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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 28, 2021

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM              TO

 

Commission file number: 001-01185

________________

GENERAL MILLS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

41-0274440

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

 

Number One General Mills Boulevard

 

Minneapolis, Minnesota

55426

(Address of principal executive offices)

(Zip Code)

 

 

 

(763)764-7600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $.10 par value

 

GIS

 

New York Stock Exchange

1.000% Notes due 2023

 

GIS23A

 

New York Stock Exchange

0.125% Notes due 2025

 

GIS25A

 

New York Stock Exchange

0.450% Notes due 2026

 

GIS26

 

New York Stock Exchange

1.500% Notes due 2027

 

GIS27

 

New York Stock Exchange

 

 

 

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 


 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

 

Number of shares of Common Stock outstanding as of December 14, 2021: 603,206,700 (excluding 151,406,628 shares held in the treasury).

 


 

General Mills, Inc.

 

Table of Contents

 

 

Page

PART I – Financial Information

 

Item 1. Financial Statements

 

Consolidated Statements of Earnings for the quarters and six-month periods ended November 28, 2021 and November 29, 2020

4

Consolidated Statements of Comprehensive Income for the quarters and six-month periods ended November 28, 2021 and November 29, 2020

5

Consolidated Balance Sheets as of November 28, 2021 and May 30, 2021

6

Consolidated Statements of Total Equity and Redeemable Interest for the quarters and six-month periods ended November 28, 2021 and November 29, 2020

7

Consolidated Statements of Cash Flows for the six-month periods ended November 28, 2021 and November 29, 2020

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

42

Item 4. Controls and Procedures

43

PART II – Other Information

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 6. Exhibits

44

Signatures

45

 

3


 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions, Except per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six-Month Period Ended

 

Nov. 28, 2021

 

Nov. 29, 2020

 

 

Nov. 28, 2021

 

Nov. 29, 2020

Net sales

$

5,024.0

 

$

4,719.4

 

$

9,563.9

 

$

9,083.4

Cost of sales

 

3,392.8

 

 

2,998.3

 

 

6,335.3

 

 

5,771.9

Selling, general, and administrative expenses

 

828.8

 

 

804.1

 

 

1,586.2

 

 

1,540.3

Restructuring, impairment, and other exit

costs (recoveries)

 

2.3

 

 

0.4

 

 

(2.0)

 

 

0.9

Operating profit

 

800.1

 

 

916.6

 

 

1,644.4

 

 

1,770.3

Benefit plan non-service income

 

(27.7)

 

 

(32.9)

 

 

(57.3)

 

 

(66.2)

Interest, net

 

92.7

 

 

100.6

 

 

188.6

 

 

211.7

Earnings before income taxes and after-tax earnings from

joint ventures

 

735.1

 

 

848.9

 

 

1,513.1

 

 

1,624.8

Income taxes

 

159.7

 

 

189.4

 

 

328.6

 

 

360.2

After-tax earnings from joint ventures

 

33.0

 

 

36.4

 

 

62.1

 

 

77.7

Net earnings, including earnings attributable to redeemable

and noncontrolling interests

 

608.4

 

 

695.9

 

 

1,246.6

 

 

1,342.3

Net earnings attributable to redeemable and

noncontrolling interests

 

11.2

 

 

7.5

 

 

22.4

 

 

15.0

Net earnings attributable to General Mills

$

597.2

 

$

688.4

 

$

1,224.2

 

$

1,327.3

Earnings per share – basic

$

0.98

 

$

1.12

 

$

2.01

 

$

2.16

Earnings per share – diluted

$

0.97

 

$

1.11

 

$

1.99

 

$

2.14

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

4


 

 

Consolidated Statements of Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six-Month Period Ended

 

Nov. 28, 2021

 

Nov. 29, 2020

 

Nov. 28, 2021

 

Nov. 29, 2020

Net earnings, including earnings attributable to

redeemable and noncontrolling interests

$

608.4

 

$

695.9

 

$

1,246.6

 

$

1,342.3

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

(38.5)

 

 

23.7

 

 

(62.4)

 

 

89.9

Other fair value changes:

 

 

 

 

 

 

 

 

 

 

 

Hedge derivatives

 

18.7

 

 

1.9

 

 

20.4

 

 

(10.2)

Reclassification to earnings:

 

 

 

