UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One) 

☑

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED

AUGUST 27, 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

GIS 25A

New York Stock Exchange

0.450% Notes due 2026

GIS 26

New York Stock Exchange

1.500% Notes due 2027

GIS 27

New York Stock Exchange

3.907% Notes due 2029

GIS 29

New York Stock Exchange

________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. 

Yes

☑

 No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files).

Yes

☑

 No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting

company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

 Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

☐

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

Yes

☐

 No

☑

Number of shares of Common Stock outstanding as of September 13, 2023:

581,279,229

 (excluding

173,334,099

 shares held in the

treasury).

3

General Mills, Inc.

Table of Contents

Page

4

5

6

7

8

20

34

35

35

35

36

37

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Earnings

GENERAL MILLS, INC. AND SUBSIDIARIES

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

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Net sales

$

4,904.7

$

4,717.6

Cost of sales

3,134.2

3,269.9

Selling, general, and administrative expenses

839.3

791.4

Divestitures gain, net

-

(430.9)

Restructuring, impairment, and other exit costs

1.2

1.6

Operating profit

930.0

1,085.6

Benefit plan non-service income

(17.0)

(21.7)

Interest, net

117.0

87.7

Earnings before income taxes and after-tax earnings from 

 joint ventures

830.0

1,019.6

Income taxes

173.2

216.1

After-tax earnings from joint ventures

23.5

19.8

Net earnings, including earnings attributable to noncontrolling interests

680.3

823.3

Net earnings attributable to noncontrolling interests

6.8

3.3

Net earnings attributable to General Mills

$

673.5

$

820.0

Earnings per share – basic

$

1.15

$

1.37

Earnings per share – diluted

$

1.14

$

1.35

See accompanying notes to consolidated financial statements.

5

Consolidated Statements of Comprehensive Income

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Net earnings, including earnings attributable to noncontrolling interests

$

680.3

$

823.3

Other comprehensive (loss) income, net of tax:

Foreign currency translation

(18.1)

3.8

Other fair value changes:

Hedge derivatives

(2.3)

(38.3)

Reclassification to earnings:

Foreign currency translation

-

(7.4)

Hedge derivatives

0.2

(1.4)

Amortization of losses and prior service costs

9.1

14.1

Other comprehensive loss, net of tax

(11.1)

(29.2)

Total comprehensive income 

669.2

794.1

Comprehensive income attributable to noncontrolling interests

6.9

2.0

Comprehensive income attributable to General Mills

$

662.3

$

792.1

See accompanying notes to consolidated financial statements. 

6

Consolidated Balance Sheets

GENERAL MILLS, INC. AND SUBSIDIARIES

(In Millions, Except Par Value)

Aug. 27, 2023

May 28, 2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

490.9

$

585.5

Receivables

1,791.1

1,683.2

Inventories

2,228.8

2,172.0

Prepaid expenses and other current assets

596.2

735.7

Total current assets

5,107.0

5,176.4

Land, buildings, and equipment

3,585.2

3,636.2

Goodwill

14,522.0

14,511.2

Other intangible assets

6,965.7

6,967.6

Other assets

1,139.8

1,160.3

Total assets

$

31,319.7

$

31,451.7

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

3,705.8

$

4,194.2

Current portion of long-term debt

1,174.6

1,709.1

Notes payable

584.3

31.7

Other current liabilities

1,603.1

1,600.7

Total current liabilities

7,067.8

7,535.7

Long-term debt

10,523.5

9,965.1

Deferred income taxes

2,085.0

2,110.9

Other liabilities

1,128.0

1,140.0

Total liabilities

20,804.3

20,751.7

Stockholders' equity:

Common stock,

754.6

 shares issued, $

0.10

 par value

75.5

75.5

Additional paid-in capital

1,185.7

1,222.4

Retained earnings

20,163.6

19,838.6

Common stock in treasury, at cost, shares of

173.4

 and

168.0

(8,874.3)

(8,410.0)

Accumulated other comprehensive loss

(2,288.1)

(2,276.9)

Total stockholders' equity

10,262.4

10,449.6

Noncontrolling interests

253.0

250.4

Total equity

10,515.4

10,700.0

Total liabilities and equity

$

31,319.7

$

31,451.7

See accompanying notes to consolidated financial statements.

