Sàrl in
fiscal 2022.
Average
 
diluted
 
shares
 
outstanding
decreased
 
by
 
11 million
 
in
 
fiscal
 
2023
 
from
 
fiscal
 
2022
 
primarily
 
due
 
to
 
share
 
repurchases,
partially offset by option exercises.
 
RESULTS
 
OF SEGMENT OPERATIONS
Our businesses are organized into four operating segments: North
 
America Retail, International, Pet, and North America Foodservice
 
.
In fiscal
 
2022, we
 
completed a
 
new organization
 
structure to
 
streamline our
 
global operations.
 
We
 
restated our
 
net sales
 
by segment
and
 
segment
 
operating
 
profit
 
to
 
reflect
 
our
 
new
 
operating
 
segments.
 
These
 
segment
 
changes
 
had
 
no
 
effect
 
on
 
previously
 
reported
consolidated net sales, operating profit, net earnings attributable to General
 
Mills, or earnings per share.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
The following tables provide
 
the dollar amount and percentage
 
of net sales and operating
 
profit from each segment for
 
fiscal 2023 and
fiscal 2022:
Fiscal Year
2023
2022
In Millions
Dollars
Percent of Total
Dollars
Percent of Total
Net Sales
North America Retail
$
12,659.9
63
%
$
11,572.0
61
%
International
2,769.5
14
3,315.7
17
Pet
2,473.3
12
2,259.4
12
North America Foodservice
2,191.5
11
1,845.7
10
Total
$
20,094.2
100
%
$
18,992.8
100
%
Segment Operating Profit
North America Retail
$
3,181.3
78
%
$
2,699.7
74
%
International
161.8
4
232.0
6
Pet
445.5
11
470.6
13
North America Foodservice
290.0
7
255.5
7
Total
$
4,078.6
100
%
$
3,657.8
100
%
Segment
 
operating
 
profit
 
as
 
reviewed
 
by
 
our
 
executive
 
management
 
excludes
 
unallocated
 
corporate
 
items,
 
net
 
gain
 
or
 
loss
 
on
divestitures, and restructuring, impairment, and other exit costs that are centrally
 
managed.
NORTH AMERICA RETAIL
 
SEGMENT
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
 
are
 
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.
North America Retail net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
12,659.9
9
%
$
11,572.0
Contributions from volume growth (a)
(6)
pts
Net price realization and mix
16
pts
Foreign currency exchange
(1)
pt
Note: Table may
 
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
 
The
 
9
 
percent
 
increase
 
in
 
North
 
America
 
Retail
 
net
 
sales
 
for
 
fiscal
 
2023
 
was
 
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
partially offset by a decrease in contributions from volume growth
 
and unfavorable foreign currency exchange.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
The components of North America Retail organic net
 
sales growth are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
16
pts
Organic net sales growth
12
pts
Foreign currency exchange
(1)
pt
Divestitures (b)
(2)
pts
Net sales growth
9
pts
Note: Table may
 
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Divestitures primarily include the impact
 
of the sale of our Helper main
 
meals and Suddenly Salad side
 
dishes businesses in fiscal
2023.
 
Please see Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report.
North America
 
Retail organic
 
net sales
 
increased 12
 
percent in
 
fiscal 2023
 
compared to
 
fiscal 2022,
 
driven by
 
favorable organic
 
net
price realization and mix, partially offset by a decrease in
 
contributions from organic volume growth.
Net sales for our North America Retail operating units are shown in the following table:
In Millions
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
U.S. Meals & Baking Solutions
$
4,426.3
10
%
$
4,023.8
U.S. Morning Foods
3,620.1
7
%
3,370.9
U.S. Snacks
3,611.0
13
%
3,191.4
Canada (a)
1,002.5
2
%
985.9
Total
$
12,659.9
9
%
$
11,572.0
(a)
On a constant
 
currency basis, Canada
 
operating unit net
 
sales increased 8
 
percent in fiscal
 
2023.
 
See the “Non-GAAP
 
Measures”
section below for our use of this measure not defined by GAAP.
Segment operati
 
ng profit
 
increased 18
 
percent to
 
$3,181 million in
 
fiscal 2023
 
compared to
 
$2,700 million
 
in fiscal
 
2022,
 
primarily
driven
 
by
 
favorable
 
net
 
price
 
realization
 
and
 
mix,
 
partially
 
offset
 
by
 
higher
 
input
 
costs,
 
a
 
decrease
 
in
 
contributions
 
from
 
volume
growth,
 
and an
 
increase in
 
SG&A expenses,
 
including increased
 
media and
 
advertising expenses.
 
Segment operating
 
profit increased
18 percent on
 
a constant-currency basis
 
in fiscal 2023
 
compared to fiscal 2022
 
(see the “Non-GAAP
 
Measures” section below
 
for our
use of this measure not defined by GAAP).
INTERNATIONAL SEGMENT
Our International
 
operating segment
 
reflects retail
 
and foodservice
 
businesses outside
 
of the
 
United States
 
and Canada.
 
Our product
categories
 
include
 
super-premium
 
ice
 
cream
 
and frozen
 
desserts, meal
 
kits,
 
salty
 
snacks,
 
snack
 
bars,
 
dessert
 
and
 
baking
 
mixes,
 
and
shelf stable vegetables.
 
International net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
2,769.5
(16)
%
$
3,315.7
Contributions from volume growth (a)
(28)
pts
Net price realization and mix
16
pts
Foreign currency exchange
(5)
pts
Note: Table may
 
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
The
 
16
 
percent
 
decrease
 
in
 
International
 
net
 
sales
 
in
 
fiscal
 
2023
 
was
 
driven
 
by
 
a
 
decrease
 
in
 
contributions
 
from
 
volume
 
growth,
including
 
the
 
impact
 
of volume
 
declines
 
from
 
divestitures
 
and
 
the
 
voluntary
 
recall
 
on certain
 
international
Häagen-Dazs
 
ice
 
cream
products, and unfavorable foreign currency exchange, partially offset
 
by favorable net price realization and mix.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
The components of International organic net sales growth
 
are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(8)
pts
Organic net price realization and mix
12
pts
Organic net sales growth
4
pts
Foreign currency exchange
(5)
pts
Divestitures (b)
(16)
pts
Net sales growth
(16)
pts
Note: Table may
 
not foot due to rounding
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Divestitures primarily include
 
the impact of
 
the sale of our
 
interests in Yoplait
 
SAS, Yoplait
 
Marques SNC, and
 
Liberté Marques
Sàrl and our European dough businesses in fiscal 2022.
 
Please see Note 3 to the Consolidated Financial Statements in Part II, Item
8 of this report.
The 4
 
percent increase
 
in International
 
organic
 
net sales
 
growth in
 
fiscal 2023
 
was driven
 
by favorable
 
organic
 
net price
 
realization
and mix, partially offset by a decrease in contributions
 
from organic volume growth.
Segment operating
 
profit decreased
 
30 percent
 
to $162 million
 
in fiscal
 
2023 compared
 
to $232
 
million in
 
2022, primarily
 
driven by
higher input costs and
 
a decrease in contributions
 
from volume growth,
 
including the impact of
 
volume declines from
 
divestitures and
the
 
voluntary
 
recall on
 
certain
 
international
Häagen-Dazs
 
ice
 
cream
 
products,
 
partially
 
offset
 
by
 
favorable
 
net
 
price realization
 
and
mix and a decrease in
 
SG&A expenses, including an
 
insurance recovery from the voluntary
 
recall. Segment operating profit
 
decreased
25 percent on
 
a constant-currency basis
 
in fiscal 2023
 
compared to fiscal 2022
 
(see the “Non-GAAP
 
Measures” section below
 
for our
use of this measure not defined by GAAP).
PET SEGMENT
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, and
 
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.
Pet net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
$
2,473.3
9
%
$
2,259.4
Contributions from volume growth (a)
(2)
pts
Net price realization and mix
12
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.
Pet net
 
sales increased
 
9 percent
 
in fiscal
 
2023 compared
 
to fiscal
 
2022, driven
 
by favorable
 
net price
 
realization and
 
mix,
 
partially
offset by a decrease in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
The components of Pet organic net sales growth are shown in the following
 
table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(3)
pts
Organic net price realization and mix
11
pts
Organic net sales growth
9
pts
Foreign currency exchange
Flat
Acquisition (b)
1
pt
Net sales growth
9
pts
Note: Table may
 
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
(b)
Acquisition of Tyson
 
Foods’ pet treats business
 
in fiscal 2022. Please
 
see Note 3 to
 
the Consolidated Financial
 
Statements in Part
II, Item 8 of this report.
The 9
 
percent increase
 
in Pet
 
organic
 
net sales
 
growth in
 
fiscal 2023
 
was driven
 
by favorable
 
organic
 
net price
 
realization and
 
mix,
partially offset by a decrease in contributions from organic
 
volume growth.
Pet operating
 
profit decreased
 
5 percent
 
to $446 million
 
in fiscal
 
2023, compared
 
to $471 million
 
in fiscal
 
2022, primarily
 
driven by
higher
 
input
 
costs,
 
an
 
increase
 
in
 
SG&A
 
expenses,
 
including
 
an
 
increase
 
in
 
media
 
and
 
advertising
 
expenses,
 
and
 
a
 
decrease
 
in
contributions
 
from volume
 
growth,
 
partially
 
offset
 
by favorable
 
net price
 
realization
 
and mix.
 
Segment operating
 
profit decreas
 
ed 5
percent on a constant-currency basis
 
in fiscal 2023 compared to fiscal
 
2022 (see the “Non-GAAP Measures”
 
section below for our use
of this measure not defined by GAAP).
NORTH AMERICA FOODSERVICE SEGMENT
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.
North America Foodservice net sales were as follows:
Fiscal 2023
Fiscal 2023 vs. 2022
Percentage Change
Fiscal 2022
Net sales (in millions)
 
$
2,191.5
19
%
$
1,845.7
Contributions from volume growth (a)
2
pts
Net price realization and mix
16
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
 
Foodservice net sales
 
increased 19
 
percent in fiscal
 
2023,
 
driven by favorable
 
net price realization
 
and mix, including
market index pricing on bakery flour, and an
 
increase in contributions from volume growth.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
The components of North America Foodservice organic
 
net sales growth are shown in the following table:
Fiscal 2023 vs. 2022
Percentage Change
Contributions from organic volume growth (a)
(2)
pts
Organic net price realization and mix
15
pts
Organic net sales growth
13
pts
Foreign currency exchange
Flat
Acquisition (b)
6
pts
Net sales growth
19
pts
Note: Table may
 
not foot due to rounding
(a)
Measured in tons based on the standard weight of our product shipments.
(b)
Acquisition
 
of
 
TNT
 
Crust
 
in
 
fiscal
 
2023.
 
Please
 
see
 
Note
 
3
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Part
 
II,
 
Item
 
8
 
of
 
this
report.
The 13
 
percent increase
 
in North
 
America
 
Foodservice
 
organic
 
net sales
 
growth
 
in fiscal
 
2023
 
was driven
 
by
 
favorable organic
 
net
price realization
 
and mix,
 
including market
 
index pricing
 
on bakery
 
flour, partially
 
offset by
 
a decrease in
 
contributions from
 
organic
volume growth.
Segment
 
operating
 
profit
 
increased
 
14
 
percent
 
to
 
$290 million
 
in
 
fiscal
 
2023,
 
compared
 
to
 
$256 million
 
in
 
fiscal
 
2022,
 
primarily
driven by
 
favorable net
 
price realization
 
and mix,
 
partially offset
 
by higher
 
input costs
 
and an
 
increase in
 
SG&A expenses.
 
Segment
operating
 
profit
 
increased
 
14
 
percent
 
on
 
a
 
constant-currency
 
basis
 
in
 
fiscal
 
2023
 
compared
 
to
 
fiscal
 
2022
 
(see
 
the
 
“Non-GAAP
Measures” section below for our use of this measure not defined by GAAP).
UNALLOCATED CORPORATE
 
ITEMS
Unallocated
 
corporate
 
items
 
include
 
corporate
 
overhead
 
expenses,
 
variances
 
to
 
planned
 
domestic
 
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.
Unallocated corporate
 
expense totaled $1,033
 
million in fiscal
 
2023, compared
 
to $403 million
 
last year.
 
We
 
recorded a $292
 
million
net increase
 
in expense
 
related to
 
the mark-to-market
 
valuation
 
of certain
 
commodity positions
 
and
 
grain inventories
 
in fiscal
 
2023,
compared to
 
a $133 million
 
net decrease
 
in expense
 
last year.
 
We
 
recorded $84
 
million of
 
net losses
 
related to
 
valuation adjustments
and the sale of corporate investments in fiscal 2023,
 
compared to $15 million of net losses in fiscal 2022.
 
In fiscal 2023, we recorded a
$22 million net charge
 
related to a voluntary
 
recall on certain international
Häagen-Dazs
 
ice cream products.
 
In addition, we recorded
$6 million of integration
 
costs primarily related to
 
our acquisition of TNT Crust
 
in fiscal 2023, compared
 
to $22 million of integration
costs
 
related
 
to
 
our
 
acquisition
 
of
 
Tyson
 
Foods’
 
pet
 
treats
 
business
 
in
 
fiscal
 
2022.
 
In
 
fiscal
 
2022,
 
we
 
recorded
 
$73
 
million
 
of
transaction costs primarily related to the sale of our
 
interests in Yoplait
 
SAS, Yoplait
 
Marques SNC, Liberté Marques Sàrl and the sale
of
 
our
 
European
 
dough
 
businesses.
 
In
 
addition,
 
we
 
recorded
 
a
 
$22
 
million
 
recovery
 
related
 
to
 
a
 
Brazil
 
indirect
 
tax
 
item
 
and
 
a
 
$13
million
 
insurance
 
recovery
 
in
 
fiscal
 
2022.
 
In
 
addition,
 
certain
 
compensation
 
and
 
benefits
 
expenses
 
and
 
charitable
 
contributions
increased in fiscal 2023 compared to fiscal 2022.
IMPACT OF INFLATION
We
 
experienced
 
broad
 
based
 
global
 
input
 
cost
 
inflation
 
of
 
13
 
percent
 
in
 
fiscal
 
2023
 
and
 
8
 
percent
 
in
 
fiscal
 
2022.
 
We
 
expect
approximately
 
5
 
percent
 
input
 
cost
 
inflation
 
in
 
fiscal
 
2024.
 
We
 
attempt
 
to
 
minimize
 
the
 
effects
 
of
 
inflation
 
through
 
HMM,
 
SRM,
planning, and operating practices. Our market risk management
 
practices are discussed in Item 7A of this report.
LIQUIDITY AND CAPITAL
 
RESOURCES
The primary source of our
 
liquidity is cash flow from
 
operations. Over the most recent
 
two-year period, our operations have
 
generated
$6.1 billion
 
in cash.
 
A substantial
 
portion of
 
this operating
 
cash flow
 
has been
 
returned to
 
shareholders through
 
dividends and
 
share
repurchases.
 
We
 
also
 
use
 
cash
 
from
 
operations
 
to
 
fund
 
our
 
capital
 
expenditures,
 
acquisitions,
 
and
 
debt
 
service.
 
We
 
typically
 
use
 
a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
combination
 
of
 
cash,
 
notes
 
payable,
 
and
 
long-term
 
debt,
 
and
 
occasionally
 
issue
 
shares
 
of
 
common
 
stock,
 
to
 
finance
 
significant
acquisitions.
 
As of
 
May
 
28,
 
2023,
 
we had
 
$381
 
million
 
of cash
 
and
 
cash equivalents
 
held
 
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.
 
Cash Flows from Operations
Fiscal Year
In Millions
2023
2022
Net earnings, including earnings attributable to redeemable and noncontrolling
 
interests
$
2,609.6
$
2,735.0
Depreciation and amortization
546.6
570.3
After-tax earnings from joint ventures
(81.3)
(111.7)
Distributions of earnings from joint ventures
69.9
107.5
Stock-based compensation
111.7
98.7
Deferred income taxes
(22.2)
62.2
Pension and other postretirement benefit plan contributions
(30.1)
(31.3)
Pension and other postretirement benefit plan costs
(27.6)
(30.1)
Divestitures gain, net
(444.6)
(194.1)
Restructuring, impairment, and other exit costs (recoveries)
24.4
(117.1)
Changes in current assets and liabilities, excluding the effects of
 
acquisitions and divestitures
(48.9)
277.4
Other, net
71.1
(50.7)
Net cash provided by operating activities
$
2,778.6
$
3,316.1
During
 
fiscal
 
2023,
 
cash
 
provided
 
by
 
operations
 
was
 
$2,779
 
million
 
compared
 
to
 
$3,316 million
 
in
 
the
 
same
 
period
 
last
 
year.
 
The
$538 million decrease
 
was primarily driven by
 
a $326 million change in
 
current assets and liabilities
 
and a $250 million
 
change in net
divestitures
 
gain.
 
The
 
$326
 
million
 
change
 
in
 
current
 
assets
 
and
 
liabilities
 
was
 
primarily
 
driven
 
by
 
a
 
$233
 
million
 
change
 
in
inventories
 
and
 
a
 
$257
 
million
 
change
 
in
 
accounts
 
payable,
 
partially
 
offset
 
by
 
a
 
$125
 
million
 
change
 
in
 
the
 
timing
 
of
 
accounts
receivable.
We
 
strive
 
to
 
grow
 
core
 
working
 
capital
 
at
 
or
 
below
 
the
 
rate
 
of
 
growth
 
in
 
our
 
net
 
sales.
 
For
 
fiscal
 
2023,
 
core
 
working
 
capital
 
net
liability
 
decreased
 
20
 
percent,
 
compared
 
to
 
a
 
net
 
sales
 
increase
 
of
 
6
 
percent.
 
The
 
core
 
working
 
capital
 
net
 
liability
 
decreased
 
$84
million from a
 
net liability of
 
$423 million in
 
fiscal 2022 to
 
a net liability of
 
$339 million in
 
fiscal 2023. The
 
$84 million net
 
liability
decrease was primarily due to an increase in inventories, partially offset
 
by an increase in accounts payable in fiscal 2023.
Cash Flows from Investing Activities
Fiscal Year
In Millions
2023
2022
Purchases of land, buildings, and equipment
$
(689.5)
$
(568.7)
Acquisitions, net of cash acquired
(251.5)
(1,201.3)
Investments in affiliates, net
(32.2)
15.4
Proceeds from disposal of land, buildings, and equipment
1.3
3.3
Proceeds from divestitures, net of cash divested
633.1
74.1
Other, net
(7.6)
(13.5)
Net cash used by investing activities
$
(346.4)
$
(1,690.7)
In
 
fiscal
 
2023,
 
we
 
used
 
$346 million
 
of
 
cash
 
through
 
investing
 
activities
 
compared
 
to
 
$1,691 million
 
in
 
fiscal
 
2022.
 
We
 
invested
$690 million in land, buildings, and equipment in fiscal 2023,
 
an increase of $121 million from fiscal 2022.
 
During fiscal 2023, we acquired TNT Crust for $252 million cash, net of cash acquired.
 
During fiscal 2023, we completed the sale of
our Helper main meals and Suddenly Salad side dishes businesses for cash proceeds
 
of $607 million.
During fiscal 2022, we acquired Tyson
 
Foods’ pet treats business for an aggregate purchase price of $1.2 billion. During fiscal
 
2022,
we sold our interests in Yoplait
 
SAS, Yoplait
 
Marques SNC, and Liberté Marques Sàrl for cash proceeds
 
of $32 million, net of cash
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
divested,
 
as part of the sale. We also completed
 
the sale of our European dough businesses in fiscal 2022 for cash proceeds of $42
million.
 
We
 
expect
 
capital
 
expenditures
 
to
 
be
 
approximately
 
4
 
percent
 
of
 
reported
 
net
 
sales
 
in
 
fiscal
 
2024.
 
These
 
expenditures
 
will
 
fund
initiatives that are expected to fuel growth, support innovative products,
 
and continue HMM initiatives throughout the supply chain.
Cash Flows from Financing Activities
Fiscal Year
In Millions
2023
2022
Change in notes payable
$
(769.3)
$
551.4
Issuance of long-term debt
2,324.4
2,203.7
Payment of long-term debt
(1,421.7)
(3,140.9)
Proceeds from common stock issued on exercised options
232.3
161.7
Purchases of common stock for treasury
(1,403.6)
(876.8)
Dividends paid
(1,287.9)
(1,244.5)
Distributions to redeemable and noncontrolling interest holders
(15.7)
(129.8)
Other, net
(62.6)
(28.0)
Net cash used by financing activities
$
(2,404.1)
$
(2,503.2)
Financing activities
 
used $2.4 billion
 
of cash
 
in fiscal
 
2023 compared
 
to $2.5 billion
 
in fiscal
 
2022. We
 
had $133 million
 
of net
 
debt
issuances in
 
fiscal 2023
 
compared to
 
$386 million of
 
net debt repayments
 
in fiscal 2022.
 
For more
 
information on
 
our debt
 
issuances
and payments, please refer to Note 9 to the Consolidated Financial Statements in
 
Item 8 of this report.
During
 
fiscal
 
2023,
 
we
 
received
 
$232 million
 
of
 
net
 
proceeds
 
from
 
common
 
stock
 
issued
 
on
 
exercised
 
options
 
compared
 
to
$162 million in fiscal 2022.
During fiscal 2023, we
 
repurchased 18 million shares
 
of our common stock for
 
$1,404 million. During fiscal 2022,
 
we repurchased 14
million shares of our common stock for $877 million.
 
Dividends paid in fiscal 2023 totaled
 
$1,288 million, or $2.16 per share. Dividends
 
paid in fiscal 2022
 
totaled $1,244 million, or $2.04
per share.
 
Selected Cash Flows from Joint Ventures
Selected cash flows from our joint ventures are set forth in the following table:
Fiscal Year
Inflow (Outflow), in Millions
2023
2022
Investments in affiliates, net
$
(32.2)
$
15.4
Dividends received
69.9
107.5
 
The following table details the fee-paid committed and uncommitted credit
 
lines we had available as of May 28, 2023:
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
$
-
To ensure availability
 
of funds, we maintain bank credit lines and have commercial paper programs
 
available to us in the United States
and Europe.
We
 
have material
 
contractual obligations
 
that arise
 
in the
 
normal course
 
of business
 
and we
 
believe that
 
cash flows
 
from operations
will be adequate to meet our liquidity and capital needs for at least the next 12
 
months.
26
Certain
 
of
 
our
 
long-term
 
debt
 
agreements,
 
our
 
credit
 
facilities,
 
and
 
our
 
noncontrolling
 
interests
 
contain
 
restrictive
 
covenants.
 
As
 
of
May 28, 2023, we were in compliance with all of these covenants.
 
We
 
have $1,709 million
 
of long-term debt
 
maturing in the
 
next 12 months
 
that is classified
 
as current, including
 
$500 million of
 
3.65
percent fixed-rate notes due February
 
15, 2024, $400 million of floating-rate
 
notes due October 17, 2023, €500
 
million of floating-rate
notes due July
 
27, 2023, and €250
 
million of floating-rate
 
notes due November
 
10, 2023. 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.
As of May
 
28, 2023,
 
our total debt,
 
including the
 
impact of derivative
 
instruments designated
 
as hedges, was
 
80 percent
 
in fixed-rate
and 20
 
percent in
 
floating-rate instruments,
 
compared to
 
77 percent
 
in fixed-rate
 
and 23
 
percent in
 
floating-rate instruments
 
on May
29, 2022.
 
The
 
third-party
 
holder
 
of
 
the
 
General
 
Mills
 
Cereals,
 
LLC
 
(GMC)
 
Class
 
A
 
Interests
 
receives
 
quarterly
 
preferred
 
distributions
 
from
available net
 
income based
 
on the application
 
of a
 
floating preferred
 
return rate
 
to the
 
holder’s capital
 
account balance
 
established in
the most
 
recent mark
 
-to-market valuation
 
(currently $252
 
million). The
 
floating preferred
 
return rate
 
on GMC’s
 
Class A
 
Interests is
the sum of three
 
-month Term
 
SOFR plus 186
 
basis points. The preferred
 
return rate is adjusted
 
every three years
 
through a negotiated
agreement with the Class A Interest holder or through a remarketing auction.
We
 
have an option
 
to purchase the
 
Class A Interests for
 
consideration equal to
 
the then current
 
capital account value,
 
plus any unpaid
preferred return
 
and the
 
prescribed make-whole
 
amount. If
 
we purchase
 
these interests,
 
any change
 
in the
 
third-party holder’s
 
capital
account
 
from
 
its
 
original
 
value
 
will
 
be
 
charged
 
directly
 
to
 
retained
 
earnings
 
and
 
will
 
increase
 
or
 
decrease
 
the
 
net
 
earnings
 
used
 
to
calculate EPS in that period.
CRITICAL ACCOUNTING ESTIMATES
For a complete description of our
 
significant accounting policies, please see Note
 
2 to the Consolidated Financial
 
Statements in Item 8
of this report. Our critical accounting
 
estimates are those that have
 
a meaningful impact on the reporting of our
 
financial condition and
results of operations.
 
These estimates include
 
our accounting for
 
revenue recognition, valuation
 
of long-lived assets,
 
intangible assets,
stock-based compensation, income taxes, and defined benefit pension,
 
other postretirement benefit, and postemployment benefit plans
 
.
Revenue Recognition
Our
 
revenues
 
are
 
reported
 
net
 
of
 
variable
 
consideration
 
and
 
consideration
 
payable
 
to
 
our
 
customers,
 
including
 
trade
 
promotion,
consumer
 
coupon
 
redemption,
 
and
 
other
 
reductions
 
to
 
the
 
transaction
 
price,
 
including
 
estimated
 
allowances
 
for
 
returns,
 
unsalable
product,
 
and
 
prompt
 
pay
 
discounts.
 
Trade
 
promotions
 
are
 
recorded
 
using
 
significant
 
judgment
 
of
 
estimated
 
participation
 
and
performance levels
 
for offered
 
programs at the
 
time of sale.
 
Differences between
 
the estimated and
 
actual reduction to
 
the transaction
price
 
are
 
recognized
 
as
 
a
 
change
 
in
 
estimate
 
in
 
a
 
subsequent
 
period.
 
Our
 
accrued
 
trade
 
and
 
coupon
 
promotion
 
liabilities
 
were
$394 million
 
as of
 
May 28,
 
2023, and
 
$420 million
 
as of
 
May 29,
 
2022. Because
 
these amounts
 
are significant,
 
if our
 
estimates are
inaccurate we would have to make adjustments in subsequent periods that could have
 
a significant effect on our results of operations.
Valuation
 
of Long-Lived Assets
 
We
 
estimate
 
the useful
 
lives
 
of long
 
-lived
 
assets and
 
make
 
estimates concerning
 
undiscounted
 
cash flows
 
to review
 
for impairment
whenever
 
events or
 
changes in
 
circumstances indicate
 
that the
 
carrying
 
amount of
 
an asset
 
(or asset
 
group)
 
may not
 
be recoverable.
Fair value is measured using discounted cash flows or independent appraisals,
 
as appropriate.
Intangible Assets
 
Goodwill
 
and
 
other
 
indefinite-lived
 
intangible
 
assets
 
are
 
not
 
subject
 
to
 
amortization
 
and
 
are
 
tested
 
for
 
impairment
 
annually
 
and
whenever
 
events or
 
changes in
 
circumstances
 
indicate
 
that impairment
 
may have
 
occurred. Our
 
estimates of
 
fair value
 
for
 
goodwill
impairment
 
testing
 
are determined
 
based on
 
a
 
discounted
 
cash
 
flow
 
model.
 
We
 
use
 
inputs from
 
our
 
long-range
 
planning
 
process to
determine
 
growth
 
rates
 
for
 
sales
 
and
 
profits.
 
We
 
also
 
make
 
estimates
 
of
 
discount
 
rates,
 
perpetuity
 
growth
 
assumptions,
 
market
comparables, and other factors.
 
We evaluate the
 
useful lives of our other intangible assets, mainly brands, to
 
determine if they are finite or indefinite-lived.
 
Reaching a
determination
 
on
 
useful
 
life
 
requires
 
significant
 
judgments
 
and
 
assumptions
 
regarding
 
the
 
future
 
effects
 
of
 
obsolescence,
 
demand,
competition, other economic
 
factors (such as the
 
stability of the industry,
 
known technological advances,
 
legislative action that
 
results
in an uncertain or
 
changing regulatory environment,
 
and expected changes in
 
distribution channels), the level
 
of required maintenance
expenditures,
 
and
 
the
 
expected
 
lives
 
of
 
other
 
related
 
groups
 
of
 
assets.
 
Intangible
 
assets
 
that
 
are
 
deemed
 
to
 
have
 
finite
 
lives
 
are
amortized
 
on a
 
straight-line basis
 
over their
 
useful lives,
 
generally
 
ranging from
 
4 to
 
30 years.
 
Our estimate
 
of the
 
fair value
 
of our
brand
 
assets
 
is
 
based
 
on
 
a
 
discounted
 
cash
 
flow
 
model
 
using
 
inputs
 
which
 
include
 
projected
 
revenues
 
from
 
our
 
long-range
 
plan,
assumed royalty rates that could be payable if we did not own the brands, and
 
a discount rate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
As of
 
May
 
28,
 
2023,
 
we
 
had
 
$21 billion
 
of
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets. While
 
we
 
currently
 
believe
 
that
 
the
 
fair
value of each
 
intangible exceeds its carrying
 
value,
 
and that those intangibles
 
will contribute indefinitely
 
to our cash flows,
 
materially
different
 
assumptions
 
regarding
 
future performance
 
of our
 
businesses
 
or
 
a different
 
weighted-average
 
cost
 
of capital
 
could
 
result
 
in
material impairment losses
 
and amortization expense.
 
We
 
performed our fiscal
 
2023
 
assessment of our
 
intangible assets as of
 
the first
day
 
of
 
the
 
second
 
quarter
 
of
 
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
 
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
values
 
were
 
substantially
 
in
 
excess
 
of
 
the
 
carrying
 
value,
 
except
 
for
Uncle
 
Toby’s
band
 
intangible
 
asset.
 
In
 
addition,
 
while
 
having
significant
 
coverage
 
as
 
of
 
our
 
fiscal
 
2023
 
assessment
 
date,
 
the
Progresso
and
EPIC
 
brand
 
intangible
 
assets
 
had
 
risk
 
of
 
decreasing
coverage. We will continue
 
to monitor these businesses for potential impairment.
Stock-based Compensation
 
The valuation of
 
stock options is a
 
significant accounting estimate
 
that requires us to
 
use judgments and
 
assumptions that are
 
likely to
have a material
 
impact on
 
our financial statements.
 
Annually,
 
we make predictive
 
assumptions regarding
 
future stock price
 
volatility,
employee exercise behavior,
 
dividend yield, and
 
the forfeiture rate. For
 
more information on
 
these assumptions, please
 
see Note 12
 
to
the Consolidated Financial Statements in Item 8 of this report.
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
Fiscal Year
2023
2022
2021
Estimated fair values of stock options granted
$
14.16
$
8.77
$
8.03
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
0.7
%
Expected term
8.5
years
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
19.5
%
Dividend yield
3.1
%
3.4
%
3.3
%
The risk-free interest rate
 
for periods during the
 
expected term of the options
 
is based on the U.S. Treasury
 
zero-coupon yield curve in
effect at the time of grant. An increase in the expected term by
 
1 year, leaving all other assumptions constant, would
 
decrease the grant
date
 
fair value
 
by less
 
than
 
1 percent
 
.
 
If all
 
other
 
assumptions
 
are held
 
constant,
 
a one
 
percentage
 
point
 
increase
 
in our
 
fiscal
 
2023
volatility assumption would increase the grant date fair value of our fiscal 2023
 
option awards by 5 percent.
To
 
the extent
 
that actual
 
outcomes differ
 
from our
 
assumptions, we
 
are not
 
required to
 
true up
 
grant-date fair
 
value-based expense
 
to
final
 
intrinsic
 
values.
 
Historical
 
data
 
has
 
a
 
significant
 
bearing
 
on
 
our
 
forward-looking
 
assumptions.
 
Significant
 
variances
 
between
actual and predicted experience could lead to prospective
 
revisions in our assumptions, which could then significantly
 
impact the year-
over-year comparability of stock-based compensation expense.
Any corporate
 
income tax
 
benefit realized
 
upon exercise
 
or vesting
 
of an
 
award in
 
excess of
 
that previously
 
recognized in
 
earnings
(referred to as
 
a windfall tax benefit)
 
is presented in the
 
Consolidated Statements of
 
Cash Flows as an
 
operating cash flow.
 
The actual
impact on future years’
 
cash flows will depend,
 
in part, on the volume
 
of employee stock option
 
exercises during a particular
 
year and
the
 
relationship
 
between
 
the
 
exercise-date
 
market
 
value
 
of
 
the
 
underlying
 
stock
 
and
 
the
 
original
 
grant-date
 
fair
 
value
 
previously
determined for financial reporting purposes.
Realized windfall
 
tax benefits
 
and shortfall
 
tax deficiencies
 
related to the
 
exercise or
 
vesting of
 
stock-based awards
 
are recognized
 
in
the Consolidated Statement
 
of Earnings. Because
 
employee stock option
 
exercise behavior is not
 
within our control,
 
it is possible that
significantly different reported results could occur if different
 
assumptions or conditions were to prevail.
 