 

 

 

 

 

 

 

 

Hedge derivatives

 

(6.4)

 

 

1.0

 

 

4.2

 

 

(0.7)

Amortization of losses and prior service costs

 

22.8

 

 

19.8

 

 

31.2

 

 

39.3

Other comprehensive (loss) income, net of tax

 

(3.4)

 

 

46.4

 

 

(6.6)

 

 

118.3

Total comprehensive income

 

605.0

 

 

742.3

 

 

1,240.0

 

 

1,460.6

Comprehensive (loss) income attributable to

redeemable and noncontrolling interests

 

(25.8)

 

 

12.8

 

 

(49.3)

 

 

86.5

Comprehensive income attributable to General Mills

$

630.8

 

$

729.5

 

$

1,289.3

 

$

1,374.1

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

5


 

 

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except Par Value)

 

Nov. 28, 2021

 

May 30, 2021

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

1,021.0

 

$

1,505.2

Receivables

 

1,766.1

 

 

1,638.5

Inventories

 

1,797.3

 

 

1,820.5

Prepaid expenses and other current assets

 

764.8

 

 

790.3

Assets held for sale

 

1,263.2

 

 

-

Total current assets

 

6,612.4

 

 

5,754.5

Land, buildings, and equipment

 

3,291.5

 

 

3,606.8

Goodwill

 

14,523.2

 

 

14,062.4

Other intangible assets

 

6,813.9

 

 

7,150.6

Other assets

 

1,240.6

 

 

1,267.6

Total assets

$

32,481.6

 

$

31,841.9

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

3,450.0

 

$

3,653.5

Current portion of long-term debt

 

600.7

 

 

2,463.8

Notes payable

 

1,098.0

 

 

361.3

Other current liabilities

 

2,060.2

 

 

1,787.2

Liabilities held for sale

 

604.3

 

 

-

Total current liabilities

 

7,813.2

 

 

8,265.8

Long-term debt

 

10,973.6

 

 

9,786.9

Deferred income taxes

 

2,146.9

 

 

2,118.4

Other liabilities

 

1,181.6

 

 

1,292.7

Total liabilities

 

22,115.3

 

 

21,463.8

Redeemable interest

 

561.6

 

 

604.9

Stockholders' equity:

 

 

 

 

 

Common stock, 754.6 shares issued, $0.10 par value

 

75.5

 

 

75.5

Additional paid-in capital

 

1,365.1

 

 

1,365.5

Retained earnings

 

17,363.2

 

 

17,069.8

Common stock in treasury, at cost, shares of 151.4 and 146.9

 

(6,915.2)

 

 

(6,611.2)

Accumulated other comprehensive loss

 

(2,364.1)

 

 

(2,429.2)

Total stockholders' equity

 

9,524.5

 

 

9,470.4

Noncontrolling interests

 

280.2

 

 

302.8

Total equity

 

9,804.7

 

 

9,773.2

Total liabilities and equity

$

32,481.6

 

$

31,841.9

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

6


 

 

Consolidated Statements of Total Equity and Redeemable Interest

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions, Except per Share Data)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nov. 28, 2021

 

Nov. 29, 2020

 

Shares

 

Amount

 

Shares

 

Amount

Total equity, beginning balance

 

 

$

9,985.9

 

 

 

$

8,757.9

Common stock, 1 billion shares authorized, $0.10 par value

754.6

 

 

75.5

 

754.6

 

 

75.5

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

1,345.0

 

 

 

 

1,335.5

Stock compensation plans

 

 

 

(5.1)

 

 

 

 

(2.4)

Unearned compensation related to stock unit awards

 

 

 

(3.9)

 

 

 

 

(2.8)

Earned compensation

 

 

 

20.6

 

 

 

 

20.0

Decrease (increase) in redemption value of

redeemable interest

 

 

 

8.5

 

 

 

 

(17.0)

Ending balance

 

 

 

1,365.1

 

 

 

 

1,333.3

Retained earnings:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

17,384.5

 

 

 

 

16,312.5

Net earnings attributable to General Mills

 

 

 

597.2

 

 

 

 

688.4

Cash dividends declared ($1.02 per share)

 

 

 

(618.5)

 

 

 

 

(626.7)

Ending balance

 

 

 

17,363.2

 

 

 

 

16,374.2

Common stock in treasury:

 

 

 

 

 

 

 

 

 

Beginning balance

(148.3)

 

 

(6,715.0)

 

(143.3)

 

 

(6,370.2)

Shares purchased

(3.7)

 

 

(224.9)

 

-

 

 

(0.1)

Stock compensation plans

0.6

 

 

24.7

 

0.1

 

 

4.9

Ending balance

(151.4)

 

 

(6,915.2)

 

(143.2)

 

 

(6,365.4)

Accumulated other comprehensive loss:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

(2,397.7)

 

 

 

 

(2,908.7)

Other comprehensive income

 

 

 

33.6

 

 

 

 

41.1

Ending balance

 

 

 

(2,364.1)

 

 

 

 

(2,867.6)

Noncontrolling interests:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

293.5

 

 

 

 

313.3

Comprehensive (loss) income

 

 

 

(11.9)

 

 

 

 

4.7

Distributions to noncontrolling interest holders

 

 

 

(1.4)

 

 

 

 

(15.4)

Ending balance

 

 

 

280.2

 

 

 

 

302.6

Total equity, ending balance

 

 

$

9,804.7

 

 

 

$

8,852.6

Redeemable interest:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

$

584.0

 

 

 

$

584.9

Comprehensive (loss) income

 

 

 

(13.9)

 

 

 

 

8.1

(Decrease) increase in redemption value of

redeemable interest

 

 

 

(8.5)

 

 

 

 

17.0

Distributions to redeemable interest holder

 

 

 

-

 

 

 

 

(22.3)

Ending balance

 

 

$

561.6

 

 

 

$

587.7

See accompanying notes to consolidated financial statements.

7


 

Consolidated Statements of Total Equity and Redeemable Interest

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions, Except per Share Data)

 

 

 

 

 

 

 

 

 

 

 

Six-Month Period Ended

 

Nov. 28, 2021

 

Nov. 29, 2020

 

Shares

 

Amount

 

Shares

 

Amount

Total equity, beginning balance

 

 

$

9,773.2

 

 

 

$

8,349.5

Common stock, 1 billion shares authorized, $0.10 par value

754.6

 

 

75.5

 

754.6

 

 

75.5

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

1,365.5

 

 

 

 

1,348.6

Stock compensation plans

 

 

 

4.0

 

 

 

 

21.2

Unearned compensation related to stock unit awards

 

 

 

(72.2)

 

 

 

 

(77.7)

Earned compensation

 

 

 

53.7

 

 

 

 

48.2

Decrease (increase) in redemption value of

redeemable interest

 

 

 

14.1

 

 

 

 

(7.0)

Ending balance

 

 

 

1,365.1

 

 

 

 

1,333.3

Retained earnings:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

17,069.8

 

 

 

 

15,982.1

Net earnings attributable to General Mills

 

 

 

1,224.2

 

 

 

 

1,327.3

Cash dividends declared ($1.53 and $1.51 per share)

 

 

 

(930.8)

 

 

 

 

(929.5)

Adoption of current expected credit loss accounting

requirements

 

 

 

-

 

 

 

 

(5.7)

Ending balance

 

 

 

17,363.2

 

 

 

 

16,374.2

Common stock in treasury:

 

 

 

 

 

 

 

 

 

Beginning balance

(146.9)

 

 

(6,611.2)

 

(144.8)

 

 

(6,433.3)

Shares purchased

(6.2)

 

 

(375.0)

 

-

 

 

(0.1)

Stock compensation plans

1.7

 

 

71.0

 

1.6

 

 

68.0

Ending balance

(151.4)

 

 

(6,915.2)

 

(143.2)

 

 

(6,365.4)

Accumulated other comprehensive loss:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

(2,429.2)

 

 

 

 

(2,914.4)

Other comprehensive income

 

 

 

65.1

 

 

 

 

46.8

Ending balance

 

 

 

(2,364.1)

 

 

 

 

(2,867.6)

Noncontrolling interests:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

302.8

 

 

 

 

291.0

Comprehensive (loss) income

 

 

 

(20.1)

 

 

 

 

28.1

Distributions to noncontrolling interest holders

 

 

 

(2.5)

 

 

 

 

(16.5)

Ending balance

 

 

 

280.2

 

 

 

 

302.6

Total equity, ending balance

 

 

$

9,804.7

 