7

Consolidated Statements of Total Equity

GENERAL MILLS, INC. AND SUBSIDIARIES

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

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Shares

Amount

Shares

Amount

Total equity, beginning balance

$

10,700.0

$

10,788.0

Common stock,

1

 billion shares authorized, $

0.10

 par value

754.6

75.5

754.6

75.5

Additional paid-in capital:

Beginning balance

1,222.4

1,182.9

Stock compensation plans

7.3

9.3

Unearned compensation related to stock unit awards

(79.4)

(79.0)

Earned compensation

35.4

32.9

Ending balance

1,185.7

1,146.1

Retained earnings:

Beginning balance

19,838.6

18,532.6

Net earnings attributable to General Mills

673.5

820.0

Cash dividends declared ($

0.59

 and $

0.54

 per share)

(348.5)

(325.0)

Ending balance

20,163.6

19,027.6

Common stock in treasury:

Beginning balance

(168.0)

(8,410.0)

(155.7)

(7,278.1)

Shares purchased, including $

4.2

 million of excise tax

(6.4)

(504.7)

(6.9)

(500.8)

Stock compensation plans

1.0

40.4

2.3

102.9

Ending balance

(173.4)

(8,874.3)

(160.3)

(7,676.0)

Accumulated other comprehensive loss:

Beginning balance

(2,276.9)

(1,970.5)

Comprehensive loss

(11.2)

(27.9)

Ending balance

(2,288.1)

(1,998.4)

Noncontrolling interests:

Beginning balance

250.4

245.6

Comprehensive income

6.9

2.0

Distributions to noncontrolling interest holders

(4.3)

(1.9)

Divestiture

-

5.1

Ending balance

253.0

250.8

Total equity, ending balance

$

10,515.4

$

10,825.6

See accompanying notes to consolidated financial statements.

8

Consolidated Statements of Cash Flows

GENERAL MILLS, INC. AND SUBSIDIARIES

(Unaudited) (In Millions)

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Cash Flows - Operating Activities

Net earnings, including earnings attributable to noncontrolling interests

$

680.3

$

823.3

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

Depreciation and amortization

137.2

134.3

After-tax earnings from joint ventures

(23.5)

(19.8)

Distributions of earnings from joint ventures

15.8

15.5

Stock-based compensation

35.3

33.5

Deferred income taxes

(14.5)

9.2

Pension and other postretirement benefit plan contributions

(7.4)

(5.3)

Pension and other postretirement benefit plan costs

(5.3)

(6.7)

Divestitures gain, net

-

(430.9)

Restructuring, impairment, and other exit costs

2.4

(15.7)

Changes in current assets and liabilities, excluding the effects of 

 acquisitions and divestitures

(457.4)

(209.7)

Other, net

15.2

61.1

Net cash provided by operating activities

378.1

388.8

Cash Flows - Investing Activities

Purchases of land, buildings, and equipment

(141.7)

(90.9)

Acquisition, net of cash acquired

-

(252.1)

Proceeds from divestitures, net of cash divested

-

610.7

Other, net

6.2

(1.9)

Net cash (used) provided by investing activities

(135.5)

265.8

Cash Flows - Financing Activities

Change in notes payable

551.8

188.0

Proceeds from common stock issued on exercised options

4.5

65.5

Purchases of common stock for treasury

(500.5)

(500.8)

Dividends paid

(348.5)

(325.0)

Distributions to noncontrolling interest holders

(4.3)

(1.9)

Other, net

(37.2)

(34.9)

Net cash used by financing activities

(334.2)

(609.1)

Effect of exchange rate changes on cash and cash equivalents

(3.0)

(20.5)

(Decrease) Increase in cash and cash equivalents

(94.6)

25.0

Cash and cash equivalents - beginning of year

585.5

569.4

Cash and cash equivalents - end of period

$

490.9

$

594.4

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

 acquisitions and divestitures:

Receivables

$

(104.4)

$

(91.1)

Inventories

(54.3)

(243.3)

Prepaid expenses and other current assets

140.9

79.5

Accounts payable

(443.8)

(130.4)

Other current liabilities

4.2

175.6

Changes in current assets and liabilities

$

(457.4)

$

(209.7)

See accompanying notes to consolidated financial statements.