Income Taxes
We
 
apply a more-likely-than-not
 
threshold to the
 
recognition and derecognition
 
of uncertain tax
 
positions. Accordingly,
 
we recognize
the amount of
 
tax benefit that
 
has a greater
 
than 50 percent
 
likelihood of being
 
ultimately realized upon
 
settlement. Future
 
changes in
judgment related
 
to the
 
expected ultimate
 
resolution of
 
uncertain tax
 
positions will
 
affect earnings
 
in the
 
period of
 
such change.
 
For
more information on income taxes, please see Note 15 to the Consolidated Financial
 
Statements in Item 8 of this report.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
 
Benefit Plans
We have
 
defined benefit pension plans
 
covering many employees in the United
 
States, Canada, Switzerland, and the
 
United Kingdom.
We also
 
sponsor plans that provide
 
health care benefits to
 
many of our retirees
 
in the United States, Canada,
 
and Brazil. Under certain
circumstances,
 
we
 
also
 
provide
 
accruable
 
benefits,
 
primarily
 
severance,
 
to
 
former
 
and
 
inactive
 
employees
 
in
 
the
 
United
 
States,
Canada,
 
and
 
Mexico.
 
Please see
 
Note
 
14
 
to
 
the
 
Consolidated
 
Financial
 
Statements
 
in
 
Item
 
8
 
of
 
this
 
report
 
for
 
a
 
description
 
of
 
our
defined benefit pension, other postretirement benefit, and postemployment
 
benefit plans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
We
 
recognize
 
benefits
 
provided
 
during
 
retirement
 
or
 
following
 
employment
 
over
 
the
 
plan
 
participants’
 
active
 
working
 
lives.
Accordingly,
 
we
 
make
 
various
 
assumptions
 
to
 
predict
 
and
 
measure
 
costs
 
and
 
obligations
 
many
 
years
 
prior
 
to
 
the
 
settlement
 
of
 
our
obligations.
 
Assumptions
 
that
 
require
 
significant
 
management
 
judgment
 
and
 
have
 
a material
 
impact
 
on
 
the
 
measurement
 
of
 
our
 
net
periodic
 
benefit
 
expense
 
or
 
income
 
and
 
accumulated
 
benefit
 
obligations
 
include
 
the
 
long-term
 
rates
 
of
 
return
 
on
 
plan
 
assets,
 
the
interest rates used to discount the obligations for our benefit plans, and health
 
care cost trend rates.
Expected Rate of Return on Plan Assets
Our expected
 
rate of return
 
on plan assets
 
is determined
 
by our asset
 
allocation, our
 
historical long-term
 
investment performance,
 
our
estimate of future long-term returns
 
by asset class (using input from our
 
actuaries, investment services, and investment
 
managers), and
long-term inflation
 
assumptions. We
 
review this assumption
 
annually for
 
each plan; however,
 
our annual
 
investment performance
 
for
one particular year does not, by itself, significantly influence our evaluation.
Our
 
historical
 
investment
 
returns
 
(compound
 
annual
 
growth
 
rates)
 
for
 
our
 
United
 
States
 
defined
 
benefit
 
pension
 
and
 
other
postretirement
 
benefit
 
plan
 
assets
 
were
 
a
 
5.7
 
percent
 
loss
 
in
 
the
 
1-year
 
period
 
ended
 
May
 
28,
 
2023
 
and
 
returns
 
of
 
3.4
 
percent,
 
5.9
percent, 5.5 percent, and 7.7 percent for the 5, 10, 15, and 20-year periods
 
ended May 28, 2023.
On a weighted-average basis, the
 
expected rate of return for all
 
defined benefit plans was 6.70
 
percent for fiscal 2023, 5.85
 
percent for
fiscal 2022, and 5.72 percent for fiscal 2021.
 
For fiscal 2024, we increased our weighted-average expected
 
rate of return on plan assets
for our principal
 
defined benefit pension
 
and other postretirement
 
plans in the
 
United States to
 
7.20 percent due
 
to higher prospective
long-term asset returns primarily on fixed income investments.
Lowering
 
the
 
expected
 
long-term
 
rate
 
of
 
return
 
on
 
assets
 
by
 
100
 
basis
 
points
 
would
 
increase
 
our
 
net
 
pension
 
and
 
postretirement
expense by $62 million for
 
fiscal 2024. A market-related
 
valuation basis is used to reduce
 
year-to-year expense volatility.
 
The market-
related valuation
 
recognizes certain
 
investment gains
 
or losses
 
over a
 
five-year period
 
from the
 
year in
 
which they
 
occur.
 
Investment
gains or
 
losses for
 
this purpose
 
are the difference
 
between the
 
expected return
 
calculated using
 
the market-related
 
value of
 
assets and
the
 
actual
 
return
 
based
 
on
 
the
 
market-related
 
value
 
of
 
assets.
 
Our
 
outside
 
actuaries
 
perform
 
these
 
calculations
 
as
 
part
 
of
 
our
determination of annual expense or income.
Discount Rates
We
 
estimate
 
the
 
service
 
and
 
interest
 
cost
 
components
 
of
 
the
 
net
 
periodic
 
benefit
 
expense
 
for
 
our
 
United
 
States
 
and
 
most
 
of
 
our
international
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
 
postemployment
 
benefit
 
plans
 
utilizing
 
a
 
full
 
yield
 
curve
approach
 
by applying
 
the specific
 
spot rates
 
along
 
the yield
 
curve used
 
to determine
 
the benefit
 
obligation
 
to the
 
relevant projected
cash flows. Our
 
discount rate assumptions
 
are determined annually
 
as of May 31
 
for our defined
 
benefit pension, other
 
postretirement
benefit,
 
and
 
postemployment
 
benefit
 
plan
 
obligations.
 
We
 
work
 
with
 
our
 
outside
 
actuaries
 
to
 
determine
 
the
 
timing
 
and
 
amount
 
of
expected future cash outflows to plan
 
participants and, using the Aa Above
 
Median corporate bond yield, to develop a
 
forward interest
rate curve, including
 
a margin to
 
that index based
 
on our credit
 
risk. This forward
 
interest rate curve
 
is applied to
 
our expected
 
future
cash outflows to determine our discount rate assumptions.
Our weighted-average discount rates were as follows:
Defined Benefit
Pension Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Effective rate for fiscal 2024 service costs
5.27
%
5.15
%
5.00
%
Effective rate for fiscal 2024 interest costs
5.06
%
4.96
%
4.61
%
Obligations as of May 31, 2023
5.18
%
5.19
%
4.55
%
Effective rate for fiscal 2023 service costs
4.57
%
4.41
%
3.69
%
Effective rate for fiscal 2023 interest costs
4.03
%
3.80
%
3.35
%
Obligations as of May 31, 2022
4.39
%
4.36
%
3.62
%
Effective rate for fiscal 2022 service costs
3.53
%
3.34
%
2.46
%
Effective rate for fiscal 2022 interest costs
2.42
%
2.08
%
1.48
%
Lowering
 
the
 
discount
 
rates
 
by
 
100
 
basis
 
points
 
would
 
increase
 
our
 
net
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
postemployment benefit plan expense
 
for fiscal 2024 by approximately
 
$30 million. All obligation-related
 
experience gains and losses
are amortized
 
using
 
a straight-line
 
method over
 
the average
 
remaining
 
service period
 
of active
 
plan participants
 
or over
 
the average
remaining lifetime of the remaining plan participants if the plan is viewed as “all or
 
almost all” inactive participants.
 
 
 
29
Health Care Cost Trend
 
Rates
 
We
 
review our
 
health care
 
cost trend
 
rates annually.
 
Our review
 
is based
 
on data
 
we collect
 
about our
 
health care
 
claims experience
and information
 
provided by our
 
actuaries. This information
 
includes recent
 
plan experience,
 
plan design, overall
 
industry experience
and projections, and
 
assumptions used by other
 
similar organizations.
 
Our initial health
 
care cost trend
 
rate is adjusted
 
as necessary to
remain consistent
 
with this
 
review,
 
recent experiences,
 
and short-term
 
expectations. Our
 
initial health
 
care cost
 
trend rate
 
assumption
is 6.6
 
percent for
 
retirees age
 
65 and
 
over and
 
6.6 percent
 
for retirees
 
under age
 
65 at
 
the end
 
of fiscal
 
2023. Rates
 
are graded
 
down
annually until
 
the ultimate
 
trend rate
 
of 4.5
 
percent is
 
reached in
 
2032 for
 
all retirees.
 
The trend
 
rates are
 
applicable for
 
calculations
only if
 
the retirees’
 
benefits increase
 
as a
 
result of
 
health care
 
inflation. The
 
ultimate trend
 
rate is
 
adjusted annually,
 
as necessary,
 
to
approximate
 
the
 
current
 
economic
 
view
 
on
 
the
 
rate
 
of
 
long-term
 
inflation
 
plus
 
an
 
appropriate
 
health
 
care
 
cost
 
premium.
 
Assumed
trend rates for health care costs have an important effect on the
 
amounts reported for the other postretirement benefit plans.
Any
 
arising
 
health
 
care
 
claims cost-related
 
experience
 
gain
 
or
 
loss is
 
recognized
 
in the
 
calculation
 
of expected
 
future claims.
 
Once
recognized, experience gains and
 
losses are amortized using a straight
 
-line method over the average remaining
 
service period of active
plan participants
 
or over
 
the average
 
remaining lifetime
 
of the
 
remaining plan
 
participants if
 
the plan
 
is viewed
 
as “all
 
or almost
 
all”
inactive participants.
Financial Statement Impact
 
In
 
fiscal
 
2023,
 
we
 
recorded
 
net
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
 
postemployment
 
benefit
 
plan
 
income
 
of
$6 million
 
compared to
 
$26 million of
 
income in
 
fiscal 2022
 
and $4 million
 
of expense
 
in fiscal
 
2021. As
 
of May
 
28, 2023,
 
we had
cumulative unrecognized
 
actuarial net losses of
 
$2 billion on our
 
defined benefit pension plans
 
and cumulative unrecognized
 
actuarial
net
 
gains
 
of
 
$189 million
 
on
 
our
 
postretirement
 
and
 
postemployment
 
benefit
 
plans,
 
mainly
 
as
 
the
 
result
 
of
 
liability
 
increases
 
from
lower historical
 
interest rates. These
 
unrecognized actuarial net
 
losses will result
 
in increases in
 
our future pension
 
and postretirement
benefit expenses because they currently exceed the corridors defined by
 
GAAP.
Actual
 
future
 
net
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
 
postemployment
 
benefit
 
plan
 
income
 
or
 
expense
 
will
depend on
 
investment performance,
 
changes in
 
future discount
 
rates, changes
 
in health care
 
cost trend
 
rates, and
 
other factors
 
related
to the populations participating in these plans.
RECENTLY
 
ISSUED ACCOUNTING PRONOUNCEMENTS
In
 
December
 
2022,
 
the
 
Financial
 
Accounting
 
Standards
 
Board
 
(FASB)
 
issued
 
optional
 
accounting
 
guidance
 
for
 
a
 
limited
 
period
 
of
time
 
to
 
ease
 
the
 
potential
 
burden
 
in
 
accounting
 
for
 
reference
 
rate
 
reform.
 
The
 
new
 
standard
 
provides
 
expedients
 
and
 
exceptions
 
to
existing accounting requirements
 
for contract modifications and
 
hedge accounting related to
 
transitioning from discontinued
 
reference
rates,
 
such
 
as
 
LIBOR,
 
to
 
alternative
 
reference
 
rates,
 
if
 
certain
 
criteria
 
are
 
met.
 
The
 
new
 
accounting
 
requirements
 
can
 
be
 
applied
through
 
December 31,
 
2024.
 
We
 
have
 
reviewed
 
and
 
modified
 
certain
 
contracts,
 
where
 
necessary,
 
to
 
apply
 
a
 
new
 
reference
 
rate,
primarily the SOFR. The guidance
 
has not had and
 
is not expected to have
 
a material impact on
 
our results of operations
 
and financial
position. We
 
will continue
 
to review
 
our contracts
 
and arrangements
 
that will
 
be affected
 
by a
 
discontinued reference
 
rate during
 
the
transition period.
 
In September 2022,
 
the FASB
 
issued Accounting Standards
 
Update (ASU) 2022-04
 
requiring enhanced disclosures
 
related to supplier
financing programs.
 
The ASU
 
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.
 
The new disclosure requirements
are effective
 
for fiscal years beginning
 
after December 15, 2022,
 
with the exception
 
of the rollforward requirement,
 
which is effective
for fiscal years beginning
 
after December 15, 2023,
 
which for us is
 
the first quarter of
 
fiscal 2024 for the
 
primary requirement and
 
the
first quarter
 
of fiscal
 
2025 for
 
the rollforward
 
requirement. Early
 
adoption is
 
permitted. We
 
have historically
 
presented the
 
key terms
of these
 
programs
 
and the
 
associated obligation
 
outstanding. We
 
do not
 
expect this
 
ASU to
 
have a
 
material
 
impact on
 
our financial
statements and related disclosures.
NON-GAAP MEASURES
We
 
have
 
included
 
in
 
this
 
report
 
measures
 
of
 
financial
 
performance
 
that
 
are not
 
defined
 
by
 
GAAP.
 
We
 
believe
 
that
 
these
 
measures
provide useful information to investors and include these measures in other
 
communications to investors.
 
For each
 
of these
 
non-GAAP financial
 
measures, we
 
are providing
 
below a
 
reconciliation of
 
the differences
 
between the
 
non-GAAP
measure and the most
 
directly comparable GAAP measure,
 
an explanation of why
 
we believe the non-GAAP
 
measure provides useful
information to
 
investors, and
 
any additional
 
material purposes
 
for which
 
our management
 
or Board
 
of Directors
 
uses the
 
non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not
 
in lieu of, the comparable GAAP measure.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
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.
Divestitures gain, net
Net divestitures
 
gain primarily
 
related to
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly Salad
 
side dishes
 
business in
 
fiscal 2023.
Divestitures gain
 
related to
 
the sale
 
of our
 
interests in
 
Yoplait
 
SAS, Yoplait
 
Marques SNC,
 
and Liberté
 
Marques Sàrl
 
and the
 
sale of
our European dough businesses in fiscal 2022.
 
Please see Note 3 to the Consolidated Financial Statements in Item 8 of this report.
Mark-to-market effects
Net
 
mark-to-market
 
valuation
 
of
 
certain
 
commodity
 
positions
 
recognized
 
in
 
unallocated
 
corporate
 
items.
 
Please
 
see
 
Note
 
8
 
to
 
the
Consolidated Financial Statements in Item 8 of this report.
Investment activity, net
Valuation
 
adjustments and the
 
loss on sale of
 
certain corporate investments
 
in fiscal 2023.
 
Valuation
 
adjustments and the
 
gain on sale
of certain corporate investments in fiscal 2022.
Restructuring charges (recoveries) and project-related
 
costs
Restructuring
 
charges
 
and
 
project-related
 
costs
 
for
 
global
 
supply
 
chain
 
actions,
 
network
 
optimization
 
actions,
 
and
 
previously
announced
 
restructuring
 
actions
 
in
 
fiscal
 
2023.
 
Restructuring
 
charges
 
for
 
International
 
restructuring
 
actions
 
and
 
net
 
restructuring
recoveries for previously announced restructuring
 
actions in fiscal 2022. Please see Note 4 to the
 
Consolidated Financial Statements in
Item 8 of this report.
Product recall, net
Voluntary
 
recall costs recorded in fiscal 2023 related to certain international
Häagen-Dazs
ice cream products, net of insurance
recovery.
Acquisition integration costs
Integration costs
 
primarily resulting
 
from the acquisition
 
of TNT Crust
 
in fiscal 2023.
 
Integration costs
 
resulting from
 
the acquisition
of Tyson Foods’ pet
 
treats business in fiscal 2022. Please see Note 3 to the Consolidated Financial Statements
 
in Item 8 of this report.
Transaction costs
Transaction
 
costs primarily
 
related to
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly Salad
 
side dish
 
business in
 
fiscal 2023.
 
Fiscal
2022 transaction
 
costs related
 
primarily to
 
the sale of
 
our interests in
 
Yoplait
 
SAS, Yoplait
 
Marques SNC,
 
and Liberté Marques
 
Sàrl,
the
 
sale
 
of
 
our
 
European
 
dough
 
businesses,
 
the
 
sale
 
of
 
our
 
Helper
 
main
 
meals
 
and
 
Suddenly
 
Salad
 
side
 
dishes
 
business,
 
and
 
the
acquisition of TNT Crust. Please see Note 3 to the Consolidated Financial Statements
 
in Item 8 of this report.
Non-income tax recovery
Recovery related to a Brazil indirect tax item recorded in fiscal 2022.
Tax item
Discrete
 
tax
 
benefit
 
recognized
 
in
 
fiscal
 
2022
 
related
 
to
 
a
 
release
 
of
 
a
 
valuation
 
allowance
 
associated
 
with
 
our
 
capital
 
loss
carryforwards expected to be used against future divestiture gains.
 
CPW restructuring charges
CPW restructuring charges related to previously announced
 
restructuring actions.
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,
 
as
well
 
as
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31
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:
Fiscal Year
2023
2022
Change
Operating profit as reported
$
3,433.8
$
3,475.8
(1)
%
Divestitures gain, net
(444.6)
(194.1)
Mark-to-market effects
291.9
(133.1)
Investment activity, net
84.0
14.7
Restructuring charges (recoveries)
61.0
(23.2)
Product recall, net
22.5
-
Acquisition integration costs
5.9
22.4
Project related costs
2.4
-
Transaction costs
0.4
72.8
Non-income tax recovery
-
(22.0)
Adjusted operating profit
$
3,457.3
$
3,213.3
8
%
Foreign currency exchange impact
Flat
Adjusted operating profit growth, on a constant-currency basis
8
%
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32
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 rate follows:
Fiscal Year
Per Share Data
2023
2022
2023 vs.
2022 Change
Diluted earnings per share, as reported
$
4.31
$
4.42
(2)
%
Divestitures gain, net
(0.62)
(0.31)
Mark-to-market effects
0.37
(0.17)
Investment activity, net
0.11
0.01
Restructuring charges (recoveries)
0.08
(0.03)
Product recall, net
0.03
-
Acquisition integration costs
0.01
0.03
Transaction costs
-
0.09
Non-income tax recovery
-
(0.02)
Tax item
-
(0.08)
Adjusted diluted earnings per share
$
4.30
$
3.94
9
%
Foreign currency exchange impact
(1)
pt
Adjusted diluted earnings per share growth, on a constant-currency basis
10
%
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
Free Cash Flow Conversion Rate
We
 
believe
 
this
 
measure
 
provides
 
useful
 
information
 
to
 
investors
 
because
 
it
 
is
 
important
 
for
 
assessing
 
our
 
efficiency
 
in
 
converting
earnings
 
to
 
cash
 
and
 
returning
 
cash
 
to
 
shareholders.
 
The
 
calculation
 
of
 
free
 
cash
 
flow
 
conversion
 
rate
 
and
 
net
 
cash
 
provided
 
by
operating activities conversion rate, its equivalent GAAP measure, follows:
In Millions
Fiscal 2023
Net earnings, including earnings attributable to redeemable and noncontrolling
 
interests, as reported
$
2,609.6
Divestitures gain, net of tax
(371.4)
Mark-to-market effects, net of tax
224.8
Investment activity, net,
 
net of tax
66.0
Restructuring charges, net of tax
48.4
Product recall, net, net of tax
17.3
Acquisition integration costs, net of tax
4.6
Project related costs, net of tax
1.6
CPW restructuring charges, net of tax
1.0
Transaction costs, net of tax
0.2
Adjusted net earnings, including earnings attributable to redeemable and
 
noncontrolling interests
$
2,602.2
Net cash provided by operating activities
2,778.6
Purchases of land, buildings, and equipment
(689.5)
Free cash flow
$
2,089.1
Net cash provided by operating activities conversion rate
106%
Free cash flow conversion rate
80%
Note: Table may not foot due 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34
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 year-to-year basis.
Our adjusted operating profit margins are calculated as follows:
Fiscal Year
Percent of Net Sales
2023
2022
Operating profit as reported
$
3,433.8
17.1
%
$
3,475.8
18.3
%
Divestitures gain, net
(444.6)
(2.2)
%
(194.1)
(1.0)
%
Mark-to-market effects
291.9
1.5
%
(133.1)
(0.7)
%
Investment activity, net
84.0
0.4
%
14.7
0.1
%
Restructuring charges (recoveries)
61.0
0.3
%
(23.2)
(0.1)
%
Product recall, net
22.5
0.1
%
-
-
%
Acquisition integration costs
5.9
-
%
22.4
0.1
%
Project-related costs
2.4
-
%
-
-
%
Transaction costs
0.4
-
%
72.8
0.4
%
Non-income tax recovery
-
-
%
(22.0)
(0.1)
%
Adjusted operating profit
$
3,457.3
17.2
%
$
3,213.3
16.9
%
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35
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:
Fiscal Year
 
Ended
2023
2022
In Millions
(Except Per Share Data)
Pretax
Earnings (a)
Income
Taxes
Pretax
Earnings (a)
Income
Taxes
As reported
$3,140.5
$612.2
$3,209.6
$586.3
Divestitures gain, net
(444.6)
(73.2)
(194.1)
(5.1)
Mark-to-market effects
291.9
67.1
(133.1)
(30.6)
Investment activity, net
84.0
18.0
14.7
8.5
Restructuring charges (recoveries)
61.0
12.6
(23.2)
(6.4)
Product recall, net
22.5
5.2
-
-
Acquisition integration costs
5.9
1.3
22.4
5.1
Project related costs
2.4
0.8
-
-
Transaction costs
0.4
0.2
72.8
16.4
Tax item
-
-
-
50.7
Non-income tax recovery
-
-
(22.0)
(7.5)
As adjusted
$3,164.0
$644.1
$2,947.1
$617.4
Effective tax rate:
As reported
19.5%
18.3%
As adjusted
20.4%
20.9%
Sum of adjustments to income taxes
$32.0
$31.1
Average number
 
of common shares - diluted EPS
601.2
612.6
Impact of income tax adjustments on adjusted diluted EPS
$(0.05)
$(0.05)
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36
Constant-currency After-Tax
 
Earnings from Joint Ventures
 
Growth Rate
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 rate on
 
a constant-currency basis are calculated as follows:
Fiscal 2023
Percentage change in after-tax earnings from joint ventures as reported
(27)
%
Impact of foreign currency exchange
(10)
pts
Percentage change in after-tax earnings from joint ventures
 
on a constant-currency basis
(18)
%
Note: Table may not foot due to rounding.
Net Sales Growth Rate for Canada Operating Unit on a Constant-currency
 
Basis
We
 
believe
 
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 rate for our Canada operating unit on a constant-currency
 
basis is calculated as follows:
Fiscal 2023
Percentage change in net sales as reported
2
%
Impact of foreign currency exchange
(6)
pts
Percentage change in net sales on a constant-currency basis
8
%
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.
Our segments’ operating profit growth rates on a constant-currency
 
basis are calculated as follows:
Fiscal 2023
Percentage Change
in Operating Profit
as Reported
Impact of Foreign
Currency Exchange
Percentage Change
in Operating Profit
on Constant-
Currency Basis
North America Retail
18
%
Flat
18
%
International
(30)
%
(5)
pts
(25)
%
Pet
(5)
%
Flat
(5)
%
North America Foodservice
14
%
Flat
14
%
Note: Table may not foot due to rounding.
Forward-Looking Financial Measures
Our fiscal 202
 
4
 
outlook for organic
 
net sales growth,
 
constant-currency adjusted
 
operating profit,
 
adjusted diluted
 
EPS, and free
 
cash
flow conversion
 
are non-GAAP financial
 
measures that
 
exclude, or
 
have otherwise
 
been adjusted
 
for, items
 
impacting comparability,
including
 
the
 
effect
 
of
 
foreign
 
currency
 
exchange
 
rate
 
fluctuations,
 
restructuring
 
charges
 
and
 
project-related
 
costs,
 
acquisition
transaction
 
and
 
integration
 
costs, acquisitions,
 
divestitures,
 
and
 
mark-to-market
 
effects.
 
We
 
are
 
not
 
able
 
to reconcile
 
these
 
forward-
looking
 
non-GAAP
 
financial
 
measures
 
to
 
their
 
most
 
directly
 
comparable
 
forward-looking
 
GAAP
 
financial
 
measures
 
without
unreasonable
 
efforts
 
because we
 
are unable
 
to predict
 
with a
 
reasonable
 
degree of
 
certainty
 
the actual
 
impact
 
of
 
changes in
 
foreign
 
 
 
 
 
 
 
 
 
 
37
currency
 
exchange
 
rates
 
and
 
commodity
 
prices
 
or
 
the
 
timing
 
or
 
impact
 
of
 
acquisitions,
 
divestitures,
 
and
 
restructuring
 
actions
throughout fiscal 2024. The unavailable information could have a significant
 
impact on our fiscal 2024
 
GAAP financial results.
 
For
 
fiscal
 
2024,
 
we
 
currently expect:
 
foreign
 
currency
 
exchange
 
rates
 
(based
 
on
 
a blend
 
of
 
forward
 
and
 
forecasted
 
rates and
 
hedge
positions) and acquisitions and
 
divestitures completed prior to fiscal
 
2024 to reduce net sales growth
 
by approximately one half of
 
one
percent; and restructuring charges to total approximately $15
 
million to $20 million.
 
ITEM 7A - QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
 
We
 
are
 
exposed
 
to
 
market
 
risk
 
stemming
 
from
 
changes
 
in
 
interest
 
and
 
foreign
 
exchange
 
rates
 
and
 
commodity
 
and
 
equity
 
prices.
Changes
 
in
 
these
 
factors
 
could
 
cause
 
fluctuations
 
in
 
our
 
earnings
 
and
 
cash
 
flows.
 
In
 
the
 
normal
 
course
 
of
 
business,
 
we
 
actively
manage
 
our
 
exposure
 
to
 
these market
 
risks
 
by entering
 
into various
 
hedging
 
transactions,
 
authorized
 
under
 
established
 
policies
 
that
place controls
 
on these
 
activities. The
 
counterparties
 
in these
 
transactions are
 
generally
 
highly rated
 
institutions. We
 
establish
 
credit
limits for
 
each counterparty.
 
Our hedging
 
transactions include
 
but are
 
not limited
 
to a variety
 
of derivative
 
financial instruments.
 
For
information
 
on
 
interest
 
rate,
 
foreign
 
exchange,
 
commodity
 
price,
 
and
 
equity
 
instrument
 
risk,
 
please
 
see
 
Note
 
8
 
to
 
the
 
Consolidated
Financial Statements in Item 8 of this report.
VALUE
 
AT RISK
The
 
estimates
 
in
 
the
 
table below
 
are
 
intended
 
to measure
 
the
 
maximum
 
potential
 
fair value
 
we
 
could
 
lose
 
in one
 
day
 
from
 
adverse
changes
 
in
 
market
 
interest
 
rates,
 
foreign
 
exchange
 
rates,
 
commodity
 
prices,
 
and
 
equity
 
prices
 
under
 
normal
 
market
 
conditions.
A
Monte Carlo
 
value-at-risk (VAR)
 
methodology was
 
used to
 
quantify the
 
market risk
 
for our
 
exposures. The
 
models assumed
 
normal
market conditions and used a 95 percent confidence level.
The
 
VAR
 
calculation
 
used
 
historical
 
interest
 
and
 
foreign
 
exchange
 
rates,
 
and
 
commodity
 
and
 
equity
 
prices
 
from
 
the
 
past
 
year
 
to
estimate the
 
potential volatility
 
and correlation
 
of these
 
rates in
 
the future.
 
The market
 
data were
 
drawn from
 
the RiskMetrics™
 
data
set.
 
The
 
calculations
 
are
 
not
 
intended
 
to
 
represent
 
actual
 
losses
 
in
 
fair
 
value
 
that
 
we
 
expect
 
to
 
incur.
 
Further,
 
since
 
the
 
hedging
instrument (the derivative) inversely correlates
 
with the underlying exposure, we would
 
expect that any loss or gain in the fair
 
value of
our
 
derivatives
 
would
 
be
 
generally
 
offset
 
by
 
an
 
increase
 
or
 
decrease
 
in
 
the
 
fair
 
value
 
of
 
the
 
underlying
 
exposure.
 
The
 
positions
included
 
in the
 
calculations were:
 
debt; investments;
 
interest rate
 
swaps; foreign
 
exchange forwards;
 
commodity swaps,
 
futures, and
options; and
 
equity instruments.
 
The calculations
 
do not
 
include the
 
underlying foreign
 
exchange and
 
commodities or
 
equity-related
positions that are offset by these market-risk-sensitive instruments.
 
The table below
 
presents the estimated maximum
 
potential VAR
 
arising from a
 
one-day loss in
 
fair value for
 
our interest rate, foreign
currency, commodity,
 
and equity market-risk-sensitive instruments outstanding as of May 28,
 
2023.
In Millions
May 28, 2023
Average During
Fiscal 2023
May 29, 2022
Analysis of Change
Interest rate instruments
$
65.3
$
52.1
$
40.9
Higher Market Volatility
Foreign currency instruments
36.7
33.3
20.3
Exchange Rate Volatility
Commodity instruments
7.6
9.5
12.9
Reduced Market Volatility
Equity instruments
2.8
3.1
2.5
Higher Market Volatility
 
38
CAUTIONARY STATEMENT
 
RELEVANT
 
TO FORWARD
 
-LOOKING INFORMATION
 
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
 
SECURITIES LITIGATION
 
REFORM ACT OF 1995
This report
 
contains or
 
incorporates by
 
reference
 
forward-looking
 
statements within
 
the meaning
 
of the
 
Private Securities
 
Litigation
Reform Act
 
of 1995
 
that are
 
based on
 
our current
 
expectations and
 
assumptions. We
 
also may
 
make written
 
or oral
 
forward-looking
statements, including statements contained in our filings with the
 
SEC and in our reports to shareholders.
The words or
 
phrases “will likely
 
result,” “are expected
 
to,” “may continue,”
 
“is anticipated,” “estimate,”
 
“plan,” “project,” or
 
similar
expressions identify
 
“forward-looking statements”
 
within the
 
meaning of
 
the Private
 
Securities Litigation
 
Reform Act
 
of 1995.
 
Such
statements are
 
subject to
 
certain risks
 
and uncertainties
 
that could
 
cause actual
 
results to
 
differ
 
materially from
 
historical results
 
and
those currently anticipated or projected. We
 
wish to caution you not to place undue reliance on any such forward-looking statements.
In connection
 
with the “safe
 
harbor” provisions
 
of the Private
 
Securities Litigation
 
Reform Act of
 
1995, we are
 
identifying important
factors
 
that could
 
affect
 
our financial
 
performance
 
and could
 
cause our
 
actual results
 
in future
 
periods
 
to differ
 
materially from
 
any
current opinions or statements.
Our
 
future
 
results
 
could
 
be
 
affected
 
by
 
a
 
variety
 
of
 
factors,
 
such
 
as:
 
disruptions
 
or
 
inefficiencies
 
in
 
the
 
supply
 
chain;
 
competitive
dynamics in the consumer
 
foods industry and the markets for
 
our products, including new product
 
introductions, advertising activities,
pricing actions, and promotional
 
activities of our competitors;
 
economic conditions, including
 
changes in inflation rates,
 
interest rates,
tax
 
rates,
 
or
 
the
 
availability
 
of
 
capital;
 
product
 
development
 
and
 
innovation;
 
consumer
 
acceptance
 
of
 
new
 
products
 
and
 
product
improvements;
 
consumer
 
reaction
 
to
 
pricing
 
actions
 
and
 
changes
 
in
 
promotion
 
levels;
 
acquisitions
 
or
 
dispositions
 
of
 
businesses
 
or
assets; changes in capital structure;
 
changes in the legal and regulatory
 
environment, including tax legislation,
 
labeling and advertising
regulations, and litigation; impairments in the carrying
 
value of goodwill, other intangible assets, or other long
 
-lived assets, or changes
in
 
the
 
useful
 
lives
 
of
 
other
 
intangible
 
assets;
 
changes
 
in
 
accounting
 
standards
 
and
 
the
 
impact
 
of
 
significant
 
accounting
 
estimates;
product quality
 
and safety
 
issues, including
 
recalls and product
 
liability; changes
 
in consumer
 
demand for our
 
products; effectiveness
of advertising,
 
marketing,
 
and promotional
 
programs;
 
changes
 
in consumer
 
behavior,
 
trends, and
 
preferences,
 
including
 
weight
 
loss
trends; consumer perception
 
of health-related issues,
 
including obesity; consolidation
 
in the retail environment;
 
changes in purchasing
and
 
inventory
 
levels
 
of
 
significant
 
customers;
 
fluctuations
 
in
 
the
 
cost
 
and
 
availability
 
of
 
supply
 
chain
 
resources,
 
including
 
raw
materials,
 
packaging,
 
energy,
 
and
 
transportation;
 
effectiveness
 
of
 
restructuring
 
and
 
cost
 
saving
 
initiatives;
 
volatility
 
in
 
the
 
market
value of
 
derivatives used to
 
manage price
 
risk for certain
 
commodities; benefit
 
plan expenses due
 
to changes
 
in plan asset
 
values and
discount rates used to determine plan liabilities; failure
 
or breach of our information technology systems;
 
foreign economic conditions,
including currency rate fluctuations; and political unrest in foreign markets
 
and economic uncertainty due to terrorism or war.
You
 
should also consider the risk factors that we identify in Item 1A of this report, which could also
 
affect our future results.
We undertake
 
no obligation to publicly revise any forward-looking
 
statements to reflect events or circumstances
 
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
39
ITEM 8 - Financial Statements and Supplementary Data
 
REPORT OF MANAGEMENT RESPONSIBILITIES
The
 
management
 
of
 
General
 
Mills,
 
Inc.
 
is
 
responsible
 
for
 
the
 
fairness
 
and
 
accuracy
 
of
 
the
 
consolidated
 
financial
 
statements.
 