 

 

$

8,852.6

Redeemable interest:

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

$

604.9

 

 

 

$

544.6

Comprehensive (loss) income

 

 

 

(29.2)

 

 

 

 

58.4

(Decrease) increase in redemption value of

redeemable interest

 

 

 

(14.1)

 

 

 

 

7.0

Distributions to redeemable interest holder

 

 

 

-

 

 

 

 

(22.3)

Ending balance

 

 

$

561.6

 

 

 

$

587.7

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

8


 

 

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

 

Six-Month Period Ended

 

Nov. 28, 2021

 

Nov. 29, 2020

Cash Flows - Operating Activities

 

 

 

 

 

Net earnings, including earnings attributable to redeemable and noncontrolling interests

$

1,246.6

 

$

1,342.3

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

286.9

 

 

295.1

After-tax earnings from joint ventures

 

(62.1)

 

 

(77.7)

Distributions of earnings from joint ventures

 

35.8

 

 

29.7

Stock-based compensation

 

47.9

 

 

48.7

Deferred income taxes

 

56.4

 

 

42.3

Pension and other postretirement benefit plan contributions

 

(12.5)

 

 

(15.6)

Pension and other postretirement benefit plan costs

 

(14.4)

 

 

(16.9)

Restructuring, impairment, and other exit costs

 

(44.2)

 

 

(3.6)

Changes in current assets and liabilities, excluding the effects of acquisition

 

(88.7)

 

 

(147.8)

Other, net

 

46.1

 

 

(69.7)

Net cash provided by operating activities

 

1,497.8

 

 

1,426.8

Cash Flows - Investing Activities

 

 

 

 

 

Purchases of land, buildings, and equipment

 

(224.3)

 

 

(226.2)

Acquisition, net of cash acquired

 

(1,198.6)

 

 

-

Investments in affiliates, net

 

4.8

 

 

18.1

Proceeds from disposal of land, buildings, and equipment

 

1.5

 

 

0.4

Other, net

 

20.6

 

 

(3.6)

Net cash used by investing activities

 

(1,396.0)

 

 

(211.3)

Cash Flows - Financing Activities

 

 

 

 

 

Change in notes payable

 

854.2

 

 

(159.6)

Issuance of long-term debt

 

1,935.0

 

 

971.3

Payment of long-term debt

 

(2,221.7)

 

 

(555.0)

Proceeds from common stock issued on exercised options

 

26.1

 

 

31.1

Purchases of common stock for treasury

 

(375.0)

 

 

(0.1)

Dividends paid

 

(623.2)

 

 

(617.7)

Distributions to noncontrolling and redeemable interest holders

 

(2.5)

 

 

(4.8)

Other, net

 

(20.1)

 

 

(18.8)

Net cash used by financing activities

 

(427.2)

 

 

(353.6)

Effect of exchange rate changes on cash and cash equivalents

 

(35.1)

 

 

43.1

(Decrease) increase in cash and cash equivalents

 

(360.5)

 

 

905.0

Cash and cash equivalents - beginning of year

 

1,505.2

 

 

1,677.8

Cash and cash equivalents - end of period (includes $123.7 million of cash classified as
held for sale as of November 28, 2021)

$

1,144.7

 

$

2,582.8

Cash Flow from changes in current assets and liabilities, excluding the effects of acquisition:

 

 

 

 

 

Receivables

$

(237.3)

 

$

(135.2)

Inventories

 

9.2

 

 

(258.6)

Prepaid expenses and other current assets

 

(1.2)

 

 

81.6

Accounts payable

 

(28.4)

 

 

165.8

Other current liabilities

 

169.0

 

 

(1.4)

Changes in current assets and liabilities

$

(88.7)

 

$

(147.8)

See accompanying notes to consolidated financial statements.

 

 

 

 

 

9


 

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

(1) Background

 

The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, General Mills, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature, including the elimination of all intercompany transactions and any noncontrolling and redeemable interests’ share of those transactions. Operating results for the quarter ended November 28, 2021, are not necessarily indicative of the results that may be expected for the fiscal year ending May 29, 2022.

 

These statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended May 30, 2021. The accounting policies used in preparing these Consolidated Financial Statements are the same as those described in Note 2 to the Consolidated Financial Statements in that Form 10-K.