9

GENERAL MILLS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Background

The accompanying Consolidated Financial Statements of General Mills, Inc. (we, us, our, General Mills, or the Company) have been

prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information

and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures

required for comprehensive financial statements. In the opinion of management, all adjustments considered necessary for a fair

presentation have been included and are of a normal recurring nature, including the elimination of all intercompany transactions and

any noncontrolling interests’ share of those transactions. Operating results for the fiscal quarter ended August 27, 2023, are not

necessarily indicative of the results that may be expected for the fiscal year ending May 26, 2024. 

These statements should be read in conjunction with the Consolidated Financial Statements and footnotes included in our Annual

Report on Form 10-K for the fiscal year ended May 28, 2023. The accounting policies used in preparing these Consolidated Financial

Statements are the same as those described in Note 2 to the Consolidated Financial Statements in that Form 10-K with the exception of

new requirements adopted in the first quarter of fiscal 2024.

In the first quarter of fiscal 2024, we adopted optional accounting guidance to ease the burden in accounting for reference rate reform.

The new standard provides temporary expedients and exceptions to existing accounting requirements for contract modifications and

hedge accounting related to transitioning from discontinued reference rates. This resulted in modifying contracts, where necessary, to

apply a new reference rate, primarily SOFR. The adoption of this accounting guidance did not have a material impact on our results of

operations or financial position.

In the first quarter of fiscal 2024, we adopted new requirements for enhanced disclosures related to supplier financing programs. The

new standard requires disclosure of the key terms of the program and a rollforward of the related obligation during the annual period,

including the amount of obligations confirmed and obligations subsequently paid. We have historically presented the key terms of

these programs and the associated obligation outstanding (please see Note 6). The rollforward requirement is effective in fiscal 2025.

The adoption did not have a material impact on our financial statements and related disclosures.

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

(2) Acquisition and Divestiture

During the first quarter of fiscal 2023, we acquired TNT Crust, a manufacturer of high-quality frozen pizza crusts for regional and

national pizza chains, foodservice distributors, and retail outlets, for a purchase price of $

253.0

 million. We financed the transaction

with U.S. commercial paper. We consolidated the TNT Crust business into our Consolidated Balance Sheets and recorded goodwill of

$

156.7

 million. The goodwill is included in the North America Foodservice segment and is not deductible for tax purposes. The pro

forma effects of this acquisition were not material. 

During the first quarter of fiscal 2023, we completed the sale of our Helper main meals and Suddenly Salad side dishes business to

Eagle Family Foods Group for $

606.8

 million and recorded a pre-tax gain of $

442.2

 million.

(3) Restructuring, Impairment, and Other Exit Costs

During the first quarter of fiscal 2024, we did not undertake any new restructuring actions. We recorded $

9.8

 million of restructuring

charges in the first quarter of fiscal 2024 and $

2.3

 million of restructuring charges in the first quarter of fiscal 2023 for previously

announced restructuring actions. We expect these actions to be completed by the end of fiscal 2025.

We paid net $

7.4

 million of cash in the first quarter of fiscal 2024 related to restructuring actions previously announced. We paid net

$

18.0

 million of cash in the same period of fiscal 2023.