The
statements
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
accounting
 
principles
 
that
 
are
 
generally
 
accepted
 
in
 
the
 
United
 
States,
 
using
management’s
 
best estimates and judgments where
 
appropriate. The financial information throughout
 
this Annual Report on Form
 
10-
K is consistent with our consolidated financial statements.
Management
 
has established
 
a system
 
of internal
 
controls that
 
provides
 
reasonable
 
assurance that
 
assets are
 
adequately
 
safeguarded
and
 
transactions
 
are
 
recorded
 
accurately
 
in
 
all
 
material
 
respects,
 
in
 
accordance
 
with
 
management’s
 
authorization.
 
We
 
maintain
 
a
strong
 
audit program
 
that independently
 
evaluates
 
the adequacy
 
and effectiveness
 
of internal
 
controls. Our
 
internal controls
 
provide
for
 
appropriate
 
separation
 
of
 
duties
 
and
 
responsibilities,
 
and
 
there
 
are
 
documented
 
policies
 
regarding
 
use
 
of
 
our
 
assets
 
and
 
proper
financial reporting. These formally stated and regularly communicated
 
policies demand highly ethical conduct from all employees.
The Audit
 
Committee of
 
the Board
 
of Directors
 
meets regularly
 
with management,
 
internal auditors,
 
and our
 
independent registered
public
 
accounting
 
firm
 
to
 
review
 
internal
 
control,
 
auditing,
 
and
 
financial
 
reporting
 
matters.
 
The
 
independent
 
registered
 
public
accounting firm, internal auditors, and employees have full and free access to
 
the Audit Committee at any time.
The Audit
 
Committee reviewed
 
and approved
 
the Company’s
 
annual financial
 
statements. The
 
Audit Committee
 
recommended,
 
and
the Board
 
of Directors
 
approved, that
 
the consolidated
 
financial statements
 
be included
 
in the
 
Annual Report.
 
The Audit
 
Committee
also appointed KPMG LLP to serve as the Company’s
 
independent registered public accounting firm for fiscal 2024.
/s/ J. L. Harmening
 
/s/ K. A. Bruce
 
J. L. Harmening
 
K. A. Bruce
 
Chief Executive Officer
 
Chief Financial Officer
 
June 28, 2023
 
40
Report of Independent Registered Public Accounting Firm
To the Stockholders
 
and Board of Directors
General Mills, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control
 
Over Financial Reporting
We
 
have
 
audited
 
the
 
accompanying
 
consolidated
 
balance
 
sheets
 
of
 
General
 
Mills,
 
Inc. and
 
subsidiaries
 
(the
 
Company)
 
as
 
of
May 28, 2023, and May 29, 2022,
 
the related consolidated statements of
 
earnings, comprehensive income, total equity
 
and redeemable
interest,
 
and
 
cash
 
flows
 
for
 
each
 
of
 
the
 
years
 
in
 
the
 
three-year
 
period
 
ended
 
May 28, 2023,
 
and
 
the
 
related
 
notes
 
and
 
financial
statement schedule
 
II (collectively,
 
the consolidated
 
financial statements).
 
We
 
also have
 
audited the
 
Company’s
 
internal control
 
over
financial reporting as
 
of May 28, 2023, based
 
on criteria established
 
in
Internal Control
 
– Integrated Framework
 
(2013)
 
issued by the
Committee of Sponsoring Organizations of the Treadway
 
Commission.
In our
 
opinion, the
 
consolidated financial
 
statements referred
 
to above
 
present fairly,
 
in all material
 
respects, the
 
financial position
 
of
the Company
 
as of
 
May 28, 2023, and
 
May 29,
 
2022, and
 
the results
 
of its
 
operations and
 
its cash
 
flows for
 
each of
 
the years
 
in the
three-year
 
period
 
ended
 
May 28, 2023,
 
in
 
conformity
 
with
 
U.S.
 
generally
 
accepted
 
accounting
 
principles.
 
Also
 
in
 
our
 
opinion,
 
the
Company maintained,
 
in all material
 
respects, effective
 
internal control
 
over financial
 
reporting as of
 
May 28, 2023, based
 
on criteria
established
 
in
Internal
 
Control
 
–
 
Integrated
 
Framework
 
(2013)
 
issued
 
by
 
the
 
Committee
 
of
 
Sponsoring
 
Organizations
 
of
 
the
Treadway Commission.
Basis for Opinions
The Company’s
 
management is responsible
 
for these consolidated
 
financial statements, for
 
maintaining effective
 
internal control over
financial
 
reporting,
 
and
 
for
 
its
 
assessment
 
of
 
the
 
effectiveness
 
of
 
internal
 
control
 
over
 
financial
 
reporting,
 
included
 
in
 
the
accompanying Management's
 
Report on
 
Internal Control
 
over Financial
 
Reporting. Our
 
responsibility is
 
to express
 
an opinion
 
on the
Company’s
 
consolidated financial
 
statements and an
 
opinion on
 
the Company’s
 
internal control
 
over financial reporting
 
based on
 
our
audits. We
 
are a
 
public accounting
 
firm registered
 
with the
 
Public Company
 
Accounting Oversight
 
Board (United
 
States) (PCAOB)
and are required to
 
be independent with
 
respect to the Company
 
in accordance with the
 
U.S. federal securities laws
 
and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted
 
our audits in accordance with the
 
standards of the PCAOB. Those standards require
 
that we plan and perform the audits
to obtain
 
reasonable assurance
 
about whether
 
the consolidated
 
financial statements
 
are free
 
of material
 
misstatement, whether
 
due to
error or fraud, and whether effective internal control over financial
 
reporting was maintained in all material respects.
Our audits of
 
the consolidated financial
 
statements included performing
 
procedures to assess
 
the risks of
 
material misstatement
 
of the
consolidated
 
financial
 
statements,
 
whether
 
due
 
to
 
error
 
or
 
fraud,
 
and
 
performing
 
procedures
 
that
 
respond
 
to
 
those
 
risks.
 
Such
procedures
 
included
 
examining,
 
on
 
a
 
test
 
basis,
 
evidence
 
regarding
 
the
 
amounts
 
and
 
disclosures
 
in
 
the
 
consolidated
 
financial
statements. Our audits also included
 
evaluating the accounting principles
 
used and significant estimates made
 
by management, as well
as evaluating
 
the overall
 
presentation
 
of the
 
consolidated
 
financial
 
statements.
 
Our
 
audit of
 
internal
 
control over
 
financial
 
reporting
included obtaining an understanding
 
of internal control over financial
 
reporting, assessing the risk that
 
a material weakness exists,
 
and
testing and
 
evaluating the
 
design and
 
operating effectiveness
 
of internal
 
control based
 
on the
 
assessed risk.
 
Our audits
 
also included
performing
 
such other
 
procedures as
 
we considered
 
necessary in
 
the circumstances.
 
We
 
believe that
 
our audits
 
provide a
 
reasonable
basis for our opinions.
Definition and Limitations of Internal Control
 
Over Financial Reporting
A company’s
 
internal control over financial reporting is a
 
process designed to provide reasonable assurance
 
regarding the reliability of
financial reporting and
 
the preparation of
 
financial statements for
 
external purposes in
 
accordance with generally
 
accepted accounting
principles.
 
A
 
company’s
 
internal
 
control
 
over
 
financial
 
reporting
 
includes
 
those
 
policies
 
and
 
procedures
 
that
 
(1)
 
pertain
 
to
 
the
maintenance
 
of
 
records
 
that,
 
in
 
reasonable
 
detail,
 
accurately
 
and
 
fairly
 
reflect
 
the
 
transactions
 
and
 
dispositions
 
of
 
the
 
assets
 
of
 
the
company; (2) provide
 
reasonable assurance that
 
transactions are recorded
 
as necessary to permit
 
preparation of financial
 
statements in
accordance with
 
generally accepted
 
accounting principles,
 
and that
 
receipts and
 
expenditures of
 
the company
 
are being
 
made only
 
in
accordance
 
with
 
authorizations
 
of
 
management
 
and
 
directors
 
of
 
the
 
company;
 
and
 
(3)
 
provide
 
reasonable
 
assurance
 
regarding
prevention or timely detection of unauthorized acquisition, use, or
 
disposition of the company’s
 
assets that could have a material effect
on the financial statements.
Because of its inherent
 
limitations, internal control
 
over financial reporting may
 
not prevent or detect
 
misstatements. Also, projections
of any evaluation
 
of effectiveness to
 
future periods are
 
subject to the
 
risk that controls
 
may become inadequate
 
because of changes
 
in
conditions, or that the degree of compliance with the policies or procedures
 
may deteriorate.
41
Critical Audit Matter
The critical audit matter
 
communicated below is a
 
matter arising from the
 
current period audit of the
 
consolidated financial statements
that was communicated
 
or required to
 
be communicated to
 
the audit committee
 
and that: (1) relates
 
to accounts or
 
disclosures that are
material to
 
the consolidated
 
financial statements
 
and (2)
 
involved our
 
especially challenging,
 
subjective, or
 
complex judgments.
 
The
communication
 
of
 
a
 
critical
 
audit matter
 
does
 
not
 
alter
 
in any
 
way
 
our
 
opinion
 
on the
 
consolidated
 
financial
 
statements, taken
 
as a
whole, and
 
we are
 
not, by
 
communicating the
 
critical audit
 
matter below,
 
providing a
 
separate opinion
 
on the
 
critical audit
 
matter or
on the accounts or disclosures to which it relates.
Valuation
 
of goodwill and brand intangible assets
As discussed in Note 6 to the consolidated financial statements, the goodwill
 
and brands and other indefinite-lived intangibles
balances
 
as
 
of
 
May
 
28,
 
2023,
 
were
 
$14,511.2
 
million
 
and
 
$6,712.4
 
million,
 
respectively.
 
The
 
impairment
 
tests
 
for
 
these
assets, which
 
are performed
 
annually and
 
whenever
 
events or
 
changes in
 
circumstances
 
indicate that
 
impairment may
 
have
occurred, require
 
the Company
 
to estimate
 
the fair
 
value of
 
the reporting
 
units to
 
which goodwill
 
is assigned
 
as well
 
as the
brands and
 
other indefinite
 
-lived intangible
 
assets. The
 
fair value
 
estimates are
 
derived
 
from discounted
 
cash flow
 
analyses
that
 
require
 
the
 
Company
 
to make
 
judgments
 
about
 
highly subjective
 
matters,
 
including
 
future
 
operating
 
results,
 
including
revenue growth rates and operating margins,
 
and an estimate of the discount rates and royalty rates.
We
 
identified the
 
assessment of the
 
valuation of certain
 
goodwill and
 
brand intangible assets
 
as a critical
 
audit matter.
 
There
was
 
a
 
significant
 
degree
 
of
 
judgment
 
required
 
in
 
evaluating
 
audit
 
evidence,
 
which
 
consists
 
primarily
 
of
 
forward-looking
assumptions
 
about
 
future
 
operating
 
results,
 
specifically
 
the
 
revenue
 
growth
 
rates
 
and
 
operating
 
margins,
 
royalty
 
rates
 
and
subjective inputs used to estimate the discount rates.
The
 
following
 
are
 
the
 
primary
 
procedures
 
we
 
performed
 
to address
 
this critical
 
audit
 
matter.
 
We
 
evaluated
 
the
 
design
 
and
tested
 
the
 
operating
 
effectiveness
 
of
 
internal
 
controls
 
related
 
to
 
the valuation
 
of goodwill
 
and
 
brand
 
intangible
 
assets. This
included controls related
 
to the assumptions
 
about future operating
 
results and the discount
 
and royalty rates
 
used to measure
the fair value
 
of the reporting
 
units and brands
 
intangible assets.
 
We
 
performed sensitivity
 
analyses over
 
the revenue
 
growth
rates, operating margins, brand
 
royalty rates and discount rates
 
to assess the impact of
 
other points within a range
 
of potential
assumptions.
 
We
 
evaluated
 
the
 
revenue
 
growth
 
rates
 
and
 
operating
 
margin
 
assumptions
 
by
 
comparing
 
them
 
to
 
recent
financial performance
 
and external
 
market and
 
industry data.
 
We
 
evaluated whether
 
these assumptions
 
were consistent
 
with
evidence obtained
 
in other areas
 
of the audit.
 
We
 
involved professionals with
 
specialized skills and
 
knowledge, who assisted
in the evaluation
 
of the Company’s
 
discount rates by
 
comparing them
 
against rate ranges
 
that were independently
 
developed
using publicly available market data
 
for comparable entities and the royalty
 
rates by evaluating the methods, assumptions
 
and
market data used to estimate the royalty rates.
/s/
KPMG
 
LLP
We have served
 
as the Company’s auditor since 1928.
Minneapolis, Minnesota
June 28, 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
2023
2022
2021
Net sales
$
20,094.2
$
18,992.8
$
18,127.0
Cost of sales
13,548.4
12,590.6
11,678.7
Selling, general, and administrative expenses
3,500.4
3,147.0
3,079.6
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
56.2
(26.5)
170.4
Operating profit
3,433.8
3,475.8
3,144.8
Benefit plan non-service income
(88.8)
(113.4)
(132.9)
Interest, net
382.1
379.6
420.3
Earnings before income taxes and after-tax earnings
 
from joint ventures
3,140.5
3,209.6
2,857.4
Income taxes
612.2
586.3
629.1
After-tax earnings from joint ventures
81.3
111.7
117.7
Net earnings, including earnings attributable to redeemable and
 
 
noncontrolling interests
2,609.6
2,735.0
2,346.0
Net earnings attributable to redeemable and noncontrolling interests
15.7
27.7
6.2
Net earnings attributable to General Mills
$
2,593.9
$
2,707.3
$
2,339.8
Earnings per share — basic
$
4.36
$
4.46
$
3.81
Earnings per share — diluted
$
4.31
$
4.42
$
3.78
Dividends per share
$
2.16
$
2.04
$
2.02
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
2023
2022
2021
Net earnings, including earnings attributable to redeemable and
 
 
noncontrolling interests
$
2,609.6
$
2,735.0
$
2,346.0
Other comprehensive (loss) income, net of tax:
Foreign currency translation
(110.8)
(175.9)
175.1
Net actuarial (loss) income
(228.0)
101.6
353.4
Other fair value changes:
Hedge derivatives
1.3
7.0
(20.7)
Reclassification to earnings:
Foreign currency translation
(7.4)
342.2
-
Hedge derivatives
(18.7)
35.1
13.5
Amortization of losses and prior service costs
56.9
75.8
78.9
Other comprehensive (loss) income, net of tax
(306.7)
385.8
600.2
Total comprehensive
 
income
2,302.9
3,120.8
2,946.2
Comprehensive income (loss) attributable to redeemable and
 
 
noncontrolling interests
15.4
(45.2)
121.2
Comprehensive income attributable to General Mills
$
2,287.5
$
3,166.0
$
2,825.0
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
May 28, 2023
May 29, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
585.5
$
569.4
Receivables
1,683.2
1,692.1
Inventories
2,172.0
1,867.3
Prepaid expenses and other current assets
735.7
802.1
Assets held for sale
-
158.9
Total current
 
assets
5,176.4
5,089.8
Land, buildings, and equipment
3,636.2
3,393.8
Goodwill
14,511.2
14,378.5
Other intangible assets
6,967.6
6,999.9
Other assets
1,160.3
1,228.1
Total assets
$
31,451.7
$
31,090.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
4,194.2
$
3,982.3
Current portion of long-term debt
1,709.1
1,674.2
Notes payable
31.7
811.4
Other current liabilities
1,600.7
1,552.0
Total current
 
liabilities
7,535.7
8,019.9
Long-term debt
9,965.1
9,134.8
Deferred income taxes
2,110.9
2,218.3
Other liabilities
1,140.0
929.1
Total liabilities
20,751.7
20,302.1
Stockholders' equity:
Common stock,
754.6
 
shares issued, $
0.10
 
par value
75.5
75.5
Additional paid-in capital
1,222.4
1,182.9
Retained earnings
19,838.6
18,532.6
Common stock in treasury,
 
at cost, shares of
168
.0 and
155.7
(8,410.0)
(7,278.1)
Accumulated other comprehensive loss
(2,276.9)
(1,970.5)
Total stockholders' equity
10,449.6
10,542.4
Noncontrolling interests
250.4
245.6
Total equity
10,700.0
10,788.0
Total liabilities and equity
$
31,451.7
$
31,090.1
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45
Consolidated Statements of Total
 
Equity and Redeemable Interest
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except per Share Data)
Fiscal Year
2023
2022
2021
Shares
Amount
Shares
Amount
Shares
Amount
Total equity,
 
beginning balance
$
10,788.0
$
9,773.2
$
8,349.5
Common stock,
1
 
billion shares authorized, $
0.10
 
par value
754.6
75.5
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,182.9
1,365.5
1,348.6
Stock compensation plans
34.5
17.9
6.2
Unearned compensation related to stock unit awards
(104.7)
(92.2)
(78.0)
Earned compensation
109.7
104.5
88.5
Decrease in redemption value of
 
 
redeemable interest
-
14.1
0.2
Reversal of cumulative redeemable interest
 
value adjustments
-
(207.4)
-
Acquisition of noncontrolling interest
-
(19.5)
-
Ending balance
1,222.4
1,182.9
1,365.5
Retained earnings:
Beginning balance
18,532.6
17,069.8
15,982.1
Net earnings attributable to General Mills
2,593.9
2,707.3
2,339.8
Cash dividends declared ($
2.16
, $
2.04
, and $
2.02
 
per share)
(1,287.9)
(1,244.5)
(1,246.4)
Adoption of current expected credit loss
 
 
accounting requirements
-
-
(5.7)
Ending balance
19,838.6
18,532.6
17,069.8
Common stock in treasury:
Beginning balance
(155.7)
(7,278.1)
(146.9)
(6,611.2)
(144.8)
(6,433.3)
Shares purchased
(18.0)
(1,403.6)
(13.5)
(876.8)
(5.0)
(301.4)
Stock compensation plans
5.7
271.7
4.7
209.9
2.9
123.5
Ending balance
(168.0)
(8,410.0)
(155.7)
(7,278.1)
(146.9)
(6,611.2)
Accumulated other comprehensive loss:
Beginning balance
(1,970.5)
(2,429.2)
(2,914.4)
Comprehensive (loss) income
(306.4)
458.7
485.2
Ending balance
(2,276.9)
(1,970.5)
(2,429.2)
Noncontrolling interests:
Beginning balance
245.6
302.8
291.0
Comprehensive income (loss)
15.4
(16.0)
38.0
Distributions to noncontrolling interest holders
(15.7)
(129.8)
(26.2)
Reclassification from redeemable interest
-
561.6
-
Reversal of cumulative redeemable interest
 
value adjustments
-
207.4
-
Divestiture
5.1
(680.4)
-
Ending balance
250.4
245.6
302.8
Total equity,
 
ending balance
$
10,700.0
$
10,788.0
$
9,773.2
Redeemable interest:
Beginning balance
$
-
$
604.9
$
544.6
Comprehensive (loss) income
-
(29.2)
83.2
Decrease in redemption value of
 
 
redeemable interest
-
(14.1)
(0.2)
Distributions to redeemable interest holder
-
-
(22.7)
Reclassification to noncontrolling interest
-
(561.6)
-
Ending balance
$
-
$
-
$
604.9
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
46
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions)
Fiscal Year
2023
2022
 
2021
 
Cash Flows - Operating Activities
Net earnings, including earnings attributable to redeemable and noncontrolling interests
$
2,609.6
$
2,735.0
$
2,346.0
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
546.6
570.3
601.3
After-tax earnings from joint ventures
(81.3)
(111.7)
(117.7)
Distributions of earnings from joint ventures
69.9
107.5
95.2
Stock-based compensation
111.7
98.7
89.9
Deferred income taxes
(22.2)
62.2
118.8
Pension and other postretirement benefit plan contributions
(30.1)
(31.3)
(33.4)
Pension and other postretirement benefit plan costs
(27.6)
(30.1)
(33.6)
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
24.4
(117.1)
150.9
Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures
(48.9)
277.4
(155.9)
Other, net
71.1
(50.7)
(131.8)
Net cash provided by operating activities
2,778.6
3,316.1
2,983.2
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(689.5)
(568.7)
(530.8)
Acquisition, net of cash acquired
(251.5)
(1,201.3)
-
Investments in affiliates, net
(32.2)
15.4
15.5
Proceeds from disposal of land, buildings, and equipment
1.3
3.3
2.7
Proceeds from divestitures, net of cash divested
633.1
74.1
2.9
Other, net
(7.6)
(13.5)
(3.1)
Net cash used by investing activities
(346.4)
(1,690.7)
(512.8)
Cash Flows - Financing Activities
Change in notes payable
(769.3)
551.4
71.7
Issuance of long-term debt
2,324.4
2,203.7
1,576.5
Payment of long-term debt
(1,421.7)
(3,140.9)
(2,609.0)
Debt exchange participation incentive cash payment
-
-
(201.4)
Proceeds from common stock issued on exercised options
232.3
161.7
74.3
Purchases of common stock for treasury
(1,403.6)
(876.8)
(301.4)
Dividends paid
(1,287.9)
(1,244.5)
(1,246.4)
Distributions to noncontrolling and redeemable interest holders
(15.7)
(129.8)
(48.9)
Other, net
(62.6)
(28.0)
(30.9)
Net cash used by financing activities
(2,404.1)
(2,503.2)
(2,715.5)
Effect of exchange rate changes on cash and cash equivalents
(12.0)
(58.0)
72.5
Increase (decrease) in cash and cash equivalents
16.1
(935.8)
(172.6)
Cash and cash equivalents - beginning of year
569.4
1,505.2
1,677.8
Cash and cash equivalents - end of year
$
585.5
$
569.4
$
1,505.2
Cash flow from changes in current assets and liabilities, excluding the effects of acquisitions and
 
divestitures:
Receivables
$
(41.2)
$
(166.3)
$
27.9
Inventories
(319.0)
(85.8)
(354.7)
Prepaid expenses and other current assets
61.6
(35.3)
(42.7)
Accounts payable
199.8
456.7
343.1
Other current liabilities
49.9
108.1
(129.5)
Changes in current assets and liabilities
$
(48.9)
$
277.4
$
(155.9)
See accompanying notes to consolidated financial statements.
47
Notes to Consolidated Financial Statements
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTE 1. BASIS OF PRESENTATION
 
AND RECLASSIFICATIONS
Basis of Presentation
Our Consolidated Financial
 
Statements include the
 
accounts of General
 
Mills, Inc. and all
 
subsidiaries in which
 
we have a controlling
financial
 
interest.
 
Intercompany
 
transactions
 
and
 
accounts,
 
including
 
any
 
noncontrolling
 
and
 
redeemable
 
interests’
 
share
 
of
 
those
transactions, are eliminated in consolidation.
Our fiscal year ends on the last Sunday in May.
 
Our India business is on an April fiscal year end.
Certain
 
reclassifications
 
to
 
our
 
previously
 
reported
 
financial
 
information
 
have
 
been
 
made
 
to
 
conform
 
to
 
the
 
current
 
period
presentation.
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
 
POLICIES
Cash and Cash Equivalents
 
We consider all investments
 
purchased with an original maturity of three months or less to be cash equivalents.
Inventories
 
All
 
inventories
 
in
 
the
 
United
 
States
 
other
 
than
 
grain
 
are
 
valued
 
at
 
the
 
lower
 
of
 
cost,
 
using
 
the
 
last-in,
 
first-out
 
(LIFO)
 
method,
 
or
market. Grain inventories are
 
valued at net realizable
 
value, and all related cash
 
contracts and derivatives are valued
 
at fair value, with
all net changes in value recorded in earnings currently.
Inventories
 
outside
 
of the
 
United
 
States are
 
generally
 
valued
 
at
 
the lower
 
of
 
cost, using
 
the
 
first-in,
 
first-out
 
(FIFO) method,
 
or net
realizable value.
Shipping
 
costs associated
 
with the
 
distribution of
 
finished product
 
to our
 
customers are
 
recorded as
 
cost of
 
sales and
 
are recognized
when the related finished product is shipped to and accepted by the customer.
Land, Buildings, Equipment, and Depreciation
 
Land is recorded at historical cost.
 
Buildings and equipment, including
 
capitalized interest and internal engineering
 
costs, are recorded
at
 
cost
 
and
 
depreciated
 
over
 
estimated
 
useful
 
lives,
 
primarily
 
using
 
the
 
straight-line
 
method.
 
Ordinary
 
maintenance
 
and
 
repairs
 
are
charged
 
to
 
cost
 
of
 
sales.
 
Buildings
 
are
 
usually
 
depreciated
 
over
40
 
years,
 
and
 
equipment,
 
furniture,
 
and
 
software
 
are
 
usually
depreciated over
3
 
to
10
 
years. Fully depreciated assets are retained
 
in buildings and equipment until disposal.
 
When an item is sold or
retired,
 
the
 
accounts
 
are
 
relieved
 
of
 
its
 
cost
 
and
 
related
 
accumulated
 
depreciation
 
and
 
the
 
resulting
 
gains
 
and
 
losses,
 
if
 
any,
 
are
recognized in earnings.
 
Long-lived assets
 
are reviewed
 
for impairment
 
whenever events
 
or changes
 
in circumstances
 
indicate that
 
the carrying
 
amount of
 
an
asset
 
(or
 
asset
 
group)
 
may
 
not
 
be
 
recoverable.
 
An
 
impairment
 
loss
 
would
 
be
 
recognized
 
when
 
estimated
 
undiscounted
 
future
 
cash
flows from
 
the operation
 
and disposition
 
of the
 
asset group
 
are less
 
than the
 
carrying amount
 
of the
 
asset group.
 
Asset groups
 
have
identifiable cash
 
flows and
 
are largely
 
independent of
 
other asset groups.
 
Measurement of
 
an impairment
 
loss would
 
be based
 
on the
excess
 
of
 
the
 
carrying
 
amount of
 
the
 
asset group
 
over
 
its fair
 
value.
 
Fair
 
value
 
is measured
 
using
 
a discounted
 
cash
 
flow model
 
or
independent appraisals, as appropriate.
Goodwill and Other Intangible Assets
 
Goodwill
 
is
 
not
 
subject
 
to
 
amortization
 
and
 
is
 
tested
 
for
 
impairment
 
annually
 
and
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
indicate that impairment may have
 
occurred. We
 
perform our annual goodwill and
 
indefinite-lived intangible assets impairment
 
test as
of the
 
first day
 
of the
 
second quarter
 
of the
 
fiscal year.
 
Impairment testing
 
is performed
 
for each
 
of our
 
reporting units.
 
We
 
compare
the
 
carrying
 
value
 
of
 
a
 
reporting
 
unit,
 
including
 
goodwill,
 
to
 
the
 
fair
 
value
 
of
 
the
 
unit.
 
Carrying
 
value
 
is
 
based
 
on
 
the
 
assets
 
and
liabilities
 
associated
 
with
 
the
 
operations
 
of
 
that
 
reporting
 
unit,
 
which
 
often
 
requires
 
allocation
 
of
 
shared
 
or
 
corporate
 
items
 
among
reporting
 
units.
 
If
 
the
 
carrying
 
amount
 
of
 
a
 
reporting
 
unit
 
exceeds
 
its
 
fair
 
value,
 
impairment
 
has
 
occurred.
 
We
 
recognize
 
an
impairment charge
 
for the
 
amount by
 
which the carrying
 
amount of
 
the reporting
 
unit exceeds
 
its fair
 
value up
 
to the
 
total amount
 
of
goodwill allocated
 
to the
 
reporting unit.
 
Our estimates
 
of fair
 
value are
 
determined based
 
on a
 
discounted
 
cash flow
 
model. Growth
rates for sales and profits are determined using inputs from our long-range
 
planning process. We also make
 
estimates of discount rates,
perpetuity growth assumptions, market comparables, and other factors.
 
We evaluate the
 
useful lives of our other intangible assets, mainly brands, to
 
determine if they are finite or indefinite-lived.
 
Reaching a
determination
 
on
 
useful
 
life
 
requires
 
significant
 
judgments
 
and
 
assumptions
 
regarding
 
the
 
future
 
effects
 
of
 
obsolescence,
 
demand,
competition, other economic
 
factors (such as the
 
stability of the industry,
 
known technological advances,
 
legislative action that
 
results
48
in an uncertain or
 
changing regulatory environment,
 
and expected changes in
 
distribution channels), the level
 
of required maintenance
expenditures,
 
and
 
the
 
expected
 
lives
 
of
 
other
 
related
 
groups
 
of
 
assets.
 
Intangible
 
assets
 
that
 
are
 
deemed
 
to
 
have
 
finite
 
lives
 
are
amortized on a straight-line basis, over their useful lives, generally ranging
 
from
4
 
to
30
 
years.
Our indefinite-lived
 
intangible assets,
 
mainly intangible
 
assets primarily
 
associated with
 
the
Blue Buffalo
,
 
Pillsbury
,
Totino’s
,
Old El
Paso
,
Progresso
,
 
Annie’s
,
Nudges
, and
Häagen-Dazs
 
brands, are also tested
 
for impairment annually
 
and whenever events or
 
changes
in circumstances
 
indicate that
 
their carrying
 
value may
 
not be
 
recoverable. Our
 
estimate of
 
the fair
 
value of
 
the brands
 
is based
 
on a
discounted
 
cash
 
flow
 
model
 
using
 
inputs
 
which
 
included
 
projected
 
revenues
 
from
 
our
 
long-range
 
plan,
 
assumed
 
royalty
 
rates
 
that
could be payable if we did not own the brands, and a discount rate.
 
Our finite-lived intangible
 
assets, primarily acquired
 
customer relationships, are
 
reviewed for impairment
 
whenever events or
 
changes
in circumstances indicate
 
that the carrying amount
 
of an asset may not
 
be recoverable. An impairment
 
loss would be recognized
 
when
estimated undiscounted future cash
 
flows from the operation and disposition
 
of the asset are less than
 
the carrying amount of the asset.
Assets generally
 
have identifiable
 
cash flows
 
and are
 
largely independent
 
of other
 
assets. Measurement
 
of an
 
impairment loss
 
would
be
 
based on
 
the
 
excess of
 
the carrying
 
amount of
 
the asset
 
over
 
its fair
 
value.
 
Fair
 
value
 
is measured
 
using
 
a discounted
 
cash flow
model or other similar valuation model, as appropriate.
 
Leases
We
 
determine whether
 
an arrangement
 
is a lease
 
at inception.
 
When our
 
lease arrangements
 
include lease and
 
non-lease components,
we account for lease and non-lease components (e.g. common area maintenance)
 
separately based on their relative standalone prices.
 
Any
 
lease
 
arrangements
 
with
 
an
 
initial
 
term
 
of
 
12
 
months
 
or
 
less
 
are
 
not
 
recorded
 
on
 
our
 
Consolidated
 
Balance
 
Sheet,
 
and
 
we
recognize lease costs for these
 
lease arrangements on a straight-line
 
basis over the lease term. Many
 
of our lease arrangements provide
us with
 
options to
 
exercise one
 
or more
 
renewal terms
 
or to
 
terminate the
 
lease arrangement.
 
We
 
include these
 
options when
 
we are
reasonably certain
 
to exercise them
 
in the lease
 
term used to
 
establish our
 
right of use
 
assets and lease
 
liabilities. Generally,
 
our lease
agreements do not include an option to purchase the leased asset, residual value guarantees,
 
or material restrictive covenants.
We
 
have
 
certain
 
lease
 
arrangements
 
with
 
variable
 
rental
 
payments.
 
Our
 
lease
 
arrangements
 
for
 
our
 
Häagen-Dazs
 
retail
 
shops
 
often
include rental payments
 
that are based
 
on a percentage
 
of retail sales. We
 
have other lease
 
arrangements that are
 
adjusted periodically
based on
 
an inflation
 
index or rate.
 
The future
 
variability of these
 
payments and
 
adjustments are
 
unknown, and
 
therefore they are
 
not
included
 
as
 
minimum
 
lease
 
payments
 
used
 
to
 
determine
 
our
 
right
 
of
 
use
 
assets
 
and
 
lease
 
liabilities.
 
Variable
 
rental
 
payments
 
are
recognized in the period in which the obligation is incurred.
 