 

Certain terms used throughout this report are defined in the “Glossary” section below.

 

 

(2) Acquisition and Divestitures

During the second quarter of fiscal 2022, we entered into definitive agreements to sell our European dough businesses. The transactions are expected to close by the end of fiscal 2022, subject to appropriate labor consultations, regulatory approvals, and other customary closing conditions. The associated assets and liabilities have an immaterial impact on the presentation of our Consolidated Balance Sheets as of November 28, 2021.

 

During the first quarter of fiscal 2022, we acquired the Tyson Foods’ pet treats business for $1.2 billion in cash. We financed the transaction with a combination of cash on hand and short-term debt. We consolidated the Tyson Foods’ pet treats business into our Consolidated Balance Sheets and recorded goodwill of $759.4 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. The consolidated results of the Tyson Foods’ pet treat business are reported in our Pet operating segment on a one-month lag. Accordingly, our Consolidated Statements of Earnings include four months of operating results for the acquired business for the six-month period ended November 28, 2021.

 

During the first quarter of fiscal 2022, we entered into a definitive agreement to sell our 51 percent controlling interest in Yoplait SAS, and our 50 percent interest in Yoplait Marques SNC and Liberté Marques Sàrl to Sodiaal International (Sodiaal) in exchange for full ownership of the Canadian Yoplait business, a reduced royalty rate for the use of Yoplait and Liberté brands in the United States and Canada, and cash. The transaction closed subsequent to the end of the second quarter of fiscal 2022. We expect to record a pre-tax gain on the sale of this business during the third quarter of fiscal 2022. We have classified all Yoplait SAS, Yoplait Marques SNC and Liberté Marques Sàrl assets and liabilities as held for sale in our Consolidated Balance Sheets as of November 28, 2021.

 

10


 

The components of assets held for sale and liabilities held for sale are as follows:

In Millions

Nov. 28, 2021

Cash and cash equivalents

$

123.7

Receivables

 

111.2

Inventories

 

24.6

Prepaid expenses and other current assets

 

18.4

Land, buildings, and equipment

 

164.3

Goodwill

 

194.9

Other intangible assets

 

621.8

Other assets

 

4.3

Assets held for sale

$

1,263.2

 

 

 

Accounts payable

$

90.8

Current portion of long-term debt

 

56.6

Notes payable

 

262.9

Other current liabilities

 

102.3

Deferred income taxes

 

77.7

Other liabilities

 

14.0

Liabilities held for sale

$

604.3

 

(3) Restructuring, Impairment, and Other Exit Costs

 

Restructuring charges were as follows:

 

 

Quarter Ended

 

Six-Month Period Ended

In Millions

Nov. 28, 2021

 

Nov. 29, 2020

 

Nov. 28, 2021

 

Nov. 29, 2020

Asia & Latin America manufacturing

and logistics operations

$

12.6

 

$

-

 

$

12.6

 

$

-

(Recoveries) charges associated with restructuring actions

previously announced

 

(9.9)

 

 

0.9

 

 

(14.0)

 

 

1.9

Total restructuring charges (recoveries)

$

2.7

 

$

0.9

 

$

(1.4)

 

$

1.9

 

In the second quarter of fiscal 2022, we approved restructuring actions in the Asia & Latin America segment to drive efficiencies in manufacturing and logistics operations. We expect to incur approximately $21 million of restructuring charges and project-related costs related to these actions, of which approximately $12 million will be cash. These charges are expected to consist of approximately $8 million of severance and $10 million of other costs, primarily asset write-offs. We also expect to incur approximately $3 million of project-related costs. We recognized $7.9 million of severance and $4.7 million of other costs in the second quarter of fiscal 2022. We expect these actions to be completed by the end of fiscal 2024.

 

We recorded a $9.9 million net recovery of restructuring charges in the second quarter of fiscal 2022 and a $14.0 million net recovery of restructuring charges in the six-month period ended November 28, 2021, related to restructuring actions previously announced. We recorded $0.9 million of restructuring charges in the second quarter of fiscal 2021 and $1.9 million of restructuring charges in the six-month period ended November 29, 2020, related to restructuring actions previously announced. The charges associated with restructuring actions previously announced primarily related to actions designed to better align our organizational structure and resources with strategic initiatives. We expect these actions to be completed by the end of fiscal 2023. Certain actions are subject to union negotiations and works counsel consultations, where required.