10

Restructuring and impairment charges and project-related costs are recorded in our Consolidated Statement of Earnings as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Cost of sales

$

8.6

$

0.7

Restructuring, impairment, and other exit costs

1.2

1.6

Total restructuring charges

$

9.8

$

2.3

Project-related costs classified in cost of sales

$

0.8

$

-

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

In Millions

Total

Reserve balance as of May 28, 2023

$

47.7

Fiscal 2024 charges, including foreign currency translation

1.2

Utilized in fiscal 2024

(6.4)

Reserve balance as of Aug. 27, 2023

$

42.5

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

Aug. 27, 2023

May 28, 2023

Goodwill

$

14,522.0

$

14,511.2

Other intangible assets:

Intangible assets not subject to amortization:

Brands and other indefinite-lived intangibles

6,715.0

6,712.4

Intangible assets subject to amortization:

Customer relationships and other finite-lived intangibles

386.9

386.3

Less accumulated amortization

(136.2)

(131.1)

Intangible assets subject to amortization, net

250.7

255.2

Other intangible assets

6,965.7

6,967.6

Total

$

21,487.7

$

21,478.8

Based on the carrying value of finite-lived intangible assets as of August 27, 2023, annual amortization expense for each of the next

five fiscal years is estimated to be approximately $

20

 million.

11

The changes in the carrying amount of goodwill during the first quarter of fiscal 2024 were as follows:

In Millions

North America

Retail

Pet

North America

Foodservice

International

Joint Ventures

Total

Balance as of May 28, 2023

$

6,542.4

$

6,062.8

$

805.6

$

708.4

$

392.0

$

14,511.2

Other activity, primarily 

 foreign currency translation

0.1

-

(0.1)

8.2

2.6

10.8

Balance as of Aug. 27, 2023

$

6,542.5

$

6,062.8

$

805.5

$

716.6

$

394.6

$

14,522.0

The changes in the carrying amount of other intangible assets during the first quarter of fiscal 2024 were as follows:

In Millions

Total

Balance as of May 28, 2023

$

6,967.6

Amortization, net of foreign currency translation

(1.9)

Balance as of Aug. 27, 2023

$

6,965.7

Our annual goodwill and indefinite-lived intangible assets impairment test was performed on the first day of the second quarter of

fiscal 2023, and we determined there was

no

 impairment of our intangible assets as their related fair values were substantially in

excess of the carrying values, except for the

Uncle Toby’s

 brand intangible asset. In addition, while having significant coverage as of

our fiscal 2023 assessment date, the

Progresso

 and

EPIC

 brand intangible assets had risk of decreasing coverage. We will continue to

monitor these businesses for potential impairment.

(5) Inventories

The components of inventories were as follows:

In Millions

Aug. 27, 2023

May 28, 2023

Finished goods

$

2,093.0

$

2,066.9

Raw materials and packaging

553.5

572.2

Grain

130.1

133.8

Excess of FIFO over LIFO cost

(547.8)

(600.9)

Total

$

2,228.8

$

2,172.0

(6) Risk Management Activities 

Many commodities we use in the production and distribution of our products are exposed to market price risks. We utilize derivatives

to manage price risk for our principal ingredients and energy costs, including grains (oats, wheat, and corn), oils (principally soybean),

dairy products, natural gas, and diesel fuel. Our primary objective when entering into these derivative contracts is to achieve certainty

with regard to the future price of commodities purchased for use in our supply chain. We manage our exposures through a

combination of purchase orders, long-term contracts with suppliers, exchange-traded futures and options, and over-the-counter options

and swaps. We offset our exposures based on current and projected market conditions and generally seek to acquire the inputs at as

close as possible to or below our planned cost.

We use derivatives to manage our exposure to changes in commodity prices. We do not perform the assessments required to achieve

hedge accounting for commodity derivative positions. Accordingly, the changes in the values of these derivatives are recorded

currently in cost of sales in our Consolidated Statements of Earnings.

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 manag ing 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. 

12

Unallocated corporate items for the quarters ended August 27, 2023, and August 28, 2022, included:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Net gain (loss) on mark-to-market valuation of certain 

 commodity positions

$

28.4

$

(72.3)

Net loss (gain) on commodity positions reclassified from 

 unallocated corporate items to segment operating profit

3.2

(43.0)

Net mark-to-market revaluation of certain grain inventories

13.3

(59.4)

Net mark-to-market valuation of certain commodity 

 positions recognized in unallocated corporate items

$

44.9

$

(174.7)

As of August 27, 2023, the net notional value of commodity derivatives was $

278.2

 million, of which $

113.2

 million related to energy

inputs and $

165.0

 million related to agricultural inputs. These contracts relate to inputs that generally will be utilized within the next

12

 months.