As
 
most
 
of
 
our
 
lease
 
arrangements
 
do
 
not
 
provide
 
an
 
implicit
 
interest
 
rate,
 
we
 
apply
 
an
 
incremental
 
borrowing
 
rate
 
based
 
on
 
the
information available at the commencement date of the lease arrangement
 
to determine the present value of lease payments.
Investments in Unconsolidated Joint Ventures
 
Our
 
investments
 
in
 
companies
 
over
 
which
 
we
 
have
 
the
 
ability
 
to
 
exercise
 
significant
 
influence
 
are
 
stated
 
at
 
cost
 
plus
 
our
 
share
 
of
undistributed
 
earnings
 
or
 
losses.
 
We
 
receive
 
royalty
 
income
 
from
 
certain
 
joint
 
ventures,
 
incur
 
various
 
expenses
 
(primarily
 
research
and
 
development),
 
and
 
record
 
the
 
tax
 
impact
 
of
 
certain
 
joint
 
venture
 
operations
 
that
 
are
 
structured
 
as
 
partnerships.
 
In
 
addition,
 
we
make
 
advances
 
to
 
our
 
joint
 
ventures
 
in
 
the
 
form
 
of
 
loans
 
or
 
capital
 
investments.
 
We
 
also
 
sell
 
certain
 
raw
 
materials,
 
semi-finished
goods, and finished goods to the joint ventures, generally at market prices.
In addition,
 
we assess our
 
investments in our
 
joint ventures if
 
we have reason
 
to believe an
 
impairment may have
 
occurred including,
but not
 
limited to,
 
as a
 
result of
 
ongoing operating
 
losses, projected
 
decreases in
 
earnings, increases
 
in the
 
weighted-average
 
cost of
capital,
 
or
 
significant
 
business
 
disruptions.
 
The
 
significant
 
assumptions
 
used
 
to
 
estimate
 
fair
 
value
 
include
 
revenue
 
growth
 
and
profitability,
 
royalty
 
rates,
 
capital
 
spending,
 
depreciation
 
and
 
taxes,
 
foreign
 
currency
 
exchange
 
rates,
 
and
 
a
 
discount
 
rate.
 
By
 
their
nature, these projections
 
and assumptions are uncertain.
 
If we were to
 
determine the current
 
fair value of our
 
investment was less than
the carrying value of
 
the investment, then we
 
would assess if the
 
shortfall was of a temporary
 
or permanent nature and
 
write down the
investment to its fair value if we concluded the impairment is other than temporary.
Revenue Recognition
 
Our revenues primarily result
 
from contracts with customers,
 
which are generally short-term
 
and have a single performance
 
obligation
– the
 
delivery of
 
product. We
 
recognize revenue
 
for the
 
sale of packaged
 
foods at the
 
point in
 
time when our
 
performance obligation
has been satisfied and control of the
 
product has transferred to our customer,
 
which generally occurs when the shipment
 
is accepted by
our customer.
 
Sales include
 
shipping and
 
handling charges
 
billed to
 
the customer
 
and are
 
reported
 
net of
 
variable consideration
 
and
consideration
 
payable
 
to
 
our
 
customers,
 
including
 
trade
 
promotion,
 
consumer
 
coupon
 
redemption
 
and
 
other
 
reductions
 
to
 
the
transaction
 
price,
 
including
 
estimated allowances
 
for
 
returns, unsalable
 
product,
 
and
 
prompt
 
pay
 
discounts.
 
Sales, use,
 
value-added,
and
 
other
 
excise
 
taxes
 
are
 
not
 
included
 
in
 
revenue.
 
Trade
 
promotions
 
are
 
recorded
 
using
 
significant
 
judgment
 
of
 
estimated
participation and
 
performance levels
 
for offered
 
programs at
 
the time
 
of sale.
 
Differences between
 
estimated and
 
actual reductions
 
to
the
 
transaction
 
price
 
are
 
recognized
 
as
 
a
 
change
 
in
 
estimate
 
in
 
a
 
subsequent
 
period.
 
We
 
generally
 
do
 
not
 
allow
 
a
 
right
 
of
 
return.
49
However,
 
on a
 
limited case-by-case
 
basis with
 
prior
 
approval, we
 
may
 
allow customers
 
to return
 
product. In
 
limited circumstances,
product
 
returned
 
in
 
saleable
 
condition
 
is
 
resold
 
to
 
other
 
customers
 
or
 
outlets.
 
Receivables
 
from
 
customers
 
generally
 
do
 
not
 
bear
interest. Payment terms and
 
collection patterns vary around
 
the world and by
 
channel, and are short-term,
 
and as such, we do
 
not have
any significant financing components.
 
Our allowance for doubtful
 
accounts represents our estimate of
 
expected credit losses related
 
to
our
 
trade
 
receivables.
 
We
 
pool
 
our
 
trade
 
receivables
 
based
 
on
 
similar
 
risk
 
characteristics,
 
such
 
as
 
geographic
 
location,
 
business
channel, and other
 
account data. To
 
estimate our allowance
 
for doubtful
 
accounts, we leverage
 
information on historical
 
losses, asset-
specific
 
risk
 
characteristics,
 
current
 
conditions,
 
and reasonable
 
and
 
supportable
 
forecasts of
 
future
 
conditions.
 
Account
 
balances
 
are
written off
 
against the
 
allowance when
 
we deem
 
the amount
 
is uncollectible.
 
Please see
 
Note 17
 
for a
 
disaggregation of
 
our revenue
into
 
categories
 
that
 
depict
 
how
 
the
 
nature,
 
amount,
 
timing,
 
and
 
uncertainty
 
of
 
revenue
 
and
 
cash
 
flows
 
are
 
affected
 
by
 
economic
factors. We do
 
not have material contract assets or liabilities arising from our contracts with customers.
Environmental Costs
 
Environmental costs
 
relating to
 
existing conditions
 
caused by
 
past operations
 
that do
 
not contribute
 
to current
 
or future
 
revenues are
expensed. Liabilities
 
for anticipated
 
remediation costs
 
are recorded
 
on an
 
undiscounted basis
 
when they
 
are probable
 
and reasonably
estimable, generally no later than the completion of feasibility studies or our commitment
 
to a plan of action.
Advertising Production Costs
 
We expense the
 
production costs of advertising the first time that the advertising takes place.
Research and Development
 
All expenditures for research and development
 
(R&D) are charged against earnings in the period
 
incurred. R&D includes expenditures
for
 
new
 
product
 
and
 
manufacturing
 
process
 
innovation,
 
and
 
the
 
annual
 
expenditures
 
are
 
comprised
 
primarily
 
of
 
internal
 
salaries,
wages, consulting, and supplies
 
attributable to R&D activities.
 
Other costs include depreciation
 
and maintenance of research
 
facilities,
including assets at facilities that are engaged in pilot plant activities.
Foreign Currency Translation
 
For
 
all
 
significant
 
foreign
 
operations,
 
the
 
functional
 
currency
 
is
 
the
 
local
 
currency.
 
Assets
 
and
 
liabilities
 
of
 
these
 
operations
 
are
translated
 
at
 
the
 
period-end
 
exchange
 
rates.
 
Income
 
statement
 
accounts
 
are
 
translated
 
using
 
the
 
average
 
exchange
 
rates
 
prevailing
during the period. Translation
 
adjustments are reflected within
 
accumulated other comprehensive
 
loss (AOCI) in stockholders’
 
equity.
Gains
 
and
 
losses
 
from
 
foreign
 
currency
 
transactions
 
are
 
included
 
in
 
net
 
earnings
 
for
 
the
 
period,
 
except
 
for
 
gains
 
and
 
losses
 
on
investments
 
in
 
subsidiaries
 
for
 
which
 
settlement
 
is not
 
planned
 
for
 
the foreseeable
 
future and
 
foreign
 
exchange
 
gains and
 
losses on
instruments designated as net investment hedges. These gains and losses are recorded
 
in AOCI.
Derivative Instruments
 
All derivatives are recognized
 
on our Consolidated
 
Balance Sheets at fair
 
value based on quoted
 
market prices or our
 
estimate of their
fair value,
 
and are
 
recorded in
 
either current
 
or noncurrent
 
assets or
 
liabilities based
 
on their
 
maturity.
 
Changes in
 
the fair
 
values of
derivatives are
 
recorded in
 
net earnings
 
or other
 
comprehensive income,
 
based on
 
whether the
 
instrument is
 
designated and
 
effective
as
 
a
 
hedge
 
transaction
 
and,
 
if
 
so,
 
the
 
type
 
of
 
hedge
 
transaction.
 
Gains
 
or
 
losses
 
on
 
derivative
 
instruments
 
reported
 
in
 
AOCI
 
are
reclassified
 
to
 
earnings
 
in
 
the
 
period
 
the
 
hedged
 
item
 
affects
 
earnings.
 
If
 
the
 
underlying
 
hedged
 
transaction
 
ceases
 
to
 
exist,
 
any
associated amounts reported in AOCI are reclassified to earnings at that time.
 
Stock-based Compensation
 
We generally
 
measure compensation expense for grants of restricted stock
 
units and performance share units using the value of
 
a share
of
 
our
 
stock
 
on
 
the
 
date
 
of
 
grant.
 
We
 
estimate
 
the
 
value
 
of
 
stock
 
option
 
grants
 
using
 
a
 
Black-Scholes
 
valuation
 
model.
 
Generally,
stock-based
 
compensation
 
is recognized
 
straight
 
line over
 
the
 
vesting
 
period.
 
Our stock-based
 
compensation
 
expense is
 
recorded
 
in
selling, general
 
,
 
and administrative
 
(SG&A) expenses
 
and cost
 
of sales
 
in our
 
Consolidated Statements
 
of Earnings
 
and allocated
 
to
each reportable segment in our segment results.
Certain equity-based compensation plans contain provisions
 
that accelerate vesting of awards upon retirement, termination,
 
or death of
eligible
 
employees
 
and
 
directors.
 
We
 
consider
 
a
 
stock-based
 
award
 
to
 
be vested
 
when
 
the employee’s
 
or
 
director’s
 
retention
 
of
 
the
award
 
is no
 
longer
 
contingent
 
on
 
providing
 
subsequent
 
service.
 
Accordingly,
 
the
 
related
 
compensation
 
cost
 
is generally
 
recognized
immediately
 
for
 
awards
 
granted
 
to
 
retirement-eligible
 
individuals
 
or
 
over
 
the
 
period
 
from
 
the
 
grant
 
date
 
to
 
the
 
date
 
retirement
eligibility is achieved, if less than the stated vesting period.
We report the
 
benefits of tax deductions in excess of recognized compensation cost as an operating
 
cash flow.
Defined Benefit Pension, Other Postretirement Benefit, and Postemployment
 
Benefit Plans
 
We
 
sponsor
 
several domestic
 
and foreign
 
defined
 
benefit plans
 
to provide
 
pension, health
 
care, and
 
other welfare
 
benefits to
 
retired
employees. Under
 
certain circumstances,
 
we also
 
provide accruable
 
benefits, primarily
 
severance, to
 
former or
 
inactive employees
 
in
the
 
United
 
States,
 
Canada,
 
and
 
Mexico.
 
We
 
recognize
 
an
 
obligation
 
for
 
any
 
of
 
these
 
benefits
 
that
 
vest
 
or
 
accumulate
 
with
 
service.
 
 
 
 
 
 
 
50
Postemployment benefits
 
that do not
 
vest or
 
accumulate with
 
service (such
 
as severance
 
based solely
 
on annual pay
 
rather than years
of service) are charged to expense when incurred. Our postemployment
 
benefit plans are unfunded.
We
 
recognize the underfunded
 
or overfunded status
 
of a defined
 
benefit pension plan
 
as an asset
 
or liability and
 
recognize changes in
the funded status in the year in which the changes occur through AOCI.
Use of Estimates
 
Preparing
 
our
 
Consolidated
 
Financial
 
Statements
 
in
 
conformity
 
with
 
accounting
 
principles
 
generally
 
accepted
 
in
 
the
 
United
 
States
requires
 
us to
 
make estimates
 
and assumptions
 
that affect
 
reported amounts
 
of assets
 
and
 
liabilities, disclosures
 
of contingent
 
assets
and liabilities
 
at the
 
date of
 
the financial
 
statements, and
 
the reported
 
amounts of
 
revenues and
 
expenses during
 
the reporting
 
period.
These
 
estimates
 
include
 
our
 
accounting
 
for
 
revenue
 
recognition,
 
valuation
 
of
 
long-lived
 
assets,
 
intangible
 
assets,
 
stock-based
compensation,
 
income
 
taxes,
 
and
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit
 
and
 
postemployment
 
benefit
 
plans.
 
Actual
results could differ from our estimates.
New Accounting Standards
 
In the
 
first quarter
 
of fiscal
 
2021,
we adopted
 
new accounting
 
requirements
 
related
 
to the
 
measurement
 
of credit
 
losses on
 
financial
instruments, including
 
trade receivables.
 
The new
 
standard and
 
subsequent
 
amendments replace
 
the incurred
 
loss impairment
 
model
with a
 
forward-looking
 
expected credit
 
loss model,
 
which will
 
generally
 
result in
 
earlier recognition
 
of credit
 
losses. Our
 
allowance
for doubtful
 
accounts represents
 
our estimate
 
of expected
 
credit losses related
 
to our trade
 
receivables. We
 
pool our trade
 
receivables
based on similar risk characteristics,
 
such as geographic location,
 
business channel, and other
 
account data. To
 
estimate our allowance
for
 
doubtful
 
accounts,
 
we
 
leverage
 
information
 
on
 
historical
 
losses,
 
asset-specific
 
risk
 
characteristics,
 
current
 
conditions,
 
and
reasonable and
 
supportable forecasts
 
of future
 
conditions. Account
 
balances are
 
written off
 
against the
 
allowance when
 
we deem
 
the
amount
 
is
 
uncollectible.
 
We
 
adopted
 
the
 
requirements
 
of
 
the
 
new
 
standard
 
and
 
subsequent
 
amendments
 
using
 
the
 
modified
retrospective transition approach, and recorded a decrease to retained
 
earnings of $
5.7
 
million after-tax
.
 
NOTE 3. ACQUISITION AND DIVESTITURES
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
$
156.8
 
million. The
 
goodwill is
 
included in
 
the North
 
America Foodservice
 
segment and
 
is not
 
deductible for
 
tax purposes.
 
The pro
forma
 
effects
 
of
 
this
 
acquisition
 
were
 
not
 
material.
 
We
 
have
 
conducted
 
a
 
preliminary
 
assessment
 
of
 
the
 
fair
 
value
 
of
 
the
 
acquired
assets
 
and
 
liabilities
 
of
 
the
 
TNT
 
Crust
 
business
 
and
 
will
 
continue
 
to
 
review
 
these
 
items
 
during
 
the
 
measurement
 
period.
 
If
 
new
information is obtained
 
about facts and circumstances
 
that existed at the
 
acquisition date, the
 
acquisition accounting
 
will be revised to
reflect the resulting adjustments to
 
current estimates of these items.
 
The consolidated results of the
 
TNT Crust business are reported
 
in
our North America Foodservice segment on a one-month lag.
 
During the
 
first quarter
 
of fiscal
 
2023,
 
we completed
 
the sale
 
of our
 
Helper main
 
meals and
 
Suddenly
 
Salad side
 
dishes business
 
to
Eagle Family Foods Group for $
606.8
 
million and recorded a pre-tax gain of $
442.2
 
million.
 
In fiscal 2022, we sold our European dough businesses and recorded
 
a net pre-tax gain on sale of $
30.4
 
million.
 
During
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
sold
 
our
 
interests
 
in
 
Yoplait
 
SAS,
 
Yoplait
 
Marques
 
SNC,
 
and
 
Liberté
 
Marques
 
Sàrl
 
to
Sodiaal International (Sodiaal) in
 
exchange for Sodiaal’s
 
interest in our Canadian yogurt business, a
 
modified agreement for the use of
Yoplait
 
and
Liberté
brands in the
 
United States and
 
Canada, and cash.
 
We
 
recorded a net
 
pre-tax gain of
 
$
163.7
 
million on the
 
sale of
these businesses.
During
 
the
 
first
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
acquired
 
Tyson
 
Foods’
 
pet
 
treats
 
business
 
for
 
$
1.2
 
billion
 
in
 
cash.
 
We
 
financed
 
the
transaction
 
with
 
a
 
combination
 
of
 
cash
 
on
 
hand
 
and
 
short-term
 
debt.
 
We
 
consolidated
 
Tyson
 
Foods’
 
pet
 
treats
 
business
 
into
 
our
Consolidated
 
Balance
 
Sheets
 
and
 
recorded
 
goodwill
 
of
 
$
762.3
 
million,
 
indefinite-lived
 
intangible
 
assets
 
for
 
the
Nudges
,
Top
Chews
, and
True
 
Chews
 
brands
 
totaling
 
$
330.0
 
million
 
in
 
aggregate,
 
and
 
a
 
finite-lived
 
customer
 
relationship
 
asset
 
of
 
$
40.0
 
million.
The goodwill is included in
 
the Pet reporting unit and is
 
deductible for tax purposes. The
 
pro forma effects of
 
this acquisition were not
material.
 
During
 
the
 
fourth
 
quarter
 
of
 
fiscal
 
2021,
 
we
 
recorded
 
a
 
pre-tax
 
loss
 
of
 
$
53.5
 
million
 
related
 
to
 
the
 
sale
 
of
 
our
 
Laticínios
 
Carolina
business in Brazil.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51
NOTE 4. RESTRUCTURING, IMPAIRMENT,
 
AND OTHER EXIT COSTS
 
We view
 
our restructuring activities as actions
 
that help us meet our long-term
 
growth targets and are evaluated
 
against internal rate of
return and net
 
present value targets.
 
Each restructuring
 
action normally takes
 
one to two
 
years to complete.
 
At completion (or
 
as each
major stage
 
is completed
 
in the
 
case of
 
multi-year programs),
 
the project
 
begins to
 
deliver cash
 
savings and/or
 
reduced depreciation.
These activities
 
result in
 
various restructuring
 
costs, including
 
asset write-offs,
 
exit charges
 
including severance,
 
contract termination
fees, and decommissioning
 
and other costs.
 
Accelerated depreciation
 
associated with restructured
 
assets, as used
 
in the context
 
of our
disclosures
 
regarding
 
restructuring
 
activity,
 
refers
 
to
 
the
 
increase
 
in
 
depreciation
 
expense
 
caused
 
by
 
shortening
 
the
 
useful
 
life
 
or
updating
 
the salvage
 
value
 
of depreciable
 
fixed
 
assets to
 
coincide
 
with the
 
end of
 
production
 
under an
 
approved
 
restructuring
 
plan.
Any impairment of the asset is recognized immediately in the period
 
the plan is approved.
Restructuring charges recorded in fiscal 2023 were
 
as follows:
Expense, in Millions
Global supply chain actions
$
36.2
Network optimization actions
6.4
Charges associated with restructuring actions previously
 
announced
18.4
Total restructuring
 
charges
$
61.0
In fiscal
 
2023,
 
we approved
 
restructuring actions
 
to enhance
 
the efficiency
 
of our
 
global supply
 
chain structure.
 
We
 
expect to
 
incur
approximately
 
$
52
 
million
 
of
 
restructuring
 
charges
 
and
 
project-related
 
costs
 
related
 
to
 
these
 
actions,
 
of
 
which
 
approximately
 
$
35
million will be
 
cash. These charges
 
are expected
 
to consist of
 
approximately $
26
 
million of severance
 
and $
26
 
million of other
 
costs,
primarily
 
$
8
 
million
 
of
 
asset
 
impairment
 
and
 
$
11
 
million
 
of
 
other
 
asset
 
write-offs.
 
We
 
recognized
 
$
25.8
 
million
 
of
 
severance
 
and
$
10.4
 
million of other costs in fiscal 2023. We
 
expect these actions to be completed by the end of fiscal 2025.
In fiscal 2023, we approved restructuring actions in
 
our International segment to optimize our Häagen-Dazs
 
shops network. We
 
expect
to incur
 
approximately $
10
 
million of
 
restructuring charges
 
and project-related
 
costs related
 
to these
 
actions, of
 
which approximately
$
9
 
million will be
 
cash. These charges
 
are expected to
 
consist of approximately
 
$
6
 
million of severance
 
and $
4
 
million of other
 
costs.
We
 
recognized $
5.6
 
million of
 
severance and
 
$
0.8
 
million of
 
other costs
 
in fiscal
 
2023. We
 
expect these
 
actions to
 
be completed
 
by
the
end of fiscal 2024
.
 
Certain actions are subject to union negotiations and works counsel consultations,
 
where required.
We paid net
 
$
36.6
 
million of cash related to restructuring actions in fiscal 2023. We
 
paid net $
93.9
 
million of cash in fiscal 2022.
Restructuring charges recorded in fiscal 2022 were
 
as follows:
Expense, in Millions
International manufacturing and logistics operations
$
15.0
Net recoveries associated with restructuring actions previously announced
(38.2)
Total net restructuring
 
recoveries
$
(23.2)
Restructuring charges recorded in fiscal 2021 were
 
as follows:
 
Expense, in Millions
Global organizational structure and resource alignment
$
157.3
International route-to-market and supply chain optimization
13.0
Charges associated with restructuring actions previously
 
announced
2.4
Total restructuring
 
charges
$
172.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52
Restructuring and impairment charges and project-related
 
costs are classified in our Consolidated Statements of Earnings as follows:
Fiscal Year
In Millions
2023
2022
2021
Restructuring, impairment, and other exit costs (recoveries)
$
56.2
$
(26.5)
$
170.4
Cost of sales
4.8
3.3
2.3
Total restructuring
 
and impairment charges (recoveries)
61.0
(23.2)
172.7
Project-related costs classified in cost of sales
$
2.4
$
-
$
-
The roll forward of our restructuring and other exit cost reserves, included
 
in other current liabilities, is as follows:
In Millions
Severance
Other Exit
Costs
Total
Reserve balance as of May 31, 2020
$
17.8
$
-
$
17.8
Fiscal 2021 charges, including foreign currency translation
142.3
1.6
143.9
Utilized in fiscal 2021
(12.8)
(0.1)
(12.9)
Reserve balance as of May 30, 2021
147.3
1.5
148.8
Fiscal 2022 charges, including foreign currency translation
2.2
1.2
3.4
Reserve adjustment
(34.0)
-
(34.0)
Utilized in fiscal 2022
(80.1)
(1.3)
(81.4)
Reserve balance as of May 29, 2022
35.4
1.4
36.8
Fiscal 2023 charges, including foreign currency translation
41.6
0.1
41.7
Utilized in fiscal 2023
(29.4)
(1.4)
(30.8)
Reserve balance as of May 28, 2023
$
47.6
$
0.1
$
47.7
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,
 
the gain or loss on the sale of restructured assets, and the
 
write-off of spare parts) and other
periodic
 
exit
 
costs
 
recognized
 
as
 
incurred,
 
as
 
those
 
items
 
are
 
not
 
reflected
 
in
 
our
 
restructuring
 
and
 
other
 
exit
 
cost
 
reserves
 
on
 
our
Consolidated Balance Sheets.
NOTE 5. INVESTMENTS IN UNCONSOLIDATED
 
JOINT VENTURES
 
We
 
have a
50
 
percent interest
 
in Cereal
 
Partners Worldwide
 
(CPW), which
 
manufactures and
 
markets ready-to-eat
 
cereal products
 
in
approximately
130
 
countries
 
outside
 
the
 
United
 
States
 
and
 
Canada.
 
CPW
 
also
 
markets
 
cereal
 
bars
 
in
 
European
 
countries
 
and
manufactures private label cereals for
 
customers in the United Kingdom.
 
We have
 
guaranteed a portion of CPW’s
 
debt and its pension
obligation in the United Kingdom.
 
We
 
also have
 
a
50
 
percent interest
 
in Häagen-Dazs
 
Japan, Inc.
 
(HDJ). This joint
 
venture manufactures
 
and markets
Häagen-Dazs
ice
cream products and frozen novelties.
 
Results from our CPW and HDJ joint ventures are reported for the
12 months
 
ended March 31.
Joint venture related balance sheet activity is as follows:
 
In Millions
May 28, 2023
May 29, 2022
Cumulative investments
$
401.5
$
416.4
Goodwill and other intangibles
444.1
444.9
Aggregate advances included in cumulative investments
275.6
254.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53
Joint venture earnings and cash flow activity is as follows:
Fiscal Year
In Millions
2023
2022
2021
Sales to joint ventures
$
5.8
$
6.3
$
6.7
Net advances (repayments)
32.2
(15.4)
(15.5)
Dividends received
69.9
107.5
95.2
Summary combined financial information for the joint ventures on
 
a 100 percent basis is as follows:
Fiscal Year
In Millions
2023
2022
2021
Net sales:
CPW
 
$
1,618.9
$
1,706.5
$
1,766.8
HDJ
338.5
427.8
422.4
Total net sales
1,957.4
2,134.3
2,189.2
Gross margin
667.7
803.1
882.9
Earnings before income taxes
169.3
249.9
247.8
Earnings after income taxes
126.9
201.0
201.7
In Millions
May 28, 2023
May 29, 2022
Current assets
$
817.7
$
823.9
Noncurrent assets
772.7
839.8
Current liabilities
1,300.0
1,298.8
Noncurrent liabilities
100.3
106.5
 
NOTE 6. GOODWILL AND OTHER INTANGIBLE
 
ASSETS
The components of goodwill and other intangible assets are as follows:
In Millions
May 28, 2023
May 29, 2022
Goodwill
$
14,511.2
$
14,378.5
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,712.4
6,725.8
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
386.3
400.3
Less accumulated amortization
(131.1)
(126.2)
Intangible assets subject to amortization
255.2
274.1
Other intangible assets
6,967.6
6,999.9
Total
$
21,478.8
$
21,378.4
Based on
 
the carrying
 
value of
 
finite-lived intangible
 
assets as of
 
May 28,
 
2023, amortization
 
expense for
 
each of
 
the next five
 
fiscal
years is estimated to be approximately $
20
 
million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54
The changes in the carrying amount of goodwill for fiscal 2021, 2022, and 2023
 
are as follows:
In Millions
North
America
Retail
Pet
North
America
Foodservice
International
Joint
Ventures
Total
Balance as of May 31, 2020
$
6,673.7
$
5,300.5
$
648.8
$
894.5
$
405.7
$
13,923.2
Divestiture
-
-
-
(1.2)
-
(1.2)
Other activity, primarily
 
foreign
 
currency translation
15.6
-
-
84.9
39.9
140.4
Balance as of May 30, 2021
6,689.3
5,300.5
648.8
978.2
445.6
14,062.4
Acquisition
-
762.3
-
-
-
762.3
Divestitures
-
-
-
(201.8)
-
(201.8)
Reclassified to assets held for sale
(130.0)
-
-
-
-
(130.0)
Other activity, primarily
 
foreign
 
currency translation
(6.4)
-
-
(54.8)
(53.2)
(114.4)
Balance as of May 29, 2022
6,552.9
6,062.8
648.8
721.6
392.4
14,378.5
Acquisition
-
-
156.8
-
-
156.8
Divestitures
(2.0)
-
-
(0.4)
-
(2.4)
Other activity, primarily
 
foreign
 
currency translation
(8.5)
-
-
(12.8)
(0.4)
(21.7)
Balance as of May 28, 2023
$
6,542.4
$
6,062.8
$
805.6
$
708.4
$
392.0
$
14,511.2
The changes in the carrying amount of other intangible assets for fiscal 2021, 2022, and
 
2023 are as follows:
In Millions
Total
Balance as of May 31, 2020
$
7,095.8
Divestiture
(5.3)
Other activity, primarily
 
amortization and foreign currency translation
60.1
Balance as of May 30, 2021
7,150.6
Acquisition
370.0
Divestitures
(621.8)
Intellectual property intangible asset
210.4
Other activity, primarily
 
amortization and foreign currency translation
(109.3)
Balance as of May 29, 2022
6,999.9
Acquisition
3.8
Divestiture
(3.6)
Other activity, primarily
 
amortization and foreign currency translation
(32.5)
Balance as of May 28, 2023
$
6,967.6
Our
 
annual
 
goodwill
 
and
 
indefinite-lived
 
intangible
 
assets
 
impairment
 
test
 
was
 
performed
 
on
 
the
 
first
 
day
 
of
 
the
 
second
 
quarter
 
of
fiscal
 
2023,
 
and
 
we
 
determined
 
there
 
was
 
no
 
impairment
 
of
 
our
 
intangible
 
assets
 
as
 
their
 
related
 
fair
 
values
 
were
 
substantially
 
in
excess of the
 
carrying values,
 
except for
 
the
Uncle Toby’s
 
brand intangible
 
asset. In addition,
 
while having
 
significant coverage
 
as of
our fiscal 2023
 
assessment date, the
Progresso
 
and
EPIC
 
brand intangible assets had
 
risk of decreasing coverage.
 
We
 
will continue to
monitor these businesses for potential impairment.
We did not
 
identify any indicators of impairment for any goodwill or indefinite-lived
 
intangible assets as of May 28, 2023.
NOTE 7. LEASES
Our lease portfolio primarily
 
consists of operating lease
 
arrangements for certain
 
warehouse and distribution space,
 
office space, retail
shops,
 
production
 
facilities,
 
rail
 
cars,
 
production
 
and
 
distribution
 
equipment,
 
automobiles,
 
and
 
office
 
equipment.
 
Our
 
lease
 
costs
associated with finance
 
leases and
 
sale-leaseback transactions
 
and our
 
lease income associated
 
with lessor and
 
sublease arrangements
are not material to our Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55
Components of our lease cost are as follows:
 
Fiscal Year
In Millions
2023
2022
2021
Operating lease cost
$
127.6
$
129.7
$
132.7
Variable
 
lease cost
6.1
8.5
21.8
Short-term lease cost
30.0
29.1
23.4
Maturities of our operating and finance lease obligations by fiscal year are
 
as follows:
In Millions
Operating Leases
Finance Leases
Fiscal 2024
$
111.9
$
1.0
Fiscal 2025
86.4
0.6
Fiscal 2026
64.3
0.6
Fiscal 2027
42.9
0.3
Fiscal 2028
28.6
-
After fiscal 2028
68.6
-
Total noncancelable
 
future lease obligations
$
402.7
$
2.5
Less: Interest
(43.8)
(0.2)
Present value of lease obligations
$
358.9
$
2.3
The
 
lease
 
payments
 
presented
 
in
 
the
 
table
 
above
 
exclude
 
$
107.2
 
million
 
of
 
minimum
 
lease
 
payments
 
for
 
operating
 
leases
 
we
 
have
committed to but have not yet commenced as of May 28, 2023.
 
The weighted-average remaining lease term and weighted-average
 
discount rate for our operating leases are as follows:
May 28, 2023
May 29, 2022
Weighted-average
 
remaining lease term
5.2
years
4.5
years
Weighted-average
 
discount rate
4.4
%
3.8
%
Supplemental operating cash flow information and non-cash activity related
 
to our operating leases are as follows:
 
Fiscal Year
In Millions
2023
2022
Cash paid for amounts included in the measurement of lease liabilities
$
129.9
$
128.7
Right of use assets obtained in exchange for new lease liabilities
$
124.4
$
84.6
 
NOTE 8. FINANCIAL INSTRUMENTS, RISK MANAGEMENT ACTIVITIES,
 
AND FAIR VALUES
FINANCIAL INSTRUMENTS
The
 
carrying
 
values
 
of
 
cash
 
and
 
cash
 
equivalents,
 
receivables,
 
accounts
 
payable,
 
other
 
current
 
liabilities,
 
and
 
notes
 
payable
approximate fair
 
value. Marketable
 
securities are
 
carried at
 
fair value.
 
As of
 
May 28,
 
2023, and
 
May 29,
 
2022, a
 
comparison of
 
cost
and market values of our marketable debt and equity securities is as follows:
Cost
Fair Value
Gross Unrealized Gains
Gross Unrealized Losses
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
Available for
 
sale
 
debt securities
$
2.3
$
2.3
$
2.3
$
2.3
$
-
$
-
$
-
$
-
Equity securities
117.5
250.1
122.7
255.3
5.2
5.2
10.0
15.1
Total
$
119.8
$
252.4
$
125.0
$
257.6
$
5.2
$
5.2
$
10.0
$
15.1
As of May 28, 2023, the fair value and carrying value
 
of equity securities restricted for payment of active employee
 
health and welfare
benefits were $
117.2
 
million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56
There were
no
 
realized gains or losses from sales
 
of marketable securities in
 
fiscal 2023 and 2022.
 
Gains and losses are determined
 
by
specific identification.
Classification
 
of
 
marketable
 
securities
 
as
 
current
 
or
 
noncurrent
 
is
 
dependent
 
upon
 
our
 
intended
 
holding
 
period
 
and
 
the
 
security’s
maturity date. The
 
aggregate unrealized gains
 
and losses on available
 
for sale debt securities,
 
net of tax effects,
 
are classified in AOCI
within stockholders’ equity.
 