 

We paid net $42.8 million of cash in the six-month period ended November 28, 2021, related to restructuring actions previously announced. We paid net $5.5 million of cash in the same period of fiscal 2021.

 

11


 

Restructuring charges are recorded in our Consolidated Statements of Earnings as follows:

 

 

Quarter Ended

 

Six-Month Period Ended

In Millions

Nov. 28, 2021

 

Nov. 29, 2020

 

Nov. 28, 2021

 

Nov. 29, 2020

Restructuring, impairment, and other exit costs (recoveries)

$

2.3

 

$

0.4

 

$

(2.0)

 

$

0.9

Cost of sales

 

0.4

 

 

0.5

 

 

0.6

 

 

1.0

Total restructuring charges (recoveries)

$

2.7

 

$

0.9

 

$

(1.4)

 

$

1.9

 

The roll forward of our restructuring and other exit cost reserves, included in other current liabilities, is as follows:

In Millions

Total

Reserve balance as of May 30, 2021

$

148.8

Fiscal 2022 net recoveries, including foreign currency translation

 

(2.0)

Utilized in fiscal 2022

 

(37.1)

Reserve balance as of Nov. 28, 2021

$

109.7

 

The reserve balance primarily consists of expected severance payments associated with restructuring actions.

 

The charges recognized in the roll forward of our reserves for restructuring and other exit costs do not include items charged directly to expense (e.g., asset impairment charges, accelerated depreciation, the gain or loss on the sale of restructured assets, and the write-off of spare parts) and other periodic exit costs are recognized as incurred, as those items are not reflected in our restructuring and other exit cost reserves on our Consolidated Balance Sheets.

 

(4) Goodwill and Other Intangible Assets

 

The components of goodwill and other intangible assets are as follows:

 

In Millions

Nov. 28, 2021

 

May 30, 2021

Goodwill

$

14,523.2

 

$

14,062.4

Other intangible assets:

 

 

 

 

 

Intangible assets not subject to amortization:

 

 

 

 

 

Brands and other indefinite-lived intangibles

 

6,529.1

 

 

6,628.1

Intangible assets subject to amortization:

 

 

 

 

 

Franchise agreements, customer relationships, and other finite-lived intangibles

 

402.5

 

 

823.4

Less accumulated amortization

 

(117.7)

 

 

(300.9)

Intangible assets subject to amortization, net

 

284.8

 

 

522.5

Other intangible assets

 

6,813.9

 

 

7,150.6

Total

$

21,337.1

 

$

21,213.0

 

 

Based on the carrying value of finite-lived intangible assets as of November 28, 2021, annual amortization expense for each of the next five fiscal years is estimated to be approximately $20 million.

 

12


 

The changes in the carrying amount of goodwill during the six-month period ended November 28, 2021, were as follows:

 

In Millions

 

North America Retail

 

Pet

 

Convenience Stores & Foodservice

 

Europe & Australia

 

Asia & Latin America

 

Joint Ventures

 

Total

Balance as of May 30, 2021

 

$

6,419.3

 

$

5,300.5

 

$

918.8

 

$

765.5

 

$

212.7

 

$

445.6

 

$

14,062.4

Acquisition

 

 

-

 

 

759.4

 

 

-

 

 

-

 

 

-

 

 

-

 

 

759.4

Reclassified to assets held

for sale

 

 

-

 

 

-

 

 

-

 

 

(184.6)

 

 

(10.3)

 

 

-

 

 

(194.9)

Other activity, primarily

foreign currency translation

 

 

(7.1)

 

 

-

 

 

-

 

 

(53.2)

 

 

(11.4)

 

 

(32.0)

 

 

(103.7)

Balance as of Nov. 28, 2021

 

$

6,412.2

 

$

6,059.9

 

$

918.8

 

$

527.7

 

$

191.0

 

$

413.6

 

$

14,523.2

The changes in the carrying amount of other intangible assets during the six-month period ended November 28, 2021, were as follows:

In Millions

 

 

Total

Balance as of May 30, 2021

 

$

7,150.6

Acquisition

 

 

370.0

Reclassified to assets held for sale

 

 

(621.8)

Other activity, primarily foreign currency translation

 

 

(84.9)

Balance as of Nov. 28, 2021

 

$

6,813.9