We also have net investments in foreign subsidiaries that are denominated in euros. As of August 27, 2023, we hedged a portion of

these investments with €

2,954.1

 million of euro-denominated bonds.

The fair values of the derivative positions used in our risk management activities and other assets recorded at fair value were not

material as of August 27, 2023, and were Level 1 or Level 2 assets and liabilities in the fair value hierarchy. We did not significantly

change our valuation techniques from prior periods. 

We offer certain suppliers access to third-party services that allow them to view our scheduled payments online. The third-party

services also allow suppliers to finance advances on our scheduled payments at the sole discretion of the supplier and the third party.

We have no economic interest in these financing arrangements and no direct relationship with the suppliers, the third parties, or any

financial institutions concerning these services, including not providing any form of guarantee and not pledging assets as security to

the third parties or financial institutions. All of our accounts payable remain as obligations to our suppliers as stated in our supplier

agreements. As of August 27, 2023, $

1,362.8

 million of our total accounts payable were payable to suppliers who utilize these third-

party services. As of May 28, 2023, $

1,430.1

 million of our total accounts payable were payable to suppliers who utilize these third-

party services.

(7) Debt

The components of notes payable were as follows:

In Millions

Aug. 27, 2023

May 28, 2023

U.S. commercial paper

$

529.2

$

-

Financial institutions

55.1

31.7

Total

$

584.3

$

31.7

To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States

and Europe.

The following table details the fee-paid committed and uncommitted credit lines we had available as of August 27, 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 August 27, 2023.

Long-Term Debt 

The fair values and carrying amounts of long-term debt, including the current portion, were $

10,811.1

 million and $

11,698.1

 million,

respectively, as of August 27, 2023. The fair value of long-term debt was estimated using market quotations and discounted cash

13

flows based on our current incremental borrowing rates for similar types of instruments. Long -term debt is a Level 2 liability in the

fair value hierarchy. 

In the first quarter of fiscal 2024, we issued €

500.0

 million of floating-rate notes due

November 8, 2024

. We used the net proceeds to

repay €

500.0

 million of floating-rate notes due

July 27, 2023

. 

In the fourth quarter of fiscal 2023, we issued €

250.0

 million of floating-rate notes due

November 10, 2023

. We used the net proceeds

to repay €

250.0

 million of floating-rate notes due

May 16, 2023

.

In the fourth quarter of fiscal 2023, we issued €

750.0

 million of

3.907

 percent fixed-rate notes due

April 13, 2029

. We used the net

proceeds to repay €

500.0

 million of

1.0

 percent fixed-rate notes due

April 27, 2023

, and €

250.0

 million of floating-rate notes due

May

16, 2023

.

In the fourth quarter of fiscal 2023, we issued $

1,000.0

 million of

4.95

 percent fixed-rate notes due

March 29, 2033

. We used the net

proceeds to repay our outstanding commercial paper and for general corporate purposes.

In the second quarter of fiscal 2023, we issued $

500.0

 million of

5.241

 percent fixed-rate notes due

November 18, 2025

. We used the

net proceeds to repay a portion of our outstanding commercial paper and for general corporate purposes.

In the second quarter of fiscal 2023, we issued €

250.0

 million of floating-rate notes due

May 16, 2023

. We used the net proceeds to

repay €

250.0

 million of

0.0

 percent fixed-rate notes due

November 11, 2022

.

In the second quarter of fiscal 2023, we repaid $

500.0

 million of

2.6

 percent fixed-rate notes due

October 12, 2022

, using proceeds

from the issuance of commercial paper.

Certain of our long-term debt agreements contain restrictive covenants.

As of August 27, 2023, we were in compliance with all of

these covenants.

(8) Noncontrolling Interests

The third-party holder of the General Mills Cereals, LLC (GMC) Class A Interests receives quarterly preferred distributions from

available net income based on the application of a floating preferred return rate to the holder’s capital account balance established in

the most recent mark-to-market valuation (currently $

251.5

 million). The floating preferred return rate on GMC’s Class A Interests is

the sum of the

three-month Term SOFR

 plus

186

 basis points. The preferred return rate is adjusted every

three years

 through a

negotiated agreement with the Class A Interest holder or through a remarketing auction.