Scheduled maturities of our marketable securities are as follows:
Marketable Securities
In Millions
Cost
Fair Value
Under 1 year (current)
$
2.3
$
2.3
Equity securities
117.5
122.7
Total
$
119.8
$
125.0
As of May 28, 2023, we had $
2.2
 
million of marketable debt securities pledged as collateral for derivative contracts.
RISK MANAGEMENT ACTIVITIES
As a
 
part of
 
our ongoing
 
operations, we
 
are exposed
 
to market
 
risks such
 
as changes
 
in interest
 
and foreign
 
currency exchange
 
rates
and commodity and
 
equity prices. To
 
manage these risks, we
 
may enter into various
 
derivative transactions (e.g.,
 
futures, options, and
swaps) pursuant to our established policies.
COMMODITY PRICE RISK
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 fiscal 2023, 2022, and 2021 included:
Fiscal Year
In Millions
2023
2022
2021
Net (loss) gain on mark-to-market valuation of commodity positions
$
(154.4)
$
303.3
$
138.2
Net gain on commodity positions reclassified from unallocated corporate
 
items to segment operating profit
(89.5)
(188.0)
(8.8)
Net mark-to-market revaluation of certain grain inventories
(48.0)
17.8
9.4
Net mark-to-market valuation of certain commodity positions recognized
 
in
 
unallocated corporate items
$
(291.9)
$
133.1
$
138.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57
As
 
of
 
May
 
28,
 
2023,
 
the
 
net
 
notional
 
value
 
of
 
commodity
 
derivatives
 
was
 
$
406.8
 
million,
 
of
 
which
 
$
257.9
 
million
 
related
 
to
agricultural inputs and $
148.9
 
million related to energy inputs. These contracts relate to inputs
 
that generally will be utilized within the
next
12
 
months.
 
INTEREST RATE RISK
We
 
are
 
exposed
 
to
 
interest
 
rate
 
volatility
 
with
 
regard
 
to
 
future
 
issuances
 
of
 
fixed-rate
 
debt,
 
and
 
existing
 
and
 
future
 
issuances
 
of
floating-rate debt. Primary exposures include U.S. Treasury
 
rates, SOFR, Euribor, and
 
commercial paper rates in the United States and
Europe.
 
We
 
use
 
interest
 
rate
 
swaps,
 
forward-starting
 
interest
 
rate
 
swaps,
 
and
 
treasury
 
locks
 
to
 
hedge
 
our
 
exposure
 
to
 
interest
 
rate
changes,
 
to
 
reduce
 
the
 
volatility
 
of
 
our
 
financing
 
costs,
 
and
 
to
 
achieve
 
a
 
desired
 
proportion
 
of
 
fixed-rate
 
versus
 
floating-rate
 
debt,
based
 
on
 
current
 
and
 
projected
 
market
 
conditions.
 
Generally
 
under
 
these
 
swaps,
 
we
 
agree
 
with
 
a
 
counterparty
 
to
 
exchange
 
the
difference between fixed-rate and floating-rate
 
interest amounts based on an agreed upon notional principal amount.
Floating Interest
 
Rate Exposures
 
— Floating-to-fixed
 
interest rate
 
swaps are
 
accounted for
 
as cash
 
flow hedges,
 
as are
 
all hedges
 
of
forecasted
 
issuances
 
of
 
debt.
 
Effectiveness
 
is
 
assessed
 
based
 
on
 
either
 
the
 
perfectly
 
effective
 
hypothetical
 
derivative
 
method
 
or
changes in the
 
present value of
 
interest payments on
 
the underlying debt.
 
Effective gains
 
and losses deferred
 
to AOCI are
 
reclassified
into earnings over the life of the associated debt.
 
Fixed
 
Interest
 
Rate
 
Exposures
 
—
 
Fixed-to-floating
 
interest
 
rate
 
swaps
 
are
 
accounted
 
for
 
as
 
fair
 
value
 
hedges
 
with
 
effectiveness
assessed
 
based
 
on
 
changes
 
in
 
the
 
fair
 
value
 
of
 
the
 
underlying
 
debt
 
and
 
derivatives,
 
using
 
incremental
 
borrowing
 
rates
 
currently
available on loans with similar terms and maturities.
 
During the fourth quarter of fiscal 2023, in advance of planned debt financing,
 
we entered into €
750.0
 
million of forward-starting
swaps. The forward-starting swap agreements were terminated during
 
the fourth quarter of fiscal 2023, in conjunction with the
Company’s issuance of
 
a €
750.0
 
million
6
-year fixed-rate note. Upon termination, a loss of $
5.0
 
million was recognized in AOCI and
will be amortized through interest expense over the respective term of
 
the debt.
 
During the fourth quarter of fiscal 2023, in advance of planned debt
 
financing, we entered into $
500.0
 
million of treasury locks. The
treasury locks were terminated during the fourth quarter of fiscal 2023, in
 
conjunction with the Company’s issuance
 
of a $
1,000.0
million
10
-year fixed-rate note. Upon termination, a loss of $
1.4
 
million was recognized in AOCI and will be amortized through
interest expense over the respective term of the debt.
 
During the second quarter of fiscal 2023, we entered
 
into a $
500.0
 
million notional amount interest swap to convert our $
500.0
 
million
fixed rate notes due
November 18, 2025
, to a floating rate.
 
As of May 28,
 
2023, the pre-tax
 
amount of cash-settled
 
interest rate hedge
 
gain or loss
 
remaining in AOCI,
 
which will be
 
reclassified
to earnings over the remaining term of the related underlying debt, follows:
In Millions
Gain/(Loss)
3.65
% notes due
February 15, 2024
$
1.3
4.0
% notes due
April 17, 2025
(1.1)
3.2
% notes due
February 10, 2027
6.3
1.5
% notes due
April 27, 2027
(1.3)
4.2
% notes due
April 17, 2028
(5.0)
3.907
% notes due
April 13, 2029
(4.9)
2.25
% notes due
October 14, 2031
16.5
4.95
% notes due
March 29, 2033
(1.4)
4.55
% notes due
April 17, 2038
(8.1)
5.4
% notes due
June 15, 2040
(9.5)
4.15
% notes due
February 15, 2043
7.8
4.7
% notes due
April 17, 2048
(11.8)
Net pre-tax hedge loss in AOCI
$
(11.2)
 
 
 
 
 
 
 
 
 
 
 
58
The
 
following
 
table
 
summarizes
 
the
 
notional
 
amounts
 
and
 
weighted-average
 
interest
 
rates
 
of
 
our
 
interest
 
rate
 
derivatives.
 
Average
floating rates are based on rates as of the end of the reporting period.
In Millions
May 28, 2023
May 29, 2022
Pay-floating swaps - notional amount
$
1,143.4
$
644.1
Average receive
 
rate
2.6
%
0.4
%
Average pay rate
2.5
%
0.1
%
The floating-rate swap contracts outstanding as of May 28, 2023, mature
 
in fiscal
2026
.
 
FOREIGN EXCHANGE RISK
Foreign currency
 
fluctuations affect
 
our net
 
investments in
 
foreign subsidiaries
 
and foreign
 
currency cash
 
flows related
 
to third
 
party
purchases,
 
intercompany
 
loans, product
 
shipments, and
 
foreign-denominated
 
debt.
 
We
 
are also
 
exposed
 
to the
 
translation of
 
foreign
currency
 
earnings
 
to
 
the
 
U.S.
 
dollar.
 
Our
 
principal
 
exposures
 
are
 
to
 
the
 
Australian
 
dollar,
 
Brazilian
 
real,
 
British
 
pound
 
sterling,
Canadian
 
dollar,
 
Chinese renminbi,
 
euro, Japanese
 
yen, Mexican
 
peso, and
 
Swiss franc.
 
We
 
primarily
 
use foreign
 
currency forward
contracts to selectively hedge our
 
foreign currency cash flow exposures.
 
We also
 
generally swap our foreign-denominated
 
commercial
paper
 
borrowings
 
and
 
nonfunctional
 
currency
 
intercompany
 
loans
 
back
 
to U.S.
 
dollars
 
or
 
the
 
functional
 
currency
 
of the
 
entity
 
with
foreign exchange exposure.
 
The gains or losses
 
on these derivatives offset
 
the foreign currency
 
revaluation gains or
 
losses recorded in
earnings on the associated borrowings. We
 
generally do not hedge more than 18 months in advance.
As of May 28, 2023, the net notional value of foreign exchange derivatives
 
was $
933.0
 
million.
We
 
also have
 
net investments
 
in foreign
 
subsidiaries that
 
are denominated
 
in euros.
 
We
 
hedged a portion
 
of these net
 
investments by
issuing
 
euro-denominated
 
commercial
 
paper
 
and
 
foreign
 
exchange
 
forward
 
contracts.
 
As of
 
May
 
28,
 
2023,
 
we
 
hedged
 
a
 
portion
 
of
these net
 
investments
 
with €
2,949.9
 
million of
 
euro denominated
 
bonds.
 
As of
 
May 28,
 
2023,
 
we had
 
deferred
 
net foreign
 
currency
transaction gains of $
71.9
 
million in AOCI associated with net investment hedging activity.
EQUITY INSTRUMENTS
Equity
 
price
 
movements
 
affect
 
our
 
compensation
 
expense
 
as
 
certain
 
investments
 
made
 
by
 
our
 
employees
 
in
 
our
 
deferred
compensation plan
 
are revalued. We
 
use equity swaps
 
to manage this
 
risk. As of May
 
28, 2023, the
 
net notional amount
 
of our equity
swaps was $
177.5
 
million. In fiscal 2024, $
165.4
 
million of swap contracts will mature,
 
and $
12.1
 
million of swap contracts mature
 
in
fiscal 2025.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59
FAIR VALUE
 
MEASUREMENTS AND FINANCIAL STATEMENT
 
PRESENTATION
The
 
fair
 
values
 
of
 
our
 
assets,
 
liabilities,
 
and
 
derivative
 
positions
 
recorded
 
at
 
fair
 
value
 
and
 
their
 
respective
 
levels
 
in
 
the
 
fair
 
value
hierarchy as of May 28, 2023, and May 29, 2022, were as follows:
May 28, 2023
May 28, 2023
Fair Values
 
of Assets
Fair Values
 
of Liabilities
In Millions
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)
$
-
$
-
$
-
$
-
$
-
$
(62.2)
$
-
$
(62.2)
Foreign exchange contracts (a) (c)
-
10.3
-
10.3
-
(2.5)
-
(2.5)
Total
-
10.3
-
10.3
-
(64.7)
-
(64.7)
Derivatives not designated as hedging
 
instruments:
Foreign exchange contracts (a) (c)
-
0.2
-
0.2
-
(5.6)
-
(5.6)
Commodity contracts (a) (d)
-
0.5
-
0.5
-
(29.3)
-
(29.3)
Grain contracts (a) (d)
-
2.3
-
2.3
-
(11.8)
-
(11.8)
Total
-
3.0
-
3.0
-
(46.7)
-
(46.7)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e) (f)
122.7
2.3
34.8
159.8
-
-
-
-
Long-lived assets (g)
-
1.0
-
1.0
-
-
-
-
Total
122.7
3.3
34.8
160.8
-
-
-
-
Total assets, liabilities, and
 
derivative positions
 
recorded at fair value
$
122.7
$
16.6
$
34.8
$
174.1
$
-
$
(111.4)
$
-
$
(111.4)
(a)
 
These contracts and investments
 
are recorded as prepaid
 
expenses and other current
 
assets, other assets, other
 
current liabilities or
other liabilities,
 
as appropriate,
 
based on
 
whether in
 
a gain
 
or loss
 
position. Certain
 
marketable investments
 
are recorded
 
as cash
and cash equivalents.
 
(b)
 
Based on EURIBOR and
 
swap rates. As
 
of May 28, 2023,
 
the carrying amount of
 
hedged debt designated
 
as the hedged item
 
in a
fair value
 
hedge was
 
$
589.7
 
million and
 
was classified
 
on the
 
Consolidated Balance
 
Sheet within
 
long-term debt.
 
As of
 
May 28,
2023, the cumulative amount of fair value hedging basis adjustments was $
53.7
 
million.
(c)
 
Based on observable market transactions of spot currency rates and forward
 
currency prices.
(d)
 
Based on prices of futures exchanges and recently reported transactions in
 
the marketplace.
(e)
 
Based on prices of common stock, mutual fund net asset values, and bond matrix pricing.
(f)
 
The level 3
 
marketable investment represents
 
an equity security
 
without a readily
 
determinable fair value.
 
During fiscal 2023,
 
we
recorded
 
an impairment
 
charge
 
of $
32.4
 
million resulting
 
from the
 
determination of
 
fair value
 
utilizing level
 
3 inputs
 
including
revised projections of future operating results and observable transaction data
 
for similar instruments.
(g)
 
We recorded
 
$
8.6
 
million in non-cash impairment charges
 
in fiscal 2023 to write down
 
certain long-lived assets to their
 
fair value.
Fair value
 
was based
 
on recently
 
reported transactions
 
for similar
 
assets in the
 
marketplace. These
 
assets had
 
a carrying value
 
of
$
9.6
 
million and were associated with the restructuring actions described in Note 4.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60
May 29, 2022
May 29, 2022
Fair Values
 
of Assets
Fair Values
 
of Liabilities
In Millions
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Derivatives designated as hedging instruments:
Interest rate contracts (a) (b)
$
-
$
-
$
-
$
-
$
-
$
(29.8)
$
-
$
(29.8)
Foreign exchange contracts (a) (c)
-
26.9
-
26.9
-
(4.7)
-
(4.7)
Total
-
26.9
-
26.9
-
(34.5)
-
(34.5)
Derivatives not designated as hedging
 
instruments:
Foreign exchange contracts (a) (c)
-
8.4
-
8.4
-
(15.1)
-
(15.1)
Commodity contracts (a) (d)
10.7
96.9
-
107.6
-
(0.2)
-
(0.2)
Grain contracts (a) (d)
-
28.7
-
28.7
-
(3.0)
-
(3.0)
Total
10.7
134.0
-
144.7
-
(18.3)
-
(18.3)
Other assets and liabilities reported at fair value:
Marketable investments (a) (e) (f)
255.3
2.3
67.2
324.8
-
-
-
-
Total
255.3
2.3
67.2
324.8
-
-
-
-
Total assets, liabilities, and
 
derivative positions
 
recorded at fair value
$
266.0
$
163.2
$
67.2
$
496.4
$
-
$
(52.8)
$
-
$
(52.8)
(
a)
 
These contracts and investments
 
are recorded as prepaid
 
expenses and other current
 
assets, other assets, other
 
current liabilities or
other liabilities,
 
as appropriate,
 
based on
 
whether in
 
a gain
 
or loss
 
position. Certain
 
marketable investments
 
are recorded
 
as cash
and cash equivalents.
 
(b)
 
Based on EURIBOR and
 
swap rates. As
 
of May 29, 2022, the
 
carrying amount of hedged
 
debt designated as
 
the hedged item in
 
a
fair value
 
hedge was
 
$
615.7
 
million and
 
was classified
 
on the
 
Consolidated Balance
 
Sheet within
 
long-term debt.
 
As of
 
May 29,
2022, the cumulative amount of fair value hedging basis adjustments was
 
$
28.4
 
million.
(c)
 
Based on observable market transactions of spot currency rates and forward
 
currency prices.
(d)
 
Based on prices of futures exchanges and recently reported transactions in the marketplace.
(e)
 
Based on prices of common stock, mutual fund net asset values, and bond matrix
 
pricing.
(f)
 
The level 3
 
marketable investment represents
 
an equity security
 
without a readily
 
determinable fair value.
 
During fiscal 2022,
 
we
recorded
 
an impairment
 
charge
 
of $
34.0
 
million resulting
 
from the
 
determination of
 
fair value
 
utilizing level
 
3 inputs
 
including
revised projections of future operating results and observable transaction data
 
for similar instruments.
We did not
 
significantly change our valuation techniques from prior periods.
 
The
 
fair value
 
of our
 
long-term
 
debt
 
is estimated
 
using
 
Level 2
 
inputs based
 
on quoted
 
prices
 
for
 
those
 
instruments. Where
 
quoted
prices are not available, fair value is estimated using
 
discounted cash flows and market-based expectations
 
for interest rates, credit risk
and
 
the
 
contractual
 
terms
 
of
 
the
 
debt
 
instruments.
 
As
 
of
 
May
 
28,
 
2023,
 
the
 
fair
 
value
 
and
 
carrying
 
amount
 
of
 
our
 
long-term
 
debt,
including the
 
current portion,
 
were $
10,929.6
 
million and
 
$
11,674.2
 
million, respectively.
 
As of
 
May 29,
 
2022, the
 
carrying amount
and fair value of our long-term debt, including the current portion, were
 
$
10,508.8
 
million and $
10,809.0
 
million, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61
Information
 
related
 
to our
 
cash flow
 
hedges,
 
fair value
 
hedges, and
 
other
 
derivatives
 
not designated
 
as hedging
 
instruments for
 
the
fiscal years ended May 28, 2023, and May 29, 2022, follows:
Interest Rate
Contracts
Foreign
Exchange
Contracts
Equity
Contracts
Commodity
Contracts
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Derivatives in Cash Flow Hedging
Relationships:
Amount of (loss) gain recognized in
other comprehensive income (OCI)
$
(6.4)
$
(5.4)
$
9.4
$
13.2
$
-
$
-
$
-
$
-
$
3.0
$
7.8
Amount of net gain (loss) reclassified
from AOCI into earnings (a)
2.2
(4.7)
22.0
(19.5)
-
-
-
-
24.2
(24.2)
Derivatives in Fair Value
 
Hedging
Relationships:
Amount of net loss recognized
 
in earnings (b)
(4.9)
(2.1)
-
-
-
-
-
-
(4.9)
(2.1)
Derivatives Not Designated as
 
Hedging Instruments:
Amount of net (loss) gain recognized
 
in earnings (c)
-
-
(46.2)
(32.8)
(3.4)
(8.0)
(152.6)
257.2
(202.2)
216.4
(a)
 
(Loss) gain reclassified
 
from AOCI into earnings
 
is reported in interest,
 
net for interest rate
 
swaps and in cost
 
of sales and SG&A
expenses for foreign
 
exchange contracts. For the
 
fiscal year ended May 28,
 
2023, the amount of
 
gain reclassified from AOCI
 
into
cost of
 
sales was
 
$
21.1
 
million and
 
the amount
 
of gain
 
reclassified from
 
AOCI into
 
SG&A was
 
$
0.9
 
million. For
 
the fiscal
 
year
ended
 
May 29,
 
2022,
 
the
 
amount
 
of
 
loss
 
reclassified
 
from
 
AOCI
 
into
 
cost
 
of
 
sales
 
was
 
$
11.1
 
million
 
and
 
the
 
amount
 
of
 
loss
reclassified from AOCI into SG&A was $
8.4
 
million.
(b)
 
Loss recognized
 
in earnings is
 
reported in
 
interest, net
 
for interest rate
 
contracts, in
 
cost of sales
 
for commodity
 
contracts, and
 
in
SG&A expenses for equity contracts and foreign exchange contracts.
(c)
 
(Loss) gain recognized in earnings
 
is related to the ineffective
 
portion of the hedging relationship, reported
 
in SG&A expenses for
foreign
 
exchange
 
contracts
 
and
 
interest,
 
net
 
for
 
interest rate
 
contracts.
No
 
amounts
 
were reported
 
as a
 
result
 
of being
 
excluded
from the assessment of hedge effectiveness.
The following
 
tables reconcile
 
the net
 
fair values
 
of assets
 
and
 
liabilities subject
 
to offsetting
 
arrangements
 
that are
 
recorded
 
in our
Consolidated Balance Sheets to the net fair values that could be reported
 
in our Consolidated Balance Sheets:
May 28, 2023
Assets
Liabilities
Gross Amounts Not Offset
in the
Balance Sheet (e)
Gross Amounts Not Offset
in the
Balance Sheet (e)
In Millions
Gross
Amounts of
Recognized
Assets
Gross
Liabilities
Offset in the
Balance Sheet
(a)
Net Amounts
of Assets
 
(b)
Financial
Instruments
Cash
Collateral
Received
Net Amount
(c)
Gross
Amounts of
Recognized
Liabilities
Gross Assets
Offset in the
Balance Sheet
(a)
Net Amounts
of Liabilities
(b)
Financial
Instruments
Cash
Collateral
Pledged
Net Amount
(d)
Commodity contracts
$
0.5
$
-
$
0.5
$
(0.5)
$
-
$
-
$
(29.3)
$
-
$
(29.3)
$
0.5
$
16.2
$
(12.6)
Interest rate contracts
-
-
-
-
-
-
(69.2)
-
(69.2)
-
44.3
(24.9)
Foreign exchange contracts
10.4
-
10.4
(4.2)
-
6.2
(8.2)
-
(8.2)
4.2
-
(4.0)
Equity contracts
2.8
-
2.8
(1.0)
-
1.8
(1.5)
-
(1.5)
1.0
-
(0.5)
Total
$
13.7
$
-
$
13.7
$
(5.7)
$
-
$
8.0
$
(108.2)
$
-
$
(108.2)
$
5.7
$
60.5
$
(42.0)
(a)
 
Includes related collateral offset in our Consolidated Balance Sheets.
 
(b)
 
Net fair value as recorded in our Consolidated Balance Sheets.
 
(c)
 
Fair value of assets that could be reported net in our Consolidated Balance Sheets.
 
(d)
 
Fair value of liabilities that could be reported net in our Consolidated Balance Sheets.
(e)
 
Fair value of assets and liabilities reported on a gross basis in our Consolidated Balance Sheets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
62
May 29, 2022
Assets
Liabilities
Gross Amounts Not Offset
in the Balance Sheet (e)
Gross Amounts Not Offset
in the Balance Sheet (e)
In Millions
Gross
Amounts of
Recognized
Assets
Gross
Liabilities
Offset in the
Balance
Sheet (a)
Net
Amounts of
Assets
 
(b)
Financial
Instruments
Cash
Collateral
Received
Net Amount
(c)
Gross
Amounts of
Recognized
Liabilities
Gross
Assets
Offset in the
Balance
Sheet (a)
Net
Amounts of
Liabilities
(b)
Financial
Instruments
Cash
Collateral
Pledged
Net Amount
(d)
Commodity contracts
$
107.5
$
-
$
107.5
$
(0.2)
$
(62.8)
$
44.5
$
(0.2)
$
-
$
(0.2)
$
0.2
$
-
$
-
Interest rate contracts
-
-
-
-
-
-
(30.7)
-
(30.7)
-
10.6
(20.1)
Foreign exchange contracts
35.3
-
35.3
(6.4)
-
28.9
(19.7)
-
(19.7)
6.4
-
(13.3)
Equity contracts
0.4
-
0.4
(0.3)
-
0.1
(4.0)
-
(4.0)
0.3
-
(3.7)
Total
$
143.2
$
-
$
143.2
$
(6.9)
$
(62.8)
$
73.5
$
(54.6)
$
-
$
(54.6)
$
6.9
$
10.6
$
(37.1)
(a)
 
Includes related collateral offset in our Consolidated Balance Sheets.
 
(b)
 
Net fair value as recorded in our Consolidated Balance Sheets.
 
(c)
 
Fair value of assets that could be reported net in our Consolidated Balance Sheets.
 
(d)
 
Fair value of liabilities that could be reported net in our Consolidated Balance Sheets.
(e)
 
Fair value of assets and liabilities reported on a gross basis in our Consolidated Balance Sheets.
AMOUNTS RECORDED IN ACCUMULATED
 
OTHER COMPREHENSIVE LOSS
 
As of May 28, 2023, the after-tax amounts of unrealized
 
gains in AOCI related to hedge derivatives follows:
In Millions
After-Tax
 
Gain/(Loss)
Unrealized losses from interest rate cash flow hedges
$
(7.8)
Unrealized gains from foreign currency cash flow hedges
13.7
After-tax gains in AOCI related to hedge derivatives
$
5.9
The net amount
 
of pre-tax gains and
 
losses in AOCI as
 
of May 28,
 
2023, that we expect
 
to be reclassified
 
into net earnings
 
within the
next 12 months is a $
19.8
 
million net gain.
CREDIT-RISK-RELATED
 
CONTINGENT FEATURES
Certain of our
 
derivative instruments contain
 
provisions that require
 
us to maintain an
 
investment grade credit rating
 
on our debt from
each
 
of
 
the
 
major
 
credit
 
rating
 
agencies.
 
If
 
our
 
debt
 
were
 
to
 
fall
 
below
 
investment
 
grade,
 
the
 
counterparties
 
to
 
the
 
derivative
instruments
 
could
 
request
 
full
 
collateralization
 
on
 
derivative
 
instruments
 
in
 
net
 
liability
 
positions.
 
The
 
aggregate
 
fair
 
value
 
of
 
all
derivative
 
instruments
 
with
 
credit-risk-related
 
contingent
 
features
 
that
 
were
 
in
 
a
 
liability
 
position
 
on
 
May
 
28,
 
2023,
 
was
 
$
100.1
million. We have
 
posted $
60.5
 
million of collateral under these contracts.
 
CONCENTRATIONS OF
 
CREDIT AND COUNTERPARTY
 
CREDIT RISK
During fiscal 2023, customer concentration was as follows:
Percent of total
Consolidated
North America
Retail
North America
Foodservice
International
Pet
Walmart (a):
Net sales
21
%
28
%
8
%
2
%
16
%
Accounts receivable
22
%
8
%
3
%
15
%
Five largest customers:
Net sales
51
%
48
%
12
%
67
%
(a)
 
Includes Walmart Inc.
 
and its affiliates.
No customer other than Walmart
 
accounted for
10
 
percent or more of our consolidated net sales.
We
 
enter
 
into
 
interest
 
rate,
 
foreign
 
exchange,
 
and
 
certain
 
commodity
 
and
 
equity
 
derivatives,
 
primarily
 
with
 
a
 
diversified
 
group
 
of
highly rated
 
counterparties. We
 
continually monitor
 
our positions and
 
the credit ratings
 
of the counterparties
 
involved and,
 
by policy,
limit
 
the
 
amount
 
of
 
credit
 
exposure
 
to
 
any
 
one
 
party.
 
These
 
transactions
 
may
 
expose
 
us
 
to
 
potential
 
losses
 
due
 
to
 
the
 
risk
 
of
nonperformance
 
by
 
these
 
counterparties;
 
however,
 
we
 
have
 
not
 
incurred
 
a
 
material
 
loss.
 
We
 
also
 
enter
 
into
 
commodity
 
futures
transactions through various regulated exchanges.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63
The amount
 
of loss due
 
to the credit
 
risk of the
 
counterparties, should
 
the counterparties
 
fail to
 
perform according
 
to the terms
 
of the
contracts,
 
is $
4.5
 
million. We
 
have
no
 
collateral
 
held against
 
these contracts.
 
Under the
 
terms of
 
our swap
 
agreements,
 
some of
 
our
transactions
 
require
 
collateral
 
or
 
other
 
security
 
to
 
support
 
financial
 
instruments
 
subject
 
to
 
threshold
 
levels
 
of
 
exposure
 
and
counterparty
 
credit
 
risk.
 
Collateral
 
assets
 
are
 
either
 
cash
 
or
 
U.S.
 
Treasury
 
instruments
 
and
 
are
 
held
 
in
 
a
 
trust
 
account
 
that
 
we
 
may
access if the counterparty defaults.
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
 
this
 
service.
 
All
 
of
 
our
 
accounts
 
payable
 
remain
 
as
 
obligations
 
to
 
our
 
suppliers
 
as
 
stated
 
in
 
our
supplier agreements.
 
As of
 
May 28,
 
2023, $
1,430.1
 
million of
 
our accounts
 
payable was
 
payable to
 
suppliers who
 
utilize these
 
third-
party services.
 
As of
 
May 29,
 
2022, $
1,429.6
 
million of
 
our accounts
 
payable was
 
payable to
 
suppliers who
 
utilize these
 
third-party
services.
 
NOTE 9. DEBT
NOTES PAYABLE
The components of notes payable and their respective weighted-average
 
interest rates at the end of the periods were as follows:
 
May 28, 2023
May 29, 2022
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
U.S. commercial paper
$
-
-
%
$
694.8
1.1
%
Financial institutions
31.7
10.5
%
116.6
4.4
%
Total
$
31.7
10.5
%
$
811.4
5.5
%
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 May 28, 2023:
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 May 28, 2023.
64
LONG-TERM DEBT
 
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.
 
In the fourth quarter of fiscal 2022, we repaid $
850.0
 
million of
3.7
 
percent fixed-rate notes due
October 17, 2023
 
using proceeds from
the issuance of commercial paper.
In the
 
fourth quarter
 
of fiscal
 
2022, we
 
issued €
250.0
 
million
0.0
 
percent fixed-rate
 
notes due
November 11, 2022
. We
 
used the
 
net
proceeds for general corporate purposes.
In the second
 
quarter of fiscal
 
2022, we issued
 
€
500.0
 
million of
0.125
 
percent fixed-rate notes
 
due
November 15, 2025
. We
 
used the
net proceeds to repay a portion of our €
500.0
 
million of
0.0
 
percent fixed-rate notes due
November 16, 2021
, and for general corporate
purposes.
 
In the second quarter of fiscal 2022, we issued €
250.0
 
million of floating-rate notes due
May 16, 2023
. We used the net proceeds
 
to
repay a portion of our €
500.0
 
million of
0.0
 
percent fixed-rate notes due
November 16, 2021
.
In the second
 
quarter of fiscal
 
2022, we issued
 
$
500.0
 
million of
2.25
 
percent fixed-rate notes
 
due
October 14, 2031
. We
 
used the net
proceeds,
 
together with
 
proceeds from
 
the issuance
 
of commercial
 
paper,
 
to repay
 
$
1,000.0
 
million
 
of
3.15
 
percent fixed-rate
 
notes
due
December 15, 2021
.
In the first quarter of fiscal 2022, we issued €
500.0
 
million of floating-rate notes due
July 27, 2023
. We used the net proceeds to
 
repay
€
500.0
 
million of
0.0
 
percent fixed-rate notes due
August 21, 2021
.
In the first quarter
 
of fiscal 2022, we
 
repaid €
200.0
 
million of
2.2
 
percent fixed-rate notes due
June 24, 2021
, using proceeds from
 
the
issuance of €
50.0
 
million of
2.2
 
percent fixed-rate notes due
November 29, 2021
, and borrowings under a committed credit facility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65
A summary of our long-term debt is as follows:
In Millions
May 28, 2023
May 29, 2022
4.2
% notes due
April 17, 2028
$
1,400.0
$
1,400.0
4.95
% notes due
March 29, 2033
1,000.0
-
Euro-denominated
3.907
% notes due
April 13, 2029
804.2
-
4.0
% notes due
April 17, 2025
800.0
800.0
3.2
% notes due
February 10, 2027
750.0
750.0
2.875
% notes due
April 15, 2030
750.0
750.0
Euro-denominated
0.45
% notes due
January 15, 2026
643.4
644.1
3.0
% notes due
February 1, 2051
605.2
605.2
Euro-denominated
0.125
% notes due
November 15, 2025
536.2
536.7
Euro-denominated floating rate notes due
July 27, 2023
536.2
537.9
3.65
% notes due
February 15, 2024
500.0
500.0
2.25
% notes due
October 14, 2031
500.0
500.0
5.241
% notes due
November 18, 2025
500.0
-
4.7
% notes due
April 17, 2048
446.2
446.2
4.15
% notes due
February 15, 2043
434.9
434.9
Euro-denominated
1.5
% notes due
April 27, 2027
428.9
429.4
Floating rate notes due
October 17, 2023
400.0
400.0
5.4
% notes due
June 15, 2040
382.5
382.5
4.55
% notes due
April 17, 2038
282.4
282.4
Euro-denominated floating rate notes due
November 10, 2023
268.1
-
Medium-term notes,
0.56
% to
6.41
%, due fiscal
2024
 
or later
4.0
103.9
Euro-denominated
1.0
% notes due
April 27, 2023
-
536.8
2.6
% notes due
October 12, 2022
-
500.0
Euro-denominated
0.0
% notes due
November 11, 2022
-
268.3
Euro-denominated
0.0
% notes due
May 16, 2023
-
268.3
Other
(298.0)
(267.6)
11,674.2
10,809.0
Less amount due within one year
(1,709.1)
(1,674.2)
Total long-term debt
$
9,965.1
$
9,134.8
Principal payments
 
due on
 
long-term debt
 
and finance
 
leases in
 
the next
 
five fiscal
 
years based
 
on stated
 
contractual maturities,
 
our
intent to redeem, or put rights of certain note holders are as follows:
 
In Millions
Fiscal 2024
$
1,709.1
Fiscal 2025
800.5
Fiscal 2026
1,680.1
Fiscal 2027
1,179.3
Fiscal 2028
1,400.0
Certain of our
 
long-term debt agreements
 
contain restrictive
 
covenants.
As of May 28, 2023, we were in compliance with all of these
covenants.
 
As of
 
May 28,
 
2023,
 
the $
11.2
 
million
 
pre-tax loss
 
recorded
 
in AOCI
 
associated with
 
our previously
 
designated interest
 
rate swaps
will be
 
reclassified
 
to net
 
interest over
 
the remaining
 
lives of
 
the hedged
 
transactions.
 
The amount
 
expected to
 
be reclassified
 
from
AOCI to net interest in fiscal 2024 is a $
0.7
 
million pre-tax gain.
 
 
 
 
 
 
 
 
66
NOTE 10. REDEEMABLE AND NONCONTROLLING INTERESTS
Our principal noncontrolling interest relates to our General Mills Cereals, LLC (GMC) subsidiar
 
y.
The holder of the
 
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.
During
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
completed
 
the
 
sale
 
of
 
our
 
interests
 
in
 
Yoplait
 
SAS,
 
Yoplait
 
Marques
 
SNC
 
and
 
Liberté
Marques
 
Sàrl
 
to
 
Sodiaal
 
in
 
exchange
 
for
 
Sodiaal’s
 
interest
 
in
 
our
 
Canadian
 
yogurt
 
business,
 
a
 
modified
 
agreement
 
for
 
the
 
use
 
of
Yoplait
 
and
Liberté
brands in the United States and Canada, and cash. Please see Note 3 to the Consolidated
 
Financial Statements.
Up to
 
the date
 
of the
 
divestiture, Sodiaal
 
held the remaining
 
interests in
 
each of
 
the entities.
 
On the
 
acquisition date,
 
we recorded
 
the
fair
 
value
 
of
 
Sodiaal’s
49
 
percent
 
euro-denominated
 
interest
 
in
 
Yoplait
 
SAS
 
as
 
a
 
redeemable
 
interest
 
on
 
our
 
Consolidated
 
Balance
Sheets. Sodiaal had
 
the right to
 
put all or
 
a portion of
 
its redeemable interest
 
to us at
 
fair value until
 
the divestiture closed
 
in the third
quarter of
 
fiscal 2022.
 
In connection
 
with the
 
divestiture, cumulative
 
adjustments made
 
to the
 
redeemable
 
interest related
 
to the
 
fair
value put feature were
 
reversed against additional paid-in
 
capital, where changes in the
 
redemption amount were historically recorded,
and the resulting carrying value of the noncontrolling interests were included
 
in the calculation of the gain on divestiture.
We
 
paid dividends
 
of $
105.1
 
million in
 
fiscal 2022
 
and $
40.3
 
million in
 
fiscal 2021
 
to Sodiaal
 
under the
 
terms of
 
the Yoplait
 
SAS,
Yoplait
 
Marques SNC, and Liberté Marques Sàrl shareholder agreements.
A subsidiary of
 
Yoplait
 
SAS had an
 
exclusive milk supply agreement
 
for its European operations
 
with Sodiaal through
 
November 28,
2021. Net purchases totaled $
99.5
 
million for the six-month period ended November 28, 2021.
For
 
financial
 
reporting
 
purposes,
 
the
 
assets,
 
liabilities,
 
results
 
of
 
operations,
 
and
 
cash
 
flows
 
of
 
our
 
non-wholly
 
owned
 
consolidated
subsidiaries
 
are
 
included
 
in
 
our
 
Consolidated
 
Financial
 
Statements.
 
The
 
third-party
 
investor’s
 
share
 
of
 
the
 
net
 
earnings
 
of
 
these
subsidiaries
 
is
 
reflected
 
in
 
net
 
earnings
 
attributable
 
to
 
redeemable
 
and
 
noncontrolling
 
interests
 
in
 
our
 
Consolidated
 
Statements
 
of
Earnings.
 
Our noncontrolling interests contain restrictive covenants. As of May 28, 2023, we were in compliance with all of these covenants.
NOTE 11. STOCKHOLDERS’
 
EQUITY
Cumulative preference stock of
5.0
 
million shares, without par value, is authorized but unissued.
On June 27, 2022, our Board of Directors authorized the
 
repurchase of up to
100
 
million shares of our common stock. Purchases under
the authorization
 
can be
 
made in
 
the open
 
market or
 
in privately
 
negotiated
 
transactions, including
 
the use
 
of call
 
options and
 
other
derivative
 
instruments,
 
Rule
 
10b5-1
 
trading
 
plans,
 
and
 
accelerated
 
repurchase
 
programs.
 
The
 
authorization
 
has
 
no
 
specified
termination date.
Share repurchases were as follows:
Fiscal Year
In Millions
2023
2022
2021
Shares of common stock
18.0
13.5
5.0
Aggregate purchase price
$
1,403.6
$
876.8
$
301.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67
The following tables provide details of total comprehensive income:
Fiscal 2023
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Net earnings, including earnings attributable to noncontrolling interests
$
2,593.9
$
15.7
Other comprehensive (loss) income:
Foreign currency translation
$
(110.2)
(0.3)
(110.5)
(0.3)
Net actuarial loss
(295.5)
67.5
(228.0)
-
Other fair value changes:
Hedge derivatives
3.8
(2.5)
1.3
-
Reclassification to earnings:
Foreign currency translation (a)
(7.4)
-
(7.4)
-
Hedge derivatives (b)
(24.7)
6.0
(18.7)
-
Amortization of losses and prior service costs (c)
72.9
(16.0)
56.9
-
Other comprehensive loss
(361.1)
54.7
(306.4)
(0.3)
Total comprehensive
 
income
$
2,287.5
$
15.4
(a)
 
Gain reclassified from AOCI into earnings is reported in the divestitures gain.
(b)
 
Gain reclassified
 
from AOCI
 
into earnings
 
is reported
 
in interest,
 
net for
 
interest rate
 
swaps and
 
in cost
 
of sales
 
and SG&A
expenses for foreign exchange contracts.
(c)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
 
income.
Fiscal 2022
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Net
Net earnings, including earnings attributable to
 
redeemable and noncontrolling interests
$
2,707.3
$
10.2
$
17.5
Other comprehensive income (loss):
Foreign currency translation
$
(188.5)
$
85.8
(102.7)
(26.2)
(47.0)
Net actuarial gain
132.4
(30.8)
101.6
-
-
Other fair value changes:
Hedge derivatives
30.1
(23.6)
6.5
-
0.5
Reclassification to earnings:
Foreign currency translation (a)
342.2
-
342.2
-
-
Hedge derivatives (b)
23.7
11.6
35.3
-
(0.2)
Amortization of losses and prior service costs (c)
97.4
(21.6)
75.8
-
-
Other comprehensive income (loss)
437.3
21.4
458.7
(26.2)
(46.7)
Total comprehensive
 
income (loss)
$
3,166.0
$
(16.0)
$
(29.2)
(a)
 
Loss reclassified from
 
AOCI into earnings
 
is reported in
 
divestitures gain related
 
to the divestiture
 
of our interests
 
in Yoplait
SAS, Yoplait
 
Marques SNC, and Liberte Marques Sarl to Sodiaal in the third quarter
 
of fiscal 2022.
(b)
 
Loss (gain)
 
reclassified from
 
AOCI into
 
earnings is
 
reported in
 
interest, net
 
for interest
 
rate swaps
 
and
 
in cost
 
of sales
 
and
SG&A expenses for foreign exchange contracts.
(c)
 
Loss reclassified from AOCI into earnings is reported in benefit plan non-service
 
income.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68
Fiscal 2021
General Mills
Noncontrolling
Interests
Redeemable
Interest
In Millions
Pretax
Tax
Net
Net
Net
Net earnings, including earnings attributable to
 
redeemable and noncontrolling interests
$
2,339.8
$
6.5
$
(0.3)
Other comprehensive income (loss):
Foreign currency translation
$
(6.1)
$
64.9
58.8
31.5
84.8
Net actuarial gain
464.9
(111.5)
353.4
-
-
Other fair value changes:
Hedge derivatives
(25.8)
6.5
(19.3)
-
(1.4)
Reclassification to earnings:
Hedge derivatives (a)
19.1
(5.7)
13.4
-
0.1
Amortization of losses and prior service costs (b)
102.5
(23.6)
78.9
-
-
Other comprehensive income
554.6
(69.4)
485.2
31.5
83.5
Total comprehensive
 
income
$
2,825.0
$
38.0
$
83.2
(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.
In
 
fiscal
 
2023,
 
2022,
 
and
 
2021,
 
except
 
for
 
certain
 
reclassifications
 
to
 
earnings,
 
changes
 
in other
 
comprehensive
 
income (loss)
 
were
primarily non-cash items.
Accumulated other comprehensive loss balances, net of tax effects,
 
were as follows:
In Millions
May 28, 2023
May 29, 2022
Foreign currency translation adjustments
$
(708.6)
$
(590.7)
Unrealized loss from hedge derivatives
5.9
23.3
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,670.6)
(1,513.4)
Prior service credits
96.4
110.3
Accumulated other comprehensive loss
$
(2,276.9)
$
(1,970.5)
 
NOTE 12. STOCK PLANS
We
 
use broad-based stock
 
plans to help
 
ensure that management’s
 
interests are aligned
 
with those of
 
our shareholders. As
 
of May 28,
2023,
 
a total
 
of
35.1
 
million shares
 
were available
 
for grant
 
in the
 
form of
 
stock options,
 
restricted
 
stock, restricted
 
stock units,
 
and
shares
 
of unrestricted
 
stock under
 
the 2022
 
Stock Compensation
 
Plan
 
(2022
 
Plan). The
 
2022
 
Plan
 
also provides
 
for
 
the issuance
 
of
cash-settled
 
share-based
 
units, stock
 
appreciation
 
rights, and
 
performance-based
 
stock awards.
 
Stock-based
 
awards now
 
outstanding
include
 
some
 
granted
 
under
 
the
 
2017
 
Stock
 
Compensation
 
Plan,
 
under
 
which
 
no
 
further
 
awards
 
may
 
be
 
granted.
 
The
 
stock
 
plans
provide for potential accelerated vesting of awards upon retirement,
 
termination, or death of eligible employees and directors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
69
Stock Options
The
 
estimated
 
fair
 
values
 
of
 
stock
 
options
 
granted
 
and
 
the
 
assumptions
 
used
 
for
 
the
 
Black-Scholes
 
option-pricing
 
model
 
were
 
as
follows:
Fiscal Year
2023
2022
2021
Estimated fair values of stock options granted
$
14.16
$
8.77
$
8.03
Assumptions:
Risk-free interest rate
3.3
%
1.5
%
0.7
%
Expected term
8.5
years
8.5
years
8.5
years
Expected volatility
20.9
%
20.2
%
19.5
%
Dividend yield
3.1
%
3.4
%
3.3
%
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
 
expected
 
term
 
represents
 
the
 
period
 
of
 
time
 
that
 
options
 
granted
 
are
 
expected
 
to
 
be
 
outstanding
 
based
 
on
 
historical
 
data
 
to
estimate option exercises and employee
 
terminations within the valuation
 
model. Separate groups of employees
 
have similar historical
exercise behavior and therefore
 
were aggregated into a
 
single pool for valuation
 
purposes. The weighted-average expected
 
term for all
employee groups is presented in the table
 
above. The risk-free interest rate for
 
periods during the expected term of
 
the options is based
on the U.S. Treasury zero-coupon yield curve in
 
effect at the time of grant.
Any corporate
 
income tax
 
benefit realized
 
upon exercise
 
or vesting
 
of an
 
award in
 
excess of
 
that previously
 
recognized in
 
earnings
(referred to
 
as a
 
windfall tax
 
benefit) is
 
presented in
 
our Consolidated
 
Statements of
 
Cash Flows
 
as an
 
operating cash
 
flow.
 
Realized
windfall
 
tax
 
benefits
 
and
 
shortfall
 
tax
 
deficiencies
 
related
 
to
 
the
 
exercise
 
or
 
vesting
 
of
 
stock-based
 
awards
 
are
 
recognized
 
in
 
the
Consolidated Statements
 
of Earnings.
Windfall tax benefits from stock-based payments
 
in income tax expense in our Consolidated Statements of Earnings were as follows:
Fiscal Year
In Millions
2023
2022
2021
Windfall tax benefits from stock-based payments
$
32.3
$
18.4
$
12.4
As of
 
May 28,
 
2023, there
 
were
no
 
options granted
 
under the
 
2022 Plan.
 
Under the
 
2017 Stock
 
Compensation Plan,
 
options may
 
be
priced
 
at
100
 
percent
 
or
 
more
 
of
 
the
 
fair
 
market
 
value
 
on
 
the
 
date
 
of
 
grant,
 
and
 
generally
 
vest
four years
 
after
 
the
 
date
 
of
 
grant.
Options generally expire within
10 years and one month
 
after the date of grant.
Information on stock option activity follows:
 
Options
Outstanding
(Thousands)
Weighted-Average
Exercise Price Per
Share
Weighted-Average
Remaining
Contractual Term
(Years)
Aggregate Intrinsic
Value (Millions)
Balance as of May 29, 2022
15,005.5
$
55.39
5.36
$
217.5
Granted
1,176.5
70.26
Exercised
(4,468.6)
53.84
Forfeited or expired
(138.2)
61.90
Outstanding as of May 28, 2023
11,575.2
$
57.43
5.59
$
309.5
Exercisable as of May 28, 2023
6,165.3
$
54.73
3.90
$
181.6
Stock-based compensation expense related to stock option awards was as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
70
Fiscal Year
In Millions
2023
2022
2021
Compensation expense related to stock option awards
$
12.3
$
12.1
$
11.2
Net
 
cash
 
proceeds
 
from
 
the
 
exercise
 
of
 
stock
 
options
 
less
 
shares
 
used
 
for
 
minimum
 
withholding
 
taxes
 
and
 
the
 
intrinsic
 
value
 
of
options exercised were as follows:
Fiscal Year
In Millions
2023
2022
2021
Net cash proceeds
$
232.3
$
161.7
$
74.3
Intrinsic value of options exercised
$
118.7
$
74.0
$
44.8
Restricted Stock, Restricted Stock Units, and Performance Share Units
Stock
 
and
 
units
 
settled
 
in
 
stock
 
subject
 
to
 
a
 
restricted
 
period
 
and
 
a
 
purchase
 
price,
 
if
 
any
 
(as
 
determined
 
by
 
the
 
Compensation
Committee
 
of
 
the
 
Board
 
of
 
Directors),
 
may
 
be granted
 
to key
 
employees
 
under
 
the 2022
 
Plan.
 
As of
 
May
 
28,
 
2023,
 
there
 
were
no
stock-based awards
 
granted under the
 
2022 Plan. Under
 
the 2017 Stock
 
Compensation Plan, restricted
 
stock and restricted
 
stock units
generally vest
 
and become
 
unrestricted
four years
 
after the
 
date of
 
grant. Performance
 
share units
 
are earned
 
primarily based
 
on our
future
 
achievement
 
of three-year
 
goals for
 
average organic
 
net sales
 
growth
 
and
 
cumulative operating
 
cash flow
 
and a
 
relative
 
total
shareholder
 
return
 
modifier.
 
Performance
 
share
 
units
 
are
 
settled
 
in
 
common
 
stock
 
and
 
are
 
generally
 
subject
 
to
 
a
three-year
performance
 
and
 
vesting
 
period.
 
The
 
sale
 
or
 
transfer
 
of
 
these
 
awards
 
is
 
restricted
 
during
 
the
 
vesting
 
period.
 
Participants
 
holding
restricted
 
stock,
 
but
 
not
 
restricted
 
stock
 
units
 
or
 
performance
 
share
 
units,
 
are
 
entitled
 
to
 
vote
 
on
 
matters
 
submitted
 
to
 
holders
 
of
common
 
stock
 
for
 
a
 
vote.
 
These
 
awards
 
accumulate
 
dividends
 
from
 
the
 
date
 
of
 
grant,
 
but
 
participants
 
only
 
receive
 
payment
 
if
 
the
awards vest.
Information on restricted stock unit and performance share unit activity
 
follows:
 
Equity Classified
Liability Classified
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Share-Settled Units
(Thousands)
Weighted-Average
Grant-Date Fair
Value
Non-vested as of May 29, 2022
5,153.4
$
56.37
77.3
$
56.43
Granted
2,042.8
69.76
23.6
70.53
Vested
(1,976.1)
53.71
(24.7)
52.09
Forfeited or expired
(183.9)
63.08
(6.8)
61.14
Non-vested as of May 28, 2023
5,036.2
$
62.60
69.4
$
62.32
Fiscal Year
2023
2022
2021
Number of units granted (thousands)
2,066.4
1,989.0
1,529.0
Weighted-average
 
price per unit
$
69.77
$
60.02
$
61.24
The total grant-date
 
fair value of
 
restricted stock
 
unit awards that
 
vested was $
107.4
 
million in fiscal
 
2023 and
 
$
82.7
 
million in fiscal
2022, and $
74.4
 
million in fiscal 2021.
As of May
 
28, 2023, unrecognized
 
compensation expense
 
related to non-vested
 
stock options, restricted
 
stock units, and
 
performance
share units was $
112.1
 
million. This expense will be recognized over
18 months
, on average.
Stock-based compensation expense related to restricted stock units
 
and performance share units was as follows:
Fiscal Year
In Millions
2023
2022
2021
Compensation expense related to restricted stock units and performance
 
share units
$
99.4
$
94.2
$
78.7
Compensation
 
expense
 
related
 
to
 
stock-based
 
payments
 
recognized
 
in
 
our
 
Consolidated
 
Statements
 
of
 
Earnings
 
includes
 
amounts
recognized in restructuring, impairment, and other exit costs for fiscal year 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
71
NOTE 13. EARNINGS PER SHARE
Basic and diluted EPS were calculated using the following:
 
Fiscal Year
In Millions, Except per Share Data
2023
2022
2021
Net earnings attributable to General Mills
$
2,593.9
$
2,707.3
$
2,339.8
Average number
 
of common shares - basic EPS
594.8
607.5
614.1
Incremental share effect from: (a)
Stock options
3.6
2.5
2.5
Restricted stock units and performance share units
2.8
2.6
2.5
Average number
 
of common shares - diluted EPS
601.2
612.6
619.1
Earnings per share — basic
$
4.36
$
4.46
$
3.81
Earnings per share — diluted
$
4.31
$
4.42
$
3.78
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:
Fiscal Year
In Millions
2023
2022
2021
Anti-dilutive stock options, restricted stock units,
 
and performance share units
0.8
4.4
3.4
 
NOTE 14. RETIREMENT BENEFITS AND POSTEMPLOYMENT BENEFITS
Defined Benefit Pension Plans
 
We have
 
defined benefit pension plans covering
 
many employees in the United
 
States, Canada, Switzerland, and the
 
United Kingdom.
Benefits for salaried
 
employees are based
 
on length of service
 
and final average
 
compensation. Benefits for
 
hourly employees include
various monthly
 
amounts for each
 
year of credited
 
service. Our funding
 
policy is consistent
 
with the requirements
 
of applicable laws.
We made
no
 
voluntary contributions to our
 
principal U.S. plans in fiscal
 
2023 or fiscal 2022.
 
We do
 
not expect to be required
 
to make
any
 
contributions
 
to
 
our
 
principal
 
U.S.
 
plans
 
in
 
fiscal
 
2024.
 
Our
 
principal
 
U.S.
 
retirement
 
plan
 
covering
 
salaried
 
employees
 
has
 
a
provision that any excess pension assets would be allocated to active participants
 
if the plan is terminated within
five years
 
of a change
in control.
 
All salaried employees
 
hired on
 
or after June 1,
 
2013, are eligible
 
for a retirement
 
program that
 
does not include
 
a defined
benefit pension plan.
 
Other Postretirement Benefit Plans
 
We
 
also
 
sponsor
 
plans
 
that
 
provide
 
health
 
care
 
benefits
 
to
 
many
 
of our
 
retirees
 
in
 
the United
 
States,
 
Canada,
 
and
 
Brazil.
 
The
 
U.S.
salaried
 
health
 
care
 
benefit
 
plan
 
is
 
contributory,
 
with
 
retiree
 
contributions
 
based
 
on
 
years
 
of
 
service.
 
We
 
make
 
decisions
 
to
 
fund
related trusts
 
for certain
 
employees and
 
retirees on an
 
annual basis.
 
We
 
made
no
 
voluntary contributions
 
to these
 
plans in fiscal
 
2023
or fiscal 2022. We
 
do not expect to be required to make any contributions to these plans in fiscal 2024.
In fiscal 2021, we approved
 
amendments to reorganize
 
certain U.S. retiree health and
 
welfare benefit plans. The General
 
Mills Retiree
Health
 
Plan
 
for
 
Union
 
Employees
 
was
 
divided
 
into
 
two
 
plans,
 
with
 
participants
 
under
 
age
 
65
 
remaining
 
within
 
its
 
coverage,
 
and
participants age 65 and over covered by The General Mills Retiree Health Plan
 
for Union Employees (65+). Effective
 
January 1, 2022,
the General
 
Mills Retiree
 
Health Plan
 
for Union
 
Employees (65+)
 
allows certain
 
participants to
 
purchase individual
 
health insurance
policies on
 
a private
 
health care
 
exchange. Additionally,
 
the Employees’
 
Benefit Plan
 
of General
 
Mills was
 
merged
 
into the
 
General
Mills
 
Retiree
 
Health
 
Plan
 
for
 
Union
 
Employees.
 
Separate
 
benefit
 
structures
 
and
 
plan
 
provisions
 
continue
 
to
 
apply
 
to
 
eligible
participants of
 
these merged
 
plans. A
 
portion of
 
the General
 
Mills Retiree
 
Health Plan
 
for Union
 
Employees overfunded
 
plan assets
were
 
segregated
 
to offset
 
the cost
 
of
 
the
 
Employees’
 
Benefit Plan
 
of
 
General
 
Mills health
 
and
 
welfare
 
benefits.
 
The
 
segregation
 
of
assets
 
is
 
reported
 
as
 
a
 
negative
 
employer
 
contribution
 
in
 
the
 
change
 
in
 
other
 
postretirement
 
benefit
 
plan
 
assets.
 
The
 
amendments
facilitate targeted investment strategies that reflect each
 
plan’s unique liability characteristics.
 
 
 
 
 
 
 
 
72
In
 
fiscal
 
2021,
 
we
 
announced
 
changes
 
to
 
the design
 
of our
 
health
 
care
 
coverage
 
for
 
certain eligible
 
retirees
 
to
 
allow participants
 
to
purchase
 
individual
 
health
 
insurance
 
policies
 
on
 
a
 
private
 
health
 
care
 
exchange
 
effective
 
January
 
1,
 
2022.
 
These
 
changes
 
provide
certain eligible retirees with greater flexibility in choosing health care coverage
 
that best fits their needs.
Health Care Cost Trend
 
Rates
 
Assumed health care cost trends are as follows:
Fiscal Year
2023
2022
Health care cost trend rate for next year
6.6
% and
6.6
%
5.9
% and
6.0
%
Rate to which the cost trend rate is assumed to decline (ultimate rate)
4.5
%
4.5
%
Year
 
that the rate reaches the ultimate trend rate
2032
2031
We
 
review our
 
health care
 
cost trend
 
rates annually.
 
Our review
 
is based
 
on data
 
we collect
 
about our
 
health care
 
claims experience
and information
 
provided by our
 
actuaries. This information
 
includes recent
 
plan experience,
 
plan design, overall
 
industry experience
and projections, and
 
assumptions used by other
 
similar organizations.
 
Our initial health
 
care cost trend
 
rate is adjusted
 
as necessary to
remain consistent
 
with this
 
review,
 
recent experiences,
 
and short-term
 
expectations. Our
 
initial health
 
care cost
 
trend rate
 
assumption
is
6.6
 
percent for retirees age
 
65 and over and for
 
retirees under age 65 at
 
the end of fiscal 2023.
 
Rates are graded down annually
 
until
the
 
ultimate
 
trend
 
rate
 
of
4.5
 
percent
 
is
 
reached
 
in
2032
 
for
 
all
 
retirees.
 
The
 
trend
 
rates
 
are
 
applicable
 
for
 
calculations
 
only
 
if
 
the
retirees’ benefits increase
 
as a result of
 
health care inflation. The
 
ultimate trend rate is
 
adjusted annually,
 
as necessary,
 
to approximate
the current
 
economic
 
view on
 
the rate
 
of long-term
 
inflation plus
 
an appropriate
 
health
 
care cost
 
premium.
 
Assumed trend
 
rates for
health care costs have an important effect on the amounts reported
 
for the other postretirement benefit plans.
Postemployment Benefit Plans
 
Under certain
 
circumstances, we
 
also provide
 
accruable benefits,
 
primarily severance,
 
to former
 
or inactive
 
employees in
 
the United
States,
 
Canada,
 
and
 
Mexico.
 
We
 
recognize
 
an
 
obligation
 
for
 
any
 
of
 
these
 
benefits
 
that
 
vest
 
or
 
accumulate
 
with
 
service.
Postemployment benefits
 
that do not
 
vest or
 
accumulate with
 
service (such
 
as severance
 
based solely
 
on annual pay
 
rather than years
of service) are charged to expense when incurred. Our postemployment
 
benefit plans are unfunded.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
73
Summarized
 
financial
 
information
 
about
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
 
postemployment
 
benefit
 
plans
 
is
presented below:
Defined Benefit Pension
Plans
Other
Postretirement
Benefit Plans
Postemployment
Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
Change in Plan Assets:
Fair value at beginning of year
$
6,510.3
$
7,460.2
$
479.2
$
519.4
Actual return on assets
(413.5)
(618.7)
(6.6)
(18.0)
Employer contributions
30.0
31.2
0.1
0.1
Plan participant contributions
1.3
3.8
5.7
9.6
Benefits payments
(344.6)
(346.2)
(22.4)
(31.9)
Foreign currency
(4.9)
(20.0)
-
-
Fair value at end of year (a)
$
5,778.6
$
6,510.3
$
456.0
$
479.2
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year
$
6,528.3
$
7,714.4
$
469.6
$
600.0
$
138.5
$
151.7
Service cost
70.3
93.5
5.1
7.6
8.4
10.0
Interest cost
258.5
184.3
17.9
12.6
3.1
1.5
Plan amendment
-
3.7
-
(16.1)
-
-
Curtailment/other
(8.5)
(29.4)
-
(3.2)
10.4
12.0
Plan participant contributions
1.3
3.8
5.7
9.6
-
-
Medicare Part D reimbursements
-
-
0.7
1.7
-
-
Actuarial gain
(538.1)
(1,089.7)
(22.5)
(86.0)
(10.7)
(18.7)
Benefits payments
(336.1)
(334.7)
(45.5)
(56.9)
(18.5)
(17.7)
Foreign currency
(5.0)
(17.6)
(0.4)
0.3
(0.2)
(0.3)
Projected benefit obligation at end of year (a)
$
5,970.7
$
6,528.3
$
430.6
$
469.6
$
131.0
$
138.5
Plan assets (less) more than benefit obligation as of
 
fiscal year end
$
(192.1)
$
(18.0)
$
25.4
$
9.6
$
(131.0)
$
(138.5)
(a)
 
Plan assets and obligations are measured as of
May 31, 2023
 
and
May 31, 2022
.
During
 
fiscal
 
2023
 
and
 
fiscal
 
2022,
 
the
 
decreases
 
in
 
defined
 
benefit
 
pension
 
obligations
 
and
 
other
 
postretirement
 
obligations
 
were
primarily driven by actuarial gains due to an increase in the discount rate
 
in each respective year.
As
 
of
 
May
 
28,
 
2023,
 
other
 
postretirement
 
benefit
 
plans
 
had
 
benefit
 
obligations
 
of
 
$
308.0
 
million
 
that
 
exceeded
 
plan
 
assets
 
of
$
274.2
 
million. As
 
of May
 
29, 2022,
 
other postretirement
 
benefit plans
 
had benefit
 
obligations of
 
$
332.4
 
million that
 
exceeded
 
plan
assets
 
of
 
$
279.6
 
million.
 
Postemployment
 
benefit
 
plans
 
are
 
not
 
funded
 
and
 
had
 
benefit
 
obligations
 
of
 
$
131.0
 
million
 
and
$
138.5
 
million as of May 28, 2023 and May 29, 2022, respectively.
The
 
accumulated
 
benefit
 
obligation
 
for
 
all
 
defined
 
benefit
 
pension
 
plans
 
was
 
$
5,807.9
 
million
 
as
 
of
 
May 28,
 
2023,
 
and
$
6,330.0
 
million as of May 29, 2022.
Amounts recognized in AOCI as of May 28, 2023 and May 29, 2022, are as follows:
Defined Benefit Pension
Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Total
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2023
2022
2023
2022
2023
2022
Net actuarial (loss) gain
$
(1,859.7)
$
(1,720.3)
$
186.9
$
208.5
$
2.2
$
(1.6)
$
(1,670.6)
$
(1,513.4)
Prior service (costs) credits
(4.8)
(7.6)
102.3
118.9
(1.1)
(1.0)
96.4
110.3
Amounts recorded in accumulated
 
other comprehensive loss
$
(1,864.5)
$
(1,727.9)
$
289.2
$
327.4
$
1.1
$
(2.6)
$
(1,574.2)
$
(1,403.1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
74
Plans with accumulated benefit obligations in excess of plan assets as of
 
May 28, 2023 and May 29, 2022 are as follows:
Defined Benefit Pension Plans
Fiscal Year
In Millions
2023
2022
Projected benefit obligation
$
466.2
$
508.2
Accumulated benefit obligation
453.4
479.6
Plan assets at fair value
18.7
20.5
Components of net periodic benefit expense are as follows:
 
Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
In Millions
2023
2022
2021
2023
2022
2021
2023
2022
2021
Service cost
$
70.3
$
93.5
$
104.4
$
5.1
$
7.6
$
8.5
$
8.4
$
10.0
$
9.3
Interest cost
258.5
184.3
192.1
17.9
12.6
18.0
3.1
1.5
1.7
Expected return on
 
plan assets
(420.5)
(411.1)
(420.9)
(31.1)
(26.7)
(34.7)
-
-
-
Amortization of losses
 
(gains)
113.2
140.5
108.3
(19.3)
(10.9)
(5.1)
0.4
3.0
2.6
Amortization of prior
 
service costs
 
(credits)
1.5
1.0
1.3
(23.2)
(20.9)
(5.5)
0.3
0.4
0.9
Other adjustments
-
0.1
-
-
(0.1)
-
10.4
12.9
8.4
Settlement or
 
curtailment (gains)
 
losses
(0.7)
(18.4)
14.9
-
(5.5)
-
-
-
-
Net expense (income)
$
22.3
$
(10.1)
$
0.1
$
(50.6)
$
(43.9)
$
(18.8)
$
22.6
$
27.8
$
22.9
Assumptions
Weighted-average
 
assumptions used to determine fiscal year-end benefit obligations are
 
as follows:
Defined Benefit Pension
Plans
Other Postretirement
Benefit Plans
Postemployment Benefit
Plans
Fiscal Year
Fiscal Year
Fiscal Year
2023
2022
2023
2022
2023
2022
Discount rate
5.18
%
4.39
%
5.19
%
4.36
%
4.55
%
3.62
%
Rate of salary increases
4.20
4.34
-
-
4.46
4.46
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75
Weighted-average
 
assumptions used to determine fiscal year net periodic benefit expense are as follows:
Defined Benefit Pension Plans
Other Postretirement Benefit
Plans
Postemployment Benefit Plans
Fiscal Year
Fiscal Year
Fiscal Year
2023
2022
2021
2023
2022
2021
2023
2022
2021
Discount rate
4.39
%
3.17
%
3.20
%
4.36
%
3.03
%
3.02
%
3.62
%
2.04
%
1.86
%
Service cost
 
effective rate
4.57
3.56
3.58
4.41
3.34
3.40
3.69
2.46
3.51
Interest cost
 
effective rate
4.03
2.42
2.55
3.80
2.08
2.29
3.35
1.48
2.83
Rate of
 
salary increases
4.18
4.39
4.44
-
-
-
4.46
4.46
4.47
Expected long-term
 
rate of return on
 
plan assets
6.70
5.85
5.72
6.76
6.09
4.57
-
-
-
Discount Rates
We
estimate
 
the
 
service
 
and
 
interest
 
cost
 
components
 
of
 
the
 
net
 
periodic
 
benefit
 
expense
 
for
 
our
 
United
 
States
 
and
 
most
 
of
 
our
international
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
 
postemployment
 
benefit
 
plans
 
utilizing
 
a
 
full
 
yield
 
curve
approach
 
by applying
 
the specific
 
spot rates
 
along
 
the yield
 
curve used
 
to determine
 
the benefit
 
obligation
 
to the
 
relevant projected
cash flows. Our
 
discount rate assumptions
 
are determined annually
 
as of May 31
 
for our defined
 
benefit pension, other
 
postretirement
benefit, and
 
postemployment benefit
 
plan obligations.
 
We
 
also use
 
discount rates
 
as of
 
May 31 to
 
determine defined
 
benefit pension,
other
 
postretirement benefit,
 
and
 
postemployment
 
benefit plan
 
income and
 
expense for
 
the following
 
fiscal year.
 