Our noncontrolling interests contain restrictive covenants. As of August 27, 2023, we were in compliance with all of these covenants.

14

(9) Stockholders’ Equity 

The following tables provide details of total comprehensive income:

Quarter Ended

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

General Mills

Noncontrolling

Interests 

General Mills

Noncontrolling

Interests

In Millions

Pretax

Tax

Net

Net

Pretax

Tax

Net

Net

Net earnings, including earnings

attributable to noncontrolling interests 

$

673.5

$

6.8

$

820.0

$

3.3

Other comprehensive (loss) income:

Foreign currency translation

$

(22.0)

$

3.8

(18.2)

0.1

$

(48.0)

$

53.1

5.1

(1.3)

Other fair value changes:

Hedge derivatives

(2.7)

0.4

(2.3)

-

(49.8)

11.5

(38.3)

-

Reclassification to earnings:

Foreign currency translation

-

-

-

-

(7.4)

-

(7.4)

-

Hedge derivatives (a)

(1.3)

1.5

0.2

-

(1.9)

0.5

(1.4)

-

Amortization of losses and

 prior service costs (b)

11.5

(2.4)

9.1

-

18.2

(4.1)

14.1

-

Other comprehensive (loss) income

$

(14.5)

$

3.3

(11.2)

0.1

$

(88.9)

$

61.0

(27.9)

(1.3)

Total comprehensive income

$

662.3

$

6.9

$

$

792.1

$

2.0

(a) (Gain) loss reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.

(b) Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.

Accumulated other comprehensive loss balances, net of tax effects, were as follows:

In Millions

Aug. 27, 2023

May 28, 2023

Foreign currency translation adjustments

$

(726.8)

$

(708.6)

Unrealized gain from hedge derivatives

3.8

5.9

Pension, other postretirement, and postemployment benefits:

Net actuarial loss

(1,655.7)

(1,670.6)

Prior service credits

90.6

96.4

Accumulated other comprehensive loss

$

(2,288.1)

$

(2,276.9)

(10) Stock Plans

We have various stock-based compensation programs under which awards, including stock options, restricted stock, restricted stock

units, and performance awards, may be granted to employees and non-employee directors. These programs and related accounting are

described in Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended

May 28, 2023.

Compensation expense related to stock-based payments recognized in the Consolidated Statements of Earnings was as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Compensation expense related to stock-based payments

$

35.3

$

33.5

Windfall tax benefits from stock-based payments in income tax expense in our Consolidated Statements of Earnings were as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Windfall tax benefits from stock-based payments

$

8.4

$

12.8

As of August 27, 2023, unrecognized compensation expense related to non-vested stock options, restricted stock units, and

performance share units was $

172.2

 million. This expense will be recognized over

25

 months, on average.

15

Net cash proceeds from the exercise of stock options less shares used for withholding taxes and the intrinsic value of options exercised

were as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Net cash proceeds

$

4.5

$

65.5

Intrinsic value of options exercised

$

2.1

$

32.0

We estimate the fair value of each stock option on the grant date using a Black-Scholes option-pricing model. Black-Scholes option-

pricing models require us to make predictive assumptions regarding future stock price volatility, employee exercise behavior, and

dividend yield. We estimate our future stock price volatility using the historical volatility over the expected term of the option,

excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. We

also have considered, but did not use, implied volatility in our estimate, because trading activity in options on our stock, especially

those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. Our method of selecting

the other valuation assumptions is explained in Note 12 to the Consolidated Financial Statements included in our Annual Report on

Form 10-K for the fiscal year ended May 28, 2023.