We
 
work with
 
our
outside actuaries
 
to determine
 
the timing
 
and amount
 
of expected
 
future cash
 
outflows to
 
plan participants
 
and, using
 
the Aa
 
Above
Median corporate
 
bond yield,
 
to develop
 
a forward
 
interest rate
 
curve, including
 
a margin
 
to that
 
index based on
 
our credit
 
risk. This
forward interest rate curve is applied to our expected future cash outflows
 
to determine our discount rate assumptions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
76
Fair Value
 
of Plan Assets
The fair
 
values of
 
our pension
 
and postretirement
 
benefit plans’
 
assets and
 
their respective
 
levels in
 
the fair
 
value hierarchy
 
by asset
category were as follows:
May 31, 2023
May 31, 2022
In Millions
Level 1
Level 2
Level 3
Total
Assets
Level 1
Level 2
Level 3
Total
Assets
Fair value measurement of pension
plan assets:
Equity (a)
$
278.3
$
484.1
$
34.3
$
796.7
$
623.4
$
442.3
$
66.3
$
1,132.0
Fixed income (b)
1,603.4
1,866.3
-
3,469.7
1,958.7
1,723.4
-
3,682.1
Real asset investments (c)
92.8
-
-
92.8
159.8
-
-
159.8
Other investments (d)
-
-
0.1
0.1
-
-
0.1
0.1
Cash and accruals
295.1
0.2
-
295.3
133.6
0.3
-
133.9
Fair value measurement of pension
 
plan assets
$
2,269.6
$
2,350.6
$
34.4
$
4,654.6
$
2,875.5
$
2,166.0
$
66.4
$
5,107.9
Assets measured at net asset value (e)
1,124.0
1,402.4
Total pension plan
 
assets
$
5,778.6
$
6,510.3
Fair value measurement of
postretirement benefit plan assets:
Fixed income (b)
$
113.3
$
-
$
-
$
113.3
$
120.8
$
-
$
-
$
120.8
Cash and accruals
2.5
-
-
2.5
6.6
-
-
6.6
Fair value measurement of
 
postretirement benefit
 
plan assets
$
115.8
$
-
$
-
$
115.8
$
127.4
$
-
$
-
$
127.4
Assets measured at net asset value (e)
340.2
351.8
Total postretirement
 
benefit
 
plan assets
$
456.0
$
479.2
(a)
 
Primarily
 
publicly
 
traded
 
common
 
stock
 
for
 
purposes
 
of
 
total
 
return
 
and
 
to
 
maintain
 
equity
 
exposure
 
consistent
 
with
 
policy
allocations. Investments
 
include: United States
 
and international
 
public equity
 
securities, mutual funds,
 
and equity futures
 
valued
at closing prices from national exchanges, commingled funds valued
 
at fair value using the unit values provided by the investment
managers,
 
and certain
 
private equity
 
securities valued
 
using
 
a matrix
 
of pricing
 
inputs reflecting
 
assumptions
 
based on
 
the best
information available.
(b)
 
Primarily government
 
and corporate
 
debt securities
 
and futures
 
for purposes
 
of total
 
return, managing
 
fixed income
 
exposure to
policy allocations, and
 
duration targets. Investments
 
include: fixed income
 
securities and bond
 
futures generally valued
 
at closing
prices from
 
national exchanges,
 
fixed income
 
pricing models,
 
and independent
 
financial analysts;
 
and fixed
 
income commingled
funds valued at unit values provided by the investment managers, which
 
are based on the fair value of the underlying investments.
(c)
 
Publicly
 
traded
 
common
 
stocks
 
in
 
energy,
 
real
 
estate,
 
and
 
infrastructure
 
for
 
the
 
purpose
 
of
 
total
 
return.
 
Investments
 
include:
energy,
 
real
 
estate,
 
and
 
infrastructure
 
securities
 
generally
 
valued
 
at
 
closing
 
prices
 
from
 
national
 
exchanges,
 
and
 
commingled
funds valued at unit values provided by the investment managers, which
 
are based on the fair value of the underlying investments.
 
(d)
 
Insurance and
 
annuity contracts
 
to provide
 
a stable
 
stream of
 
income for
 
pension retirees.
 
Fair values
 
are based
 
on the
 
fair value
of the underlying investments and contract fair values established by the providers
 
.
(e)
 
Primarily limited
 
partnerships, trust-owned
 
life insurance,
 
common collective
 
trusts, and
 
certain private
 
equity securities
 
that are
measured at fair value using
 
the net asset value per
 
share (or its equivalent) practical
 
expedient and have not
 
been classified in the
fair value hierarchy.
There were
no
 
transfers into
 
or out
 
of level
 
3 investments
 
in fiscal
 
2023.
 
During fiscal
 
2022, the
 
inclusion of
 
non-observable inputs
into the pricing of certain private equity securities resulted in the transfer of $
66.3
 
million into level 3 investments.
Expected Rate of Return on Plan Assets
Our expected
 
rate of return
 
on plan assets
 
is determined
 
by our asset
 
allocation, our
 
historical long-term
 
investment performance,
 
our
estimate of future long-term returns
 
by asset class (using input from
 
our actuaries, investment services,
 
and investment managers), and
long-term inflation
 
assumptions. We
 
review this assumption
 
annually for
 
each plan; however,
 
our annual
 
investment performance
 
for
one particular year does not, by itself, significantly influence our evaluation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
77
Weighted-average
 
asset allocations for our defined benefit pension and other postretirement benefit plans are
 
as follows:
Defined Benefit Pension Plans
Other Postretirement Benefit Plans
Fiscal Year
Fiscal Year
2023
2022
2023
2022
Asset category:
United States equities
8.3
%
12.1
%
28.6
%
27.9
%
International equities
4.8
7.8
13.4
13.5
Private equities
10.6
10.4
14.5
15.2
Fixed income
65.1
58.3
43.5
43.4
Real assets
11.2
11.4
-
-
Total
100.0
%
100.0
%
100.0
%
100.0
%
The investment
 
objective for
 
our defined
 
benefit pension
 
and other
 
postretirement benefit
 
plans is
 
to secure
 
the benefit
 
obligations to
participants
 
at
 
a
 
reasonable
 
cost
 
to
 
us.
 
Our
 
goal
 
is
 
to
 
optimize
 
the
 
long-term
 
return
 
on
 
plan
 
assets
 
at
 
a
 
moderate
 
level
 
of
 
risk.
 
The
defined benefit
 
pension plan
 
and other postretirement
 
benefit plan
 
portfolios are
 
broadly diversified
 
across asset
 
classes. Within
 
asset
classes,
 
the
 
portfolios
 
are
 
further
 
diversified
 
across
 
investment
 
styles
 
and
 
investment
 
organizations.
 
For
 
the
 
U.S.
 
defined
 
benefit
pension
 
plans,
 
the
 
long-term
 
investment
 
policy
 
allocation
 
is:
9
 
percent
 
to
 
equities
 
in
 
the
 
United
 
States;
6
 
percent
 
to
 
international
equities;
7
 
percent to private equities;
68
 
percent to fixed income; and
10
 
percent to real assets (real estate,
 
energy,
 
and infrastructure).
For other U.S. postretirement benefit plans, the long-term investment
 
policy allocations are:
28
 
percent to equities in the United States;
14
 
percent to international equities;
14
 
percent to total private equities; and
44
 
percent to fixed income.
 
The actual allocations to these
asset classes may vary tactically around the long-term policy allocations based
 
on relative market valuations.
Contributions and Future Benefit Payments
We
 
do
no
t
 
expect
 
to
 
be
 
required
 
to
 
make
 
contributions
 
to
 
our
 
defined
 
benefit
 
pension,
 
other
 
postretirement
 
benefit,
 
and
postemployment benefit
 
plans in
 
fiscal 2024.
 
Actual fiscal
 
2024 contributions
 
could exceed
 
our current
 
projections, as
 
influenced by
our decision
 
to undertake
 
discretionary funding
 
of our benefit
 
trusts and
 
future changes
 
in regulatory
 
requirements. Estimated
 
benefit
payments, which reflect expected future service, as appropriate, are
 
expected to be paid from fiscal 2024 to fiscal 2033 as follows:
In Millions
Defined Benefit
Pension Plans
Other
Postretirement
Benefit Plans
Gross Payments
Postemployment
Benefit Plans
Fiscal 2024
$
351.4
$
38.6
$
27.1
Fiscal 2025
357.6
37.5
20.0
Fiscal 2026
364.6
36.6
18.6
Fiscal 2027
371.6
36.1
16.7
Fiscal 2028
378.9
34.9
15.4
Fiscal 2029-2033
1,977.5
158.8
64.4
Defined Contribution Plans
 
The
 
General
 
Mills
 
Savings
 
Plan
 
is
 
a
 
defined
 
contribution
 
plan
 
that
 
covers
 
domestic
 
salaried,
 
hourly,
 
nonunion,
 
and
 
certain
 
union
employees.
 
This plan
 
is a
 
401(k)
 
savings plan
 
that includes
 
a number
 
of investment
 
funds, including
 
a Company
 
stock fund
 
and an
Employee Stock
 
Ownership Plan
 
(ESOP). We
 
sponsor another
 
money purchase
 
plan for
 
certain domestic
 
hourly employees
 
with net
assets of $
19.2
 
million as of May 28, 2023, and $
20.6
 
million as of May 29, 2022. We
 
also sponsor defined contribution plans in many
of
 
our
 
foreign
 
locations.
 
Our
 
total
 
recognized
 
expense
 
related
 
to
 
defined
 
contribution
 
plans
 
was
 
$
97.2
 
million
 
in
 
fiscal
 
2023,
$
90.1
 
million in fiscal 2022, and $
76.1
 
million in fiscal 2021.
We
 
match a
 
percentage of
 
employee contributions
 
to the
 
General Mills
 
Savings Plan.
 
The Company
 
match is
 
directed to
 
investment
options
 
of
 
the
 
participant’s
 
choosing.
 
The
 
number
 
of
 
shares
 
of
 
our
 
common
 
stock
 
allocated
 
to
 
participants
 
in
 
the
 
ESOP
 
was
3.7
million as
 
of May
 
28, 2023,
 
and
4.0
 
million as
 
of May
 
29, 2022.
 
The ESOP’s
 
only assets
 
are our
 
common stock
 
and temporary
 
cash
balances.
The Company stock fund and the ESOP collectively held $
498.7
 
million and $
443.8
 
million of Company common stock as of May 28,
2023, and May 29, 2022, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
78
NOTE 15. INCOME TAXES
 
The
 
components
 
of
 
earnings
 
before
 
income
 
taxes
 
and
 
after-tax
 
earnings
 
from
 
joint
 
ventures
 
and
 
the
 
corresponding
 
income
 
taxes
thereon are as follows:
Fiscal Year
In Millions
2023
2022
2021
Earnings before income taxes and after-tax earnings
 
from joint ventures:
United States
$
2,740.5
$
2,652.3
$
2,567.1
Foreign
400.0
557.3
290.3
Total earnings
 
before income taxes and after-tax earnings from joint ventures
$
3,140.5
$
3,209.6
$
2,857.4
Income taxes:
Currently payable:
Federal
$
487.1
$
384.2
$
369.8
State and local
82.2
60.8
47.5
Foreign
65.1
79.1
93.0
Total current
634.4
524.1
510.3
Deferred:
Federal
9.6
75.0
117.9
State and local
(8.1)
18.3
13.6
Foreign
(23.7)
(31.1)
(12.7)
Total deferred
(22.2)
62.2
118.8
Total income
 
taxes
$
612.2
$
586.3
$
629.1
The following table reconciles the United States statutory income tax rate
 
with our effective income tax rate:
Fiscal Year
2023
2022
2021
United States statutory rate
21.0
%
21.0
%
21.0
%
State and local income taxes, net of federal tax benefits
1.5
2.1
1.7
Foreign rate differences
(1.0)
(1.1)
0.3
Stock based compensation
(1.0)
(0.6)
(0.4)
Capital loss (a)
-
(1.7)
-
Divestitures, net
(0.8)
(1.2)
-
Other, net
(0.2)
(0.2)
(0.6)
Effective income tax rate
19.5
%
18.3
%
22.0
%
(a)
 
During fiscal
 
2022, we
 
released a
 
$
50.7
 
million valuation
 
allowance associated
 
with our capital
 
loss carryforward
 
expected to
 
be
used against divestiture gains.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
79
The tax effects of temporary differences that
 
give rise to deferred tax assets and liabilities are as follows:
In Millions
May 28, 2023
May 29, 2022
Accrued liabilities
$
51.2
$
46.2
Compensation and employee benefits
143.7
146.7
Pension
43.7
1.5
Tax credit carryforwards
38.7
34.9
Stock, partnership, and miscellaneous investments
2.4
17.9
Capitalized research and development
83.7
-
Capital losses
76.2
61.9
Net operating losses
221.3
178.0
Other
99.4
96.3
Gross deferred tax assets
760.3
583.4
Valuation
 
allowance
259.2
185.1
Net deferred tax assets
501.1
398.3
Brands
1,417.2
1,415.2
Fixed assets
402.7
392.6
Intangible assets
213.1
201.0
Tax lease transactions
8.5
14.9
Inventories
47.1
27.1
Stock, partnership, and miscellaneous investments
369.0
357.7
Unrealized hedges
34.3
98.7
Other
120.1
109.4
Gross deferred tax liabilities
2,612.0
2,616.6
Net deferred tax liability
$
2,110.9
$
2,218.3
We
 
have established a
 
valuation allowance against
 
certain of the
 
categories of deferred
 
tax assets described
 
above as current
 
evidence
does
 
not
 
suggest
 
we
 
will
 
realize
 
sufficient
 
taxable
 
income
 
of
 
the
 
appropriate
 
character
 
(e.g.,
 
ordinary
 
income
 
versus
 
capital
 
gain
income) within the carryforward period to allow us to realize these deferred tax
 
benefits.
Information about our valuation allowance follows:
 
In Millions
May 28, 2023
Pillsbury acquisition losses
$
106.2
State and foreign loss carryforwards
27.1
Capital loss carryforwards
75.7
Other
50.2
Total
$
259.2
As of May 28, 2023, we believe it is more-likely-than-not that the remainder
 
of our deferred tax assets are realizable.
 
Information about our tax loss carryforwards follows
:
In Millions
May 28, 2023
Foreign loss carryforwards
$
202.0
Federal operating loss carryforwards
10.2
State operating loss carryforwards
9.0
Total tax loss carryforwards
$
221.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
80
Our foreign loss carryforwards expire as follows:
In Millions
May 28, 2023
Expire in fiscal 2024 and 2025
$
0.5
Expire in fiscal 2026 and beyond
15.0
Do not expire (a)
186.5
Total foreign loss carryforwards
$
202.0
(a)
 
Approximately
 
$
172
 
million
 
of
 
our
 
foreign
 
loss
 
carryforwards
 
are
 
held
 
in
 
Brazil
 
for
 
which
 
we
 
have
 
not
 
recorded
 
a
 
valuation
allowance.
On August
 
16, 2022,
 
the Inflation
 
Reduction Act
 
(IRA) was
 
signed into
 
law.
 
The IRA
 
introduces
 
a Corporate
 
Alternative Minimum
Tax
 
beginning
 
in
 
our
 
fiscal
 
2024
 
and
 
an
 
excise
 
tax
 
on
 
the
 
repurchase
 
of
 
corporate
 
stock
 
starting
 
after
 
January
 
1,
 
2023.
 
We
 
do
 
not
currently expect the IRA
 
to have a material impact
 
on our financial results, including
 
our annual estimated effective
 
tax rate, or on our
liquidity.
 
The amount
 
of excise
 
tax on
 
the repurchase
 
of corporate
 
stock was
 
immaterial in
 
fiscal 2023.
 
We
 
will continue
 
to monitor
and assess the impact the IRA may have on our business and financial results.
On
 
March
 
11,
 
2021,
 
the
 
American
 
Rescue
 
Plan
 
Act
 
(ARPA)
 
was
 
signed
 
into
 
law.
 
The
 
ARPA
 
includes
 
a
 
provision
 
expanding
 
the
limitations on
 
the deductibility
 
of certain
 
executive employee
 
compensation beginning
 
in our fiscal
 
2028. We
 
do not
 
currently expect
the ARPA to have
 
a material impact on our financial results, including our annual estimated effective
 
tax rate, or on our liquidity.
 
As of
 
May 28,
 
2023, we
 
have
no
t recognized
 
a deferred
 
tax liability
 
for unremitted
 
earnings of
 
approximately $
2.3
 
billion from
 
our
foreign operations
 
because we
 
currently believe
 
our subsidiaries
 
have invested
 
the undistributed
 
earnings indefinitely
 
or the
 
earnings
will be remitted
 
in a tax-neutral
 
transaction. It
 
is not practicable
 
for us to
 
determine the amount
 
of unrecognized
 
tax expense on
 
these
reinvested earnings.
 
Deferred taxes
 
are recorded
 
for earnings
 
of our
 
foreign operations
 
when we
 
determine that
 
such earnings
 
are no
longer indefinitely reinvested. All
 
earnings prior to fiscal 2018
 
remain permanently reinvested. Earnings
 
from fiscal 2018 and later
 
are
not permanently reinvested and local country withholding taxes are
 
recorded on earnings each year.
 
We are
 
subject to federal income
 
taxes in the United States
 
as well as various state, local,
 
and foreign jurisdictions. A
 
number of years
may elapse before an uncertain tax position is audited and finally resolved.
 
While it is often difficult to predict the final outcome or the
timing
 
of
 
resolution
 
of
 
any
 
particular
 
uncertain
 
tax
 
position,
 
we
 
believe
 
that
 
our
 
liabilities
 
for
 
income
 
taxes
 
reflect
 
the
 
most
 
likely
outcome.
 
We
 
adjust
 
these
 
liabilities,
 
as
 
well
 
as
 
the
 
related
 
interest,
 
in
 
light
 
of
 
changing
 
facts
 
and
 
circumstances.
 
Settlement
 
of
 
any
particular position would usually require the use of cash.
The number
 
of years
 
with open
 
tax audits
 
varies depending
 
on the
 
tax jurisdiction.
 
Our major
 
taxing jurisdiction
 
is the
 
United States
(federal and state). Various
 
tax examinations by United States state taxing
 
authorities could be conducted for any
 
open tax year,
 
which
vary by jurisdiction, but are generally from
3
 
to
5
 
years.
The Internal
 
Revenue
 
Service (IRS)
 
is currently
 
auditing
 
our federal
 
tax returns
 
for
 
fiscal
2018 and 2019
. Several
 
state and
 
foreign
examinations are currently in
 
progress. We
 
do not expect these examinations
 
to result in a material
 
impact on our results
 
of operations
or financial position. We
 
have effectively settled all issues with the IRS for fiscal years
 
2015 and prior.
The Brazilian
 
tax authority,
 
Secretaria da
 
Receita Federal
 
do Brasil (RFB),
 
has concluded
 
audits of our
 
2012
 
through 2018 tax
 
return
years. These
 
audits included
 
a review
 
of our
 
determinations of
 
amortization of
 
certain goodwill
 
arising from
 
the acquisition
 
of Yoki
Alimentos
 
S.A.
 
The
 
RFB
 
has
 
proposed
 
adjustments
 
that
 
effectively
 
eliminate
 
the
 
goodwill
 
amortization
 
benefits
 
related
 
to
 
this
transaction. We
 
believe we have meritorious defenses and intend to continue to contest the disallowance
 
for all years.
 
We
 
apply a more-likely-than-not
 
threshold to the
 
recognition and derecognition
 
of uncertain tax
 
positions. Accordingly,
 
we recognize
the amount of
 
tax benefit that
 
has a greater
 
than 50 percent
 
likelihood of being
 
ultimately realized upon
 
settlement. Future changes
 
in
judgment related to the expected ultimate resolution of uncertain tax positions
 
will affect earnings in the period of such change.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
81
The following table sets forth
 
changes in our total gross
 
unrecognized tax benefit liabilities,
 
excluding accrued interest,
 
for fiscal 2023
and
 
fiscal
 
2022.
 
Approximately
 
$
90
 
million
 
of
 
this
 
total
 
in
 
fiscal
 
2023
 
represents
 
the
 
amount
 
that,
 
if
 
recognized,
 
would
 
affect
 
our
effective income tax rate in future periods.
 
This amount differs from the gross unrecognized
 
tax benefits presented in the table because
certain
 
portions of
 
the liabilities
 
below
 
would
 
impact deferred
 
taxes if
 
recognized.
 
We
 
also would
 
record a
 
decrease
 
in U.S.
 
federal
income taxes upon recognition of the state tax benefits included therein.
Fiscal Year
In Millions
2023
2022
Balance, beginning of year
$
160.9
$
145.3
Tax positions related
 
to current year:
Additions
29.9
21.6
Tax positions related
 
to prior years:
Additions
2.9
10.4
Reductions
(0.9)
(5.5)
Settlements
(4.7)
(2.4)
Lapses in statutes of limitations
(6.9)
(8.5)
Balance, end of year
$
181.2
$
160.9
As of
 
May 28,
 
2023, we do
no
t expect
 
to pay unrecognized
 
tax benefit
 
liabilities and
 
accrued interest
 
within the
 
next 12
 
months. We
are not
 
able to
 
reasonably estimate
 
the timing
 
of future
 
cash flows
 
beyond 12
 
months due
 
to uncertainties
 
in the
 
timing of
 
tax audit
outcomes. Our unrecognized tax benefit liability was classified in other
 
liabilities.
We
 
report
 
accrued
 
interest
 
and
 
penalties
 
related
 
to
 
unrecognized
 
tax
 
benefit
 
liabilities
 
in
 
income
 
tax
 
expense.
 
For
 
fiscal
 
2023,
 
we
recognized $
4.7
 
million of tax-related
 
net interest and
 
penalties, and had
 
$
32.4
 
million of accrued
 
interest and penalties
 
as of May 28,
2023. For
 
fiscal 2022,
 
we recognized
 
$
2.0
 
million of
 
tax-related net
 
interest and
 
penalties, and
 
had $
26.6
 
million of
 
accrued interest
and penalties as of May 29, 2022.
NOTE 16. COMMITMENTS AND CONTINGENCIES
 
As
 
of
 
May
 
28,
 
2023,
 
we
 
have
 
issued
 
guarantees
 
and
 
comfort
 
letters
 
of
 
$
149.9
 
million
 
for
 
the
 
debt
 
and
 
other
 
obligations
 
of
 
non-
consolidated affiliates, mainly CPW.
 
Off-balance sheet arrangements were not material as of
 
May 28, 2023.
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
May 28, 2023
, we
 
are unable
 
to estimate
any possible loss and have not recorded a loss contingency for this matter.
NOTE 17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
 
We
 
operate
 
in
 
the
 
packaged
 
foods
 
industry.
 
In
 
fiscal
 
2022,
 
we
 
completed
 
a
 
new
 
organization
 
structure
 
to
 
streamline
 
our
 
global
operations.
 
This
 
global
 
reorganization
 
required
 
us
 
to
 
reevaluate
 
our
 
operating
 
segments.
 
Under
 
our
 
new
 
organization
 
structure,
 
our
chief operating decision maker assesses performance
 
and makes decisions about resources to be allocated to
 
our operating segments as
follows: North America Retail, International, Pet, and North America Foodservice.
 
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,
and
 
shelf
 
stable
 
vegetables.
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
82
categories include dog and cat food (dry
 
foods, wet foods, and treats) made
 
with whole meats, fruits, vegetables and
 
other high-quality
natural
 
ingredients.
 
Our
 
tailored
 
pet
 
product
 
offerings
 
address
 
specific
 
dietary,
 
lifestyle,
 
and
 
life-stage
 
needs
 
and
 
span
 
different
product types, diet types, breed sizes for dogs, lifestages, flavors, product
 
functions, and textures and cuts for wet foods.
Our
 
North
 
America
 
Foodservice
 
segment
 
consists
 
of
 
foodservice
 
businesses
 
in
 
the
 
United
 
States
 
and
 
Canada.
 
Our
 
major
 
product
categories
 
in
 
our
 
North
 
America
 
Foodservice
 
operating
 
segment
 
are
 
ready-to-eat
 
cereals,
 
snacks,
 
refrigerated
 
yogurt,
 
frozen
 
meals,
unbaked and
 
fully baked
 
frozen dough products,
 
baking mixes,
 
and bakery
 
flour.
 
Many products we
 
sell are branded
 
to the consumer
and nearly
 
all are
 
branded to
 
our customers.
 
We
 
sell to
 
distributors and
 
operators in
 
many customer
 
channels including
 
foodservice,
vending, and supermarket bakeries.
Operating profit
 
for these
 
segments excludes
 
unallocated corporate
 
items, gain
 
or loss
 
on divestitures,
 
and restructuring,
 
impairment,
and
 
other
 
exit
 
costs.
 
Unallocated
 
corporate
 
items
 
include
 
corporate
 
overhead
 
expenses,
 
variances
 
to
 
planned
 
North
 
American
employee
 
benefits
 
and
 
incentives,
 
certain
 
charitable
 
contributions,
 
restructuring
 
initiative
 
project-related
 
costs,
 
gains
 
and
 
losses
 
on
corporate investments,
 
and other
 
items that
 
are not
 
part of
 
our measurement
 
of segment
 
operating performance.
 
These include
 
gains
and
 
losses
 
arising
 
from
 
the
 
revaluation
 
of
 
certain
 
grain
 
inventories
 
and
 
gains
 
and
 
losses
 
from
 
mark-to-market
 
valuation
 
of
 
certain
commodity positions
 
until passed back
 
to our operating
 
segments. These items
 
affecting operating
 
profit are
 
centrally managed
 
at the
corporate
 
level
 
and
 
are
 
excluded
 
from
 
the
 
measure
 
of
 
segment
 
profitability
 
reviewed
 
by
 
executive
 
management.
 
Under
 
our
 
supply
chain organization, our manufacturing,
 
warehouse, and distribution activities are substantially integrated
 
across our operations in order
to maximize
 
efficiency
 
and productivity.
 
As a
 
result, fixed
 
assets and
 
depreciation and
 
amortization expenses
 
are neither
 
maintained
nor available by operating segment.
Our operating segment results were as follows:
Fiscal Year
In Millions
2023
2022
2021
Net sales:
North America Retail
$
12,659.9
$
11,572.0
$
11,250.0
International
2,769.5
3,315.7
3,656.8
Pet
2,473.3
2,259.4
1,732.4
North America Foodservice
2,191.5
1,845.7
1,487.8
Total
$
20,094.2
$
18,992.8
$
18,127.0
Operating profit:
North America Retail
$
3,181.3
$
2,699.7
$
2,725.9
International
161.8
232.0
236.6
Pet
445.5
470.6
415.0
North America Foodservice
290.0
255.5
203.3
Total segment operating
 
profit
$
4,078.6
$
3,657.8
$
3,580.8
Unallocated corporate items
1,033.2
402.6
212.1
Divestitures (gain) loss, net
(444.6)
(194.1)
53.5
Restructuring, impairment, and other exit costs (recoveries)
56.2
(26.5)
170.4
Operating profit
$
3,433.8
$
3,475.8
$
3,144.8
Net sales for our North America Retail operating units were as follows:
Fiscal Year
In Millions
2023
2022
2021
U.S. Meals & Baking Solutions
$
4,426.3
$
4,023.8
$
4,042.2
U.S. Morning Foods
3,620.1
3,370.9
3,314.0
U.S. Snacks
3,611.0
3,191.4
2,940.5
Canada
1,002.5
985.9
953.3
Total
$
12,659.9
$
11,572.0
$
11,250.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83
Net sales by class of similar products were as follows:
Fiscal Year
In Millions
2023
2022
2021
Snacks
$
4,431.5
$
3,960.9
$
3,574.2
Cereal
3,209.5
2,998.1
2,868.9
Convenient meals
2,961.6
2,988.5
3,030.2
Pet
2,476.0
2,260.1
1,732.4
Dough
2,390.5
1,986.3
1,866.1
Baking mixes and ingredients
2,037.3
1,843.6
1,695.5
Yogurt
1,472.9
1,714.9
2,074.8
Super-premium ice cream
703.7
782.2
819.7
Other
411.2
458.2
465.2
Total
$
20,094.2
$
18,992.8
$
18,127.0
The following tables provide financial information by geographic area:
 
Fiscal Year
In Millions
2023
2022
2021
Net sales:
United States
$
16,322.2
$
14,691.2
$
13,496.9
Non-United States
3,772.0
4,301.6
4,630.1
Total
$
20,094.2
$
18,992.8
$
18,127.0
In Millions
May 28, 2023
May 29, 2022
Cash and cash equivalents:
United States
$
204.2
$
46.0
Non-United States
381.3
523.4
Total
$
585.5
$
569.4
In Millions
May 28, 2023
May 29, 2022
Land, buildings, and equipment:
United States
$
2,920.5
$
2,675.2
Non-United States
715.7
718.6
Total
$
3,636.2
$
3,393.8
 
NOTE 18. SUPPLEMENTAL
 
INFORMATION
The components of certain Consolidated Balance Sheets accounts are
 
as follows:
 
In Millions
May 28, 2023
May 29, 2022
Receivables:
Customers
$
1,710.1
$
1,720.4
Less allowance for doubtful accounts
(26.9)
(28.3)
Total
$
1,683.2
$
1,692.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
84
In Millions
May 28, 2023
May 29, 2022
Inventories:
Finished goods
$
2,066.9
$
1,634.7
Raw materials and packaging
572.2
532.0
Grain
133.8
164.0
Excess of FIFO over LIFO cost (a)
(600.9)
(463.4)
Total
$
2,172.0
$
1,867.3
(a)
 
Inventories
 
of
 
$
1,477.5
 
million
 
as
 
of
 
May
 
28,
 
2023,
 
and
 
$
1,127.1
 
million
 
as
 
of
 
May
 
29,
 
2022,
 
were
 
valued
 
at
 
LIFO.
 
The
difference between replacement
 
cost and the stated LIFO
 
inventory value is not materially
 
different from the reserve
 
for the LIFO
valuation method.
In Millions
May 28, 2023
May 29, 2022
Prepaid expenses and other current assets:
Marketable investments
$
117.2
$
249.8
Other receivables
285.7
182.8
Prepaid expenses
244.4
213.5
Derivative receivables
45.1
86.1
Grain contracts
2.3
28.7
Miscellaneous
41.0
41.2
Total
$
735.7
$
802.1
In Millions
May 28, 2023
May 29, 2022
Assets held for sale:
Goodwill
$
-
$
130.0
Inventories
-
22.9
Equipment
-
6.0
Total
$
-
$
158.9
In Millions
May 28, 2023
May 29, 2022
Land, buildings, and equipment:
Equipment
$
6,672.2
$
6,491.7
Buildings
2,569.3
2,444.8
Construction in progress
746.7
492.8
Capitalized software
514.8
717.8
Land
56.5
55.1
Equipment under finance lease
9.8
7.8
Buildings under finance lease
0.3
0.3
Total land, buildings,
 
and equipment
10,569.6
10,210.3
Less accumulated depreciation
(6,933.4)
(6,816.5)
Total
$
3,636.2
$
3,393.8
In Millions
May 28, 2023
May 29, 2022
Other assets:
Investments in and advances to joint ventures
$
462.0
$
513.8
Right of use operating lease assets
340.0
336.8
Pension assets
51.8
52.6
Life insurance
15.8
17.5
Miscellaneous
290.7
307.4
Total
$
1,160.3
$
1,228.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85
In Millions
May 28, 2023
May 29, 2022
Other current liabilities:
Accrued trade and consumer promotions
$
454.3
$
474.4
Accrued payroll
426.6
435.6
Current portion of operating lease liabilities
101.9
106.7
Accrued interest, including interest rate swaps
83.1
70.1
Accrued taxes
80.9
31.4
Restructuring and other exit costs reserve
47.7
36.8
Derivative payable, primarily commodity-related
34.0
19.9
Dividends payable
23.1
25.3
Grain contracts
11.8
3.0
Miscellaneous
337.3
348.8
Total
$
1,600.7
$
1,552.0
In Millions
May 28, 2023
May 29, 2022
Other non-current liabilities:
Accrued compensation and benefits, including obligations for underfunded
 
other
 
postretirement benefit and postemployment benefit plans
$
509.6
$
360.8
Non-current portion of operating lease liabilities
257.0
248.3
Accrued taxes
245.1
233.0
Miscellaneous
128.3
87.0
Total
$
1,140.0
$
929.1
Certain Consolidated Statements of Earnings amounts are as follows:
 
Fiscal Year
In Millions
2023
2022
2021
Depreciation and amortization
$
546.6
$
570.3
$
601.3
Research and development expense
257.6
243.1
239.3
Advertising and media expense (including production and
 
communication costs)
810.0
690.1
736.3
The components of interest, net are as follows:
 
Fiscal Year
Expense (Income), in Millions
2023
2022
2021
Interest expense
$
400.5
$
387.2
$
430.9
Capitalized interest
(4.4)
(3.8)
(3.2)
Interest income
(14.0)
(3.8)
(7.4)
Interest, net
$
382.1
$
379.6
$
420.3
Certain Consolidated Statements of Cash Flows amounts are as follows:
 
Fiscal Year
In Millions
2023
2022
2021
Cash interest payments
$
337.1
$
357.8
$
412.5
Cash paid for income taxes
682.6
545.3
636.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
86
NOTE 19. QUARTERLY
 
DATA
 
(UNAUDITED)
Summarized quarterly data for fiscal 2023 and fiscal 2022 follows:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year
Fiscal Year
Fiscal Year
Fiscal Year
In Millions, Except Per
 
Share Amounts
2023
2022
2023
2022
2023
2022
2023
2022
Net sales
$
4,717.6
$
4,539.9
$
5,220.7
$
5,024.0
$
5,125.9
$
4,537.7
$
5,030.0
$
4,891.2
Gross margin
1,447.7
1,597.4
1,705.1
1,631.2
1,664.8
1,403.7
1,728.2
1,769.9
Net earnings attributable to
 
General Mills
820.0
627.0
605.9
597.2
553.1
660.3
614.9
822.8
EPS:
Basic
$
1.37
$
1.03
$
1.01
$
0.98
$
0.94
$
1.09
$
1.04
$
1.36
Diluted
$
1.35
$
1.02
$
1.01
$
0.97
$
0.92
$
1.08
$
1.03
$
1.36
In the fourth
 
quarter fiscal 2023,
 
we approved restructuring
 
actions to enhance
 
the efficiency
 
of our global
 
supply chain structure
 
and
recorded $
36.2
 
million of
 
charges. We
 
also approved
 
restructuring actions
 
in our International
 
segment to
 
optimize our
 
Häagen-Dazs
shops network
 
and recorded
 
$
6.4
 
million of
 
charges.
 
In addition,
 
we recorded
 
a net
 
recovery of
 
$
11.8
 
million related
 
to a
 
voluntary
recall of certain international
H
ä
agen-Dazs
ice cream products as a result of an insurance recovery.
In the fourth
 
quarter of fiscal 2022,
 
we recorded an additional
 
gain on the
 
sale of our interests in
 
Yoplait
 
SAS, Yoplait
 
Marques SNC,
and Liberté
 
Marques Sàrl
 
of $
14.9
 
million and
 
an additional
 
gain on
 
the sale
 
of our
 
European dough
 
businesses of
 
$
9.2
 
million. We
also recorded
 
$
16.0
 
million of
 
transaction costs
 
primarily
 
related to
 
the sale
 
of our
 
interests in
 
Yoplait
 
SAS, Yoplait
 
Marques SNC,
and
 
Liberté
 
Marques
 
Sàrl,
 
the sale
 
of
 
our
 
European
 
dough
 
businesses,
 
the
 
definitive
 
agreements
 
to
 
sell our
 
Helper
 
main meals
 
and
Suddenly
 
Salad
 
side
 
dishes
 
business,
 
and
 
the
 
definitive
 
agreement
 
to
 
acquire
 
TNT
 
Crust.
 
We
 
also
 
recorded
 
a
 
$
34.0
 
million
 
loss
associated
 
with
 
the
 
valuation
 
of
 
a
 
corporate
 
investment.
 
In
 
addition,
 
we
 
recorded
 
a
 
$
34.0
 
million
 
reduction
 
to
 
our
 
restructuring
reserve.
 
87
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-to-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, all as of the last day of our
 
fiscal year.
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 equity
 
prices.
Earnings
 
before
 
interest,
 
taxes,
 
depreciation
 
and
 
amortization
 
(EBITDA
)
.
 
The
 
calculation
 
of earnings
 
before
 
income taxes
 
and
after-tax earnings from joint ventures, net interest, depreciation
 
and amortization.
Euribor.
 
European 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
 
.
Free
 
cash
 
flow
 
conversion
 
rate.
 
Free
 
cash
 
flow
 
divided
 
by
 
our
 
net
 
earnings,
 
including
 
earnings
 
attributable
 
to
 
redeemable
 
and
noncontrolling interests adjusted for certain items affecting year-to-year
 
comparability.
Generally
 
accepted accounting
 
principles (GAAP).
 
Guidelines, procedures,
 
and practices
 
that we
 
are required
 
to use
 
in recording
and reporting accounting information in our financial statements.
Goodwill.
 
The difference
 
between the purchase
 
price of acquired
 
companies plus the fair
 
value of any
 
redeemable and noncontrolling
interests and the related fair values of net assets acquired.
Gross margin.
 
Net sales less cost of sales.
 
Hedge accounting.
 
Accounting for qualifying
 
hedges that allows changes in
 
a hedging instrument’s
 
fair value to offset
 
corresponding
changes in
 
the hedged
 
item in
 
the same
 
reporting period
.
 
Hedge accounting
 
is permitted
 
for certain
 
hedging instruments
 
and hedged
items
 
only
 
if
 
the
 
hedging
 
relationship
 
is
 
highly
 
effective,
 
and
 
only
 
prospectively
 
from
 
the
 
date
 
a
 
hedging
 
relationship
 
is
 
formally
documented.
Holistic Margin Management
 
(HMM).
 
Company-wide initiative to
 
use productivity savings, mix
 
management,
 
and price realization
to offset input cost inflation, protect margins
 
,
 
and generate funds to reinvest in sales-generating activities.
 
 
 
88
Interest
 
bearing
 
instruments.
 
Notes
 
payable,
 
long-term
 
debt,
 
including
 
current
 
portion,
 
cash
 
and
 
cash
 
equivalents,
 
and
 
certain
interest bearing investments classified within prepaid expenses and other current
 
assets and other assets.
LIBOR.
 
London Interbank Offered Rate.
 
Mark-to-market.
 
The act of determining a value for
 
financial instruments, commodity contracts, and
 
related assets or liabilities based
on the current market price for that item.
Net debt.
 
Long-term debt, current portion of long-term debt, and notes payable,
 
less cash and cash equivalents.
Net debt-to-adjusted EBITDA ratio.
 
Net debt divided by Adjusted EBITDA.
 
Net
 
mark-to-market
 
valuation of
 
certain
 
commodity
 
positions.
 
Realized
 
and
 
unrealized
 
gains
 
and
 
losses on
 
derivative
 
contracts
that will be allocated to segment operating profit when the exposure
 
we are hedging affects earnings.
Net price realization.
 
The impact of list and promoted price changes, net of trade and other price
 
promotion costs.
Net realizable
 
value.
The estimated
 
selling price
 
in the
 
ordinary course
 
of business,
 
less reasonably
 
predictable costs
 
of completion,
disposal, and transportation.
Noncontrolling interests.
 
Interests of consolidated subsidiaries held by third parties.
 
Notional principal amount.
 
The principal
 
amount on which fixed-rate or floating-rate interest payments are calculated
 
.
OCI.
 
Other comprehensive income (loss).
 
Operating
 
cash
 
flow
 
conversion
 
rate.
 
Net
 
cash
 
provided
 
by
 
operating
 
activities,
 
divided
 
by
 
net
 
earnings,
 
including
 
earnings
attributable to redeemable and noncontrolling interests.
Operating cash flow to net debt ratio.
 
Net debt divided by cash provided by operating activities.
 
Organic net
 
sales growth.
 
Net sales growth
 
adjusted for
 
foreign currency
 
translation, as
 
well as
 
acquisitions, divestitures,
 
and a
 
53
rd
week impact, when applicable.
Project-related costs.
 
Costs incurred related to our restructuring initiatives not included in restructuring
 
charges.
Redeemable
 
interest.
 
Interest
 
of
 
consolidated
 
subsidiaries
 
held
 
by
 
a
 
third
 
party
 
that
 
can
 
be
 
redeemed
 
outside
 
of
 
our
 
control
 
and
therefore cannot be classified as a noncontrolling interest in equity.
Reporting unit.
 
An operating segment or a business one level below an operating
 
segment.
SOFR.
Secured Overnight Financing Rate.
Strategic
 
Revenue
 
Management
 
(SRM).
 
A
 
company-wide
 
capability
 
focused
 
on
 
generating
 
sustainable
 
benefits
 
from
 
net
 
price
realization
 
and
 
mix
 
by
 
identifying
 
and
 
executing
 
against
 
specific
 
opportunities
 
to
 
apply
 
tools
 
including
 
pricing,
 
sizing,
 
mix
management, and promotion optimization across each of our businesses.
Supply chain
 
input costs.
 
Costs incurred
 
to produce
 
and deliver
 
product,
 
including costs
 
for
 
ingredients
 
and
 
conversion, inventory
management, logistics, and warehousing.
Total
 
debt.
 
Notes payable and long-term debt, including current portion.
 
Translation
 
adjustments.
 
The impact
 
of the conversion
 
of our foreign
 
affiliates’ financial
 
statements to United
 
States dollars
 
for the
purpose of consolidating our financial statements.
Working capital.
 
Current assets and current liabilities, all as of the last day of our fiscal year.
ITEM 9 - Changes in and Disagreements With
 
Accountants on Accounting and Financial Disclosure
None.
 
89
ITEM 9A - Controls and Procedures
 
We,
 
under the
 
supervision and
 
with the
 
participation of
 
our management,
 
including our
 
Chief Executive
 
Officer and
 
Chief Financial
Officer,
 
have
 
evaluated
 
the
 
effectiveness
 
of
 
the design
 
and
 
operation
 
of
 
our
 
disclosure
 
controls
 
and
 
procedures
 
(as
 
defined
 
in
 
Rule
13a-15(e) under the 1934 Act). Based on that evaluation, our Chief Executive
 
Officer and Chief Financial Officer have concluded
 
that,
as of May 28,
 
2023, our disclosure
 
controls and procedures
 
were effective
 
to ensure that information
 
required to be disclosed
 
by us in
reports
 
that
 
we
 
file
 
or
 
submit
 
under
 
the
 
1934
 
Act
 
is
 
(1)
 
recorded,
 
processed,
 
summarized,
 
and
 
reported
 
within
 
the
 
time
 
periods
specified
 
in applicable
 
rules and
 
forms, and
 
(2)
 
accumulated and
 
communicated
 
to our
 
management,
 
including our
 
Chief
 
Executive
Officer and Chief Financial Officer,
 
in a manner that allows timely decisions regarding required disclosure.
There were
 
no changes
 
in our
 
internal control
 
over financial
 
reporting (as
 
defined in
 
Rule 13a-15(f)
 
under the
 
1934 Act)
 
during our
fiscal quarter ended May
 
28, 2023, that have materially
 
affected, or are reasonably
 
likely to materially affect,
 
our internal control
 
over
financial reporting.
MANAGEMENT’S REPORT ON INTERNAL CONTROL
 
OVER FINANCIAL REPORTING
 
The
 
management
 
of
 
General
 
Mills,
 
Inc.
 
is
 
responsible
 
for
 
establishing
 
and
 
maintaining
 
adequate
 
internal
 
control
 
over
 
financial
reporting,
 
as
 
such
 
term
 
is
 
defined
 
in
 
Rule
 
13a-15(f)
 
under
 
the
 
1934
 
Act.
 
The
 
Company’s
 
internal
 
control
 
system
 
was
 
designed
 
to
provide
 
reasonable
 
assurance
 
to
 
our
 
management
 
and
 
the
 
Board
 
of
 
Directors
 
regarding
 
the
 
preparation
 
and
 
fair
 
presentation
 
of
published
 
financial
 
statements.
 
Under
 
the
 
supervision
 
and
 
with
 
the
 
participation
 
of
 
management,
 
including
 
our
 
Chief
 
Executive
Officer and Chief Financial Officer,
 
we conducted an assessment of the effectiveness
 
of our internal control over financial reporting
 
as
of May 28, 2023. In
 
making this assessment, management
 
used the criteria set forth
 
by the Committee of Sponsoring
 
Organizations of
the Treadway Commission (COSO) in
Internal Control – Integrated Framework (2013)
.
Based
 
on
 
our
 
assessment
 
using
 
the
 
criteria
 
set
 
forth
 
by
 
COSO
 
in
Internal
 
Control
 
–
 
Integrated
 
Framework
 
(2013)
,
 
management
concluded that our internal control over financial reporting was effective
 
as of May 28, 2023.
KPMG
 
LLP,
 
our
 
independent
 
registered
 
public
 
accounting
 
firm,
 
has
 
issued
 
a
 
report
 
on the
 
effectiveness
 
of
 
the Company’s
 
internal
control over financial reporting.
/s/ J. L. Harmening
 
/s/ K. A. Bruce
J. L. Harmening
 
K. A. Bruce
Chief Executive Officer
 
Chief Financial Officer
June 28, 2023
Our independent registered public accounting firm’s
 
attestation report on our internal control over financial reporting
 
is included in the
“Report of Independent Registered Public Accounting Firm” in Item
 
8 of this report.
ITEM 9B - Other Information
 
None.
 
ITEM 9C - Disclosure Regarding Foreign Jurisdictions that
 
Prevent Inspections
Not applicable.
 
PART
 
III
ITEM 10 - Directors, Executive Officers and Corporate
 
Governance
 
The
 
information
 
contained
 
in
 
the
 
sections
 
entitled
 
“Proposal
 
Number
 
1
 
-
 
Election
 
of
 
Directors”
 
and
 
“Shareholder
 
Director
Nominations”
 
contained
 
in
 
our
 
definitive
 
Proxy
 
Statement
 
for
 
our
 
2023
 
Annual
 
Meeting
 
of
 
Shareholders
 
is
 
incorporated
 
herein
 
by
reference.
Information regarding our executive officers is set forth in
 
Item 1 of this report.
The
 
information
 
regarding
 
our
 
Audit
 
Committee,
 
including
 
the
 
members
 
of
 
the
 
Audit
 
Committee
 
and
 
audit
 
committee
 
financial
experts, set forth
 
in the section
 
entitled “Board
 
Committees and
 
Their Functions”
 
contained in our
 
definitive Proxy
 
Statement for
 
our
2023 Annual Meeting of Shareholders is incorporated herein by reference.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90
We
 
have adopted a
 
Code of Conduct
 
applicable to all employees,
 
including our principal
 
executive officer,
 
principal financial officer,
and
 
principal
 
accounting
 
officer.
 
A
 
copy
 
of
 
the
 
Code
 
of Conduct
 
is
 
available
 
on
 
our
 
website
 
at
 
https://www.general
 
mills.com.
We
intend
 
to
 
post
 
on
 
our
 
website
 
any
 
amendments
 
to
 
our
 
Code
 
of
 
Conduct
 
and
 
any
 
waivers
 
from
 
our
 
Code
 
of
 
Conduct
 
for
 
principal
officers.
ITEM 11 - Executive Compensation
 
The
 
information
 
contained
 
in
 
the
 
sections
 
entitled
 
“Executive
 
Compensation,”
 
“Director
 
Compensation,”
 
and
 
“Overseeing
 
Risk
Management” in our definitive Proxy Statement for our 2023 Annual
 
Meeting of Shareholders is incorporated herein by reference.
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
 
and Related Stockholder Matters
 
The
 
information
 
contained
 
in
 
the
 
section
 
entitled
 
“Ownership
 
of
 
General
 
Mills
 
Common
 
Stock
 
by
 
Directors,
 
Officers
 
and
 
Certain
Beneficial
 
Owners”
 
in
 
our
 
definitive
 
Proxy
 
Statement
 
for
 
our
 
2023
 
Annual
 
Meeting
 
of
 
Shareholders
 
is
 
incorporated
 
herein
 
by
reference.
 
Equity Compensation Plan Information
The following table provides certain information as of May 28, 2023,
 
with respect to our equity compensation plans:
Plan Category
Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (1)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and
Rights (2) (a)
Number of Securities Remaining
Available for
 
Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column (1)) (3)
Equity compensation plans
 
approved by
 
security holders
18,806,084
(b)
$
57.43
35,104,287
(d)
Equity compensation plans
 
not approved by
 
security holders
97,154
(c)
-
-
Total
18,903,238
$
57.43
35,104,287
(a)
Only includes the weighted-average exercise price of outstanding options,
 
whose weighted-average term is 5.59 years.
(b)
Includes 11,571,445
 
stock options, 3,359,589
 
restricted stock units,
 
1,690,278 performance share
 
units (assuming pay out
 
for
target performance), and 2,184,772 restricted stock units that have
 
vested and been deferred.
(c)
Includes 97,154 restricted
 
stock units that have
 
vested and been deferred.
 
These awards were made
 
in lieu of salary
 
increases
and certain other compensation
 
and benefits. We
 
granted these awards under
 
our 1998 Employee Stock
 
Plan, which provided
for the
 
issuance of stock
 
options, restricted
 
stock, and restricted
 
stock units
 
to attract
 
and retain
 
employees and
 
to align their
interest with those of shareholders.
 
We discontinued
 
the 1998 Employee Stock Plan in
 
September 2003, and no future awards
may be granted under that plan.
(d)
Includes
 
stock
 
options,
 
restricted
 
stock,
 
restricted
 
stock
 
units,
 
shares
 
of
 
unrestricted
 
stock,
 
stock
 
appreciation
 
rights,
 
and
performance awards that we may
 
award under our 2022 Stock
 
Compensation Plan, which has 35,104,287
 
shares available for
grant at May 28, 2023.
ITEM 13 - Certain Relationships and Related Transactions,
 
and Director Independence
The
 
information
 
set forth
 
in the
 
section
 
entitled “Board
 
Independence
 
and Related
 
Person
 
Transactions”
 
contained
 
in our
 
definitive
Proxy Statement for our 2023 Annual Meeting of Shareholders is incorporated
 
herein by reference.
ITEM 14 - Principal Accountant Fees and Services
 
The
 
information
 
contained
 
in
 
the
 
section
 
entitled
 
“Independent
 
Registered
 
Public
 
Accounting
 
Firm
 
Fees”
 
in
 
our
 
definitive
 
Proxy
Statement for our 2023 Annual Meeting of Shareholders is incorporated herein
 
by reference.
91
PART
 
IV
ITEM 15 – Exhibits and Financial Statement Schedules
 
1.
 
Financial Statements:
 
The following financial statements are included in Item 8 of this report:
Consolidated Statements of Earnings for the fiscal years ended May 28, 2023, May 29,
 
2022, and May 30, 2021.
Consolidated
 
Statements
 
of
 
Comprehensive
 
Income
 
for
 
the
 
fiscal
 
years
 
ended
 
May
 
28,
 
2023,
 
May
 
29,
 
2022,
 
and
 
May
 
30,
2021.
Consolidated Balance Sheets as of May 28, 2023 and May 29, 2022.
 
Consolidated Statements of Cash Flows for the fiscal years ended May 28, 2023,
 
May 29, 2022, and May 30, 2021.
Consolidated
 
Statements of
 
Total
 
Equity
 
and Redeemable
 
Interest for
 
the fiscal
 
years ended
 
May 28,
 
2023, May
 
29, 2022,
and May 30, 2021.
Notes to Consolidated Financial Statements.
 
Report of Management Responsibilities.
 
Report of Independent Registered Public Accounting Firm. PCAOB ID:
185
.
2.
 
Financial Statement Schedule:
 
For the fiscal years ended May 28, 2023, May 29, 2022, and May 30, 2021:
II – Valuation
 
and Qualifying Accounts
 
92
3.
Exhibits
:
 
Exhibit No.
Description
Amended
 
and
 
Restated
 
Certificate
 
of
 
Incorporation
 
of
 
the
 
Company
 
(incorporated
 
herein
 
by
reference to Exhibit 3.1 to the Company’s
 
Current Report on Form 8-K filed October 1, 2021).
By-laws
 
of
 
the
 
Company
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
3.1
 
to
 
the
 
Company’s
Current Report on Form 8-K filed January 28, 2022).
Indenture,
 
dated
 
as
 
of
 
February
 
1,
 
1996,
 
between
 
the
 
Company
 
and
 
U.S.
 
Bank
 
National
Association
 
(f/k/a
 
First
 
Trust
 
of
 
Illinois,
 
National
 
Association)
 
(incorporated
 
herein
 
by
reference to
 
Exhibit 4.1
 
to the
 
Company’s
 
Registration Statement
 
on Form
 
S-3 filed
 
February
6, 1996 (File no. 333-00745)).
First Supplemental
 
Indenture, dated as
 
of May 18,
 
2009, between the
 
Company and U.S.
 
Bank
National
 
Association
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
4.2
 
to
 
Registrant’s
 
Annual
Report on Form 10-K for the fiscal year ended May 31, 2009).
Description of the Company’s registered
 
securities.
2001
 
Compensation
 
Plan
 
for
 
Non-Employee
 
Directors
 
(incorporated
 
herein
 
by
 
reference
 
to
Exhibit
 
10.2
 
to
 
the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for
 
the
 
fiscal
 
quarter
 
ended
August 29, 2010).
2006 Compensation Plan for Non-Employee Directors (incorporated
 
herein by reference to
Exhibit 10.5 to the Company’s Quarterly
 
Report on Form 10-Q for the fiscal quarter ended
August 29, 2010).
2011
 
Stock
 
Compensation
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.6
 
to
 
the
Company’s Annual Report
 
on Form 10-K for the fiscal year ended May 31, 2015).
2011 Compensation Plan for Non-Employee
 
Directors (incorporated herein by reference to
Exhibit 10.2 to the Company’s Quarterly
 
Report on Form 10-Q for the fiscal quarter ended
November 27, 2011).
2016
 
Compensation
 
Plan
 
for
 
Non-Employee
 
Directors
 
(incorporated
 
herein
 
by
 
reference
 
to
Exhibit
 
10.1
 
to
 
the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for
 
the
 
fiscal
 
quarter
 
ended
November 27, 2016).
Executive
 
Incentive
 
Plan
 
(incorporated
 
herein
 
by reference
 
to
 
Exhibit
 
10.1
 
to
 
the
 
Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended November
 
28, 2010).
Separation Pay
 
and Benefits
 
Program for
 
Officers (incorporated
 
herein by
 
reference to
 
Exhibit
10.1
 
to the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for the
 
fiscal
 
quarter
 
ended February
23, 2020).
 
Supplemental Savings Plan (incorporated
 
herein by reference to Exhibit
 
10.4 to the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended February
 
28, 2021).
Supplemental
 
Retirement
 
Plan
 
(Grandfathered)
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
10.1
 
to the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for the
 
fiscal
 
quarter
 
ended February
28, 2021).
2005
 
Supplemental
 
Retirement
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.3
 
to
 
the
Company’s Quarterly Report on
 
Form 10-Q for the fiscal quarter ended February 28, 2021).
Deferred
 
Compensation
 
Plan
 
(Grandfathered)
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
10.14 to
 
the Company’s
 
Quarterly Report
 
on Form
 
10-Q for
 
the fiscal
 
quarter ended
 
February
22, 2009).
2005
 
Deferred
 
Compensation
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.5
 
to
 
the
Company’s Quarterly Report on
 
Form 10-Q for the fiscal quarter ended February 28, 2021).
Executive
 
Survivor
 
Income
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.6
 
to
 
the
Company’s Annual Report
 
on Form 10-K for the fiscal year ended May 29, 2005).
93
Supplemental
 
Benefits
 
Trust
 
Agreement,
 
amended
 
and
 
restated
 
as
 
of
 
September
 
26,
 
1988,
between the Company and
 
Norwest Bank Minnesota, N.A. (incorporated
 
herein by reference to
Exhibit
 
10.3
 
to
 
the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for
 
the
 
fiscal
 
quarter
 
ended
November 27, 2011).
Supplemental Benefits Trust
 
Agreement, dated September 26,
 
1988, between the Company and
Norwest
 
Bank
 
Minnesota,
 
N.A.
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.4
 
to
 
the
Company’s Quarterly Report on
 
Form 10-Q for the fiscal quarter ended November 27, 2011).
Form
 
of
 
Performance
 
Share
 
Unit
 
Award
 
Agreement
 
(incorporated
 
herein
 
by
 
reference
 
to
Exhibit
 
10.18
 
to
 
the Company’s
 
Annual
 
Report
 
on
 
Form
 
10-K
 
for
 
the fiscal
 
year
 
ended May
27, 2018).
Form
 
of
 
Stock
 
Option
 
Agreement
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.19
 
to
 
the
Company’s Annual Report
 
on Form 10-K for the fiscal year ended May 27, 2018).
Form of Restricted Stock
 
Unit Agreement (incorporated
 
herein by reference to Exhibit
 
10.20 to
the Company’s Annual Report on
 
Form 10-K for the fiscal year ended May 27, 2018).
Deferred Compensation
 
Plan for Non-Employee
 
Directors (incorporated
 
herein by reference
 
to
Exhibit
 
10.1
 
to
 
the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for
 
the
 
fiscal
 
quarter
 
ended
November 26, 2017).
2017
 
Stock
 
Compensation
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.2
 
to
 
the
Company’s Quarterly Report on
 
Form 10-Q for the fiscal quarter ended November 26, 2017).
Supplemental
 
Retirement
 
Plan
 
I
 
(Grandfathered)
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
10.2
 
to the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for the
 
fiscal
 
quarter
 
ended February
28, 2021).
Supplemental
 
Retirement
 
Plan
 
I
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.6
 
to
 
the
Company’s Quarterly Report on
 
Form 10-Q for the fiscal quarter ended
 
February 28, 2021).
2022
 
Stock
 
Compensation
 
Plan
 
(incorporated
 
herein
 
by
 
reference
 
to
 
Exhibit
 
10.1
 
to
 
the
Company's Current Report on Form 8-K filed September 30, 2022).
Agreements,
 
dated
 
November
 
29,
 
1989,
 
by
 
and
 
between
 
the
 
Company
 
and
 
Nestle
 
S.A.
(incorporated
 
herein by
 
reference
 
to Exhibit
 
10.15 to
 
the Company’s
 
Annual Report
 
on Form
10-K for the fiscal year ended May 28, 2000).
Protocol
 
of
 
Cereal
 
Partners
 
Worldwide,
 
dated
 
November
 
21,
 
1989,
 
and
 
Addendum
 
No.
 
1
 
to
Protocol, dated
 
February 9,
 
1990, between
 
the Company
 
and Nestle
 
S.A. (incorporated
 
herein
by
 
reference
 
to
 
Exhibit
 
10.16
 
to
 
the
 
Company’s
 
Annual
 
Report
 
on
 
Form
 
10-K
 
for
 
the
 
fiscal
year ended May 27, 2001).
Addendum
 
No.
 
2
 
to
 
the
 
Protocol
 
of
 
Cereal
 
Partners
 
Worldwide,
 
dated
 
March
 
16,
 
1993,
between the Company and Nestle S.A. (incorporated herein by
 
reference to Exhibit 10.18 to the
Company’s Annual Report
 
on Form 10-K for the
 
fiscal year ended May 30, 2004).
Addendum No. 3 to the Protocol of Cereal Partners Worldwide,
 
effective as of March 15, 1993,
between the
 
Company and
 
Nestle S.A. (incorporated
 
herein by reference
 
to Exhibit 10.2
 
to the
Company’s Annual Report
 
on Form 10-K for the fiscal year ended May 28, 2000).
+
Addendum
 
No.
 
4,
 
effective
 
as
 
August
 
1,
 
1998,
 
and
 
Addendum
 
No.
 
5,
 
effective
 
as
 
April
 
1,
2000,
 
to
 
the
 
Protocol
 
of
 
Cereal
 
Partners
 
Worldwide
 
between
 
the
 
Company
 
and
 
Nestle
 
S.A.
(incorporated
 
herein by
 
reference
 
to Exhibit
 
10.26 to
 
the Company’s
 
Annual Report
 
on Form
10-K for the fiscal year ended May 31, 2009).
Addendum
 
No.
 
10
 
to
 
the
 
Protocol
 
of
 
Cereal
 
Partners
 
Worldwide,
 
effective
 
January
 
1,
 
2010,
among the
 
Company,
 
Nestle S.A.,
 
and CPW
 
S.A. (incorporated
 
herein by
 
reference to
 
Exhibit
10.1
 
to the
 
Company’s
 
Quarterly
 
Report
 
on
 
Form
 
10-Q
 
for the
 
fiscal
 
quarter
 
ended February
28, 2010).
Five-Year
 
Credit Agreement, dated
 
as of April 12,
 
2021, as amended
 
April 3, 2023,
 
among the
Company,
 
the several financial
 
institutions from time
 
to time party
 
to the agreement,
 
and Bank
of America, N.A., as Administrative Agent.
94
Subsidiaries of the Company.
Consent of Independent Registered Public Accounting Firm.
Certification of
 
Chief Executive
 
Officer pursuant
 
to Section
 
302 of
 
the Sarbanes-Oxley
 
Act of
2002.
Certification of
 
Chief Financial
 
Officer
 
pursuant to
 
Section 302
 
of the
 
Sarbanes-Oxley
 
Act of
2002.
Certification of
 
Chief Executive
 
Officer pursuant
 
to Section
 
906 of
 
the Sarbanes-Oxley
 
Act of
2002.
Certification of
 
Chief Financial
 
Officer
 
pursuant to
 
Section 906
 
of the
 
Sarbanes-Oxley
 
Act of
2002.
101
The following
 
materials from
 
the Company’s
 
Annual Report
 
on Form
 
10-K for
 
the fiscal
 
year
ended
 
May
 
28,
 
2023,
 
formatted
 
in
 
Inline
 
Extensible
 
Business
 
Reporting
 
Language:
 
(i)
 
the
Consolidated
 
Balance
 
Sheets;
 
(ii)
 
the
 
Consolidated
 
Statements
 
of
 
Earnings;
 
(iii)
 
the
Consolidated Statements
 
of Comprehensive
 
Income; (iv)
 
the Consolidated
 
Statements of
 
Total
Equity and Redeemable Interest; (v)
 
the Consolidated Statements of Cash
 
Flows; (vi) the Notes
to
 
Consolidated
 
Financial
 
Statements;
 
and
 
(vii)
 
Schedule
 
II
 
–
 
Valuation
 
of
 
Qualifying
Accounts.
104
Cover
 
Page,
 
formatted
 
in
 
Inline
 
Extensible
 
Business
 
Reporting
 
Language
 
and
 
contained
 
in
Exhibit 101.
_____________
 
*
 
Management contract or compensatory plan or arrangement required
 
to be filed as an exhibit pursuant to Item 15 of Form
10-K.
+
 
Confidential information has been omitted from the exhibit and filed
 
separately with the SEC pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain
 
instruments defining the rights of holders of our long-term debt are
not filed and, in lieu thereof, we agree to furnish copies to the SEC upon request.
ITEM 16 - Form 10-K Summary
 
Not Applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gis202310kp95i0
95
Signatures
Pursuant to
 
the requirements of
 
Section 13 or
 
15(d) of the
 
Securities Exchange
 
Act of 1934,
 
the registrant has
 
duly caused this
 
report
to be signed on its behalf by the undersigned, thereunto duly authorized.
GENERAL MILLS, INC.
Date:
 
June 28, 2023
By
 
/s/ Mark A. Pallot
Name:
 
Mark A. Pallot
Title:
 
Vice President, Chief Accounting
 
Officer
Pursuant to
 
the requirements
 
of the
 
Securities Exchange
 
Act of
 
1934, this
 
report has
 
been signed
 
below by
 
the following
 
persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jeffrey L Harmening
Jeffrey L. Harmening
Chairman of the Board, Chief Executive Officer,
 
and Director
(Principal Executive Officer)
June 28, 2023
/s/ Kofi A. Bruce
Kofi A. Bruce
Chief Financial Officer
(Principal Financial Officer)
June 28, 2023
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
 
Officer
 
(Principal Accounting Officer)
June 28, 2023
/s/ R. Kerry Clark
R. Kerry Clark
Director
June 28, 2023
/s/ David M. Cordani
David M. Cordani
Director
June 28, 2023
/s/ C. Kim Goodwin
Director
June 28, 2023
C. Kim Goodwin
/s/ Maria G. Henry
Maria G. Henry
Director
June 28, 2023
/s/ Jo Ann Jenkins
Jo Ann Jenkins
Director
June 28, 2023
/s/ Elizabeth C. Lempres
Elizabeth C. Lempres
Director
June 28, 2023
/s/ Diane L. Neal
Diane L. Neal
Director
June 28, 2023
/s/ Steve Odland
Steve Odland
Director
June 28, 2023
/s/ Maria A. Sastre
Maria A. Sastre
Director
June 28, 2023
/s/ Eric D. Sprunk
Eric D. Sprunk
Director
June 28, 2023
/s/ Jorge A. Uribe
Jorge A. Uribe
Director
June 28, 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
96
General Mills, Inc. and Subsidiaries
Schedule II - Valuation
 
of Qualifying Accounts
Fiscal Year
In Millions
2023
2022
2021
Allowance for doubtful accounts:
Balance at beginning of year
$
28.3
$
36.0
$
33.2
Additions charged to expense
29.6
23.0
25.7
Bad debt write-offs
(28.6)
(26.4)
(29.9)
Other adjustments and reclassifications
(2.4)
(4.3)
7.0
Balance at end of year
$
26.9
$
28.3
$
36.0
Valuation
 
allowance for deferred tax assets:
Balance at beginning of year
$
185.1
$
229.2
$
214.2
Additions charged (benefits) to expense
77.1
(41.6)
9.1
Adjustments due to acquisitions, translation of amounts, and other
(3.0)
(2.5)
5.9
Balance at end of year
$
259.2
$
185.1
$
229.2
Reserve for restructuring and other exit charges:
Balance at beginning of year
$
36.8
$
148.8
$
17.8
Additions charged to expense, including translation amounts
41.7
3.4
143.9
Reserve adjustment
-
(34.0)
-
Net amounts utilized for restructuring activities
(30.8)
(81.4)
(12.9)
Balance at end of year
$
47.7
$
36.8
$
148.8
Reserve for LIFO valuation:
Balance at beginning of year
$
463.4
$
209.5
$
202.1
Increase
137.5
253.9
7.4
Balance at end of year
$
600.9
$
463.4
$
209.5