The estimated fair values of stock options granted and the assumptions used for the Black-Scholes option-pricing model were as

follows:

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Estimated fair values of stock options granted 

$

17.47

$

14.16

Assumptions:

Risk-free interest rate

4.0

%

3.3

%

Expected term

8.5

years

8.5

years

Expected volatility

21.4

%

20.9

%

Dividend yield

2.8

%

3.1

%

The total grant date fair value of restricted stock unit awards that vested during the period was as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Total grant date fair value

$

104.8

$

82.0

16

(11) Earnings Per Share

Basic and diluted earnings per share (EPS) were calculated using the following:

Quarter Ended

In Millions, Except per Share Data

Aug. 27, 2023

Aug. 28, 2022

Net earnings attributable to General Mills

$

673.5

$

820.0

Average number of common shares - basic EPS

586.3

600.2

Incremental share effect from: (a)

Stock options

2.8

3.3

Restricted stock units and performance share units

2.3

2.5

Average number of common shares - diluted EPS

591.4

606.0

Earnings per share – basic

$

1.15

$

1.37

Earnings per share – diluted

$

1.14

$

1.35

(a) Incremental shares from stock options, restricted stock units, and performance share units are computed by the treasury stock

method.

 Stock options, restricted stock units, and performance share units excluded from our computation of diluted EPS because they

were not dilutive were as follows

:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Anti-dilutive stock options, restricted stock units, and

 performance share units 

1.6

0.8

(12) Share Repurchases

Share repurchases were as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Shares of common stock

6.4

6.9

Aggregate purchase price

$

504.7

$

500.8

(13) Statements of Cash Flows

Our Consolidated Statements of Cash Flows include the following:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Net cash interest payments

$

83.9

$

55.2

Net income tax payments

$

13.7

$

9.0

17

(14) Retirement and Postemployment Benefits

Components of net periodic benefit expense (income) are as follows:

Defined Benefit

Pension Plans

Other Postretirement 

Benefit Plans

Postemployment

Benefit Plans

Quarter Ended

Quarter Ended

Quarter Ended

In Millions

Aug. 27,

2023

Aug. 28,

2022

Aug. 27,

2023

Aug. 28,

2022

Aug. 27,

2023

Aug. 28,

2022

Service cost

$

14.2

$

17.6

$

1.2

$

1.4

$

1.8

$

2.1

Interest cost

74.2

64.6

5.3

4.5

1.0

0.8

Expected return on plan assets

(102.9)

(105.0)

(8.7)

(7.8)

-

-

Amortization of losses (gains)

21.5

28.3

(5.1)

(4.9)

-

0.1

Amortization of prior service costs (credits)

0.4

0.4

(5.4)

(5.8)

0.1

0.1

Other adjustments

-

-

-

-

2.6

3.0

Net expense (income)

$

7.4

$

5.9

$

(12.7)

$

(12.6)

$

5.5

$

6.1

(15) Income Taxes

During the first quarter of fiscal 2023, the Inflation Reduction Act (IRA) was signed into law. The IRA introduces a Corporate

Alternative Minimum Tax beginning in our fiscal 2024 and an excise tax on the repurchase of corporate stock starting after January 1,

2023. We do not expect the IRA to have a material impact on our financial results, including our annual estimated effective tax rate, or

on our liquidity.

(16) Contingencies

During fiscal 2020, we received notice from the tax authorities of the State of São Paulo, Brazil regarding our compliance with its

state sales tax requirements. As a result, we have been assessed additional state sales taxes, interest, and penalties. We believe that we

have meritorious defenses against this claim and will vigorously defend our position. As of August 27, 2023, we are unable to estimate

any possible loss and have not recorded a loss contingency for this matter.

(17) Business Segment and Geographic Information

We operate in the packaged foods industry. Our operating segments are as follows: North America Retail, International, Pet, and

North America Foodservice. 

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

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

18

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:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Net sales:

North America Retail

$

3,073.0

$

2,988.8

International

715.8

652.5

Pet

579.9

579.9

North America Foodservice

536.0

496.4

Total

$

4,904.7

$

4,717.6

Operating profit:

North America Retail

$

798.2

$

777.8

International

50.0

34.8

Pet

111.2

123.1

North America Foodservice

59.1

53.6

Total segment operating profit

$

1,018.5

$

989.3

Unallocated corporate items

87.3

333.0

Divestitures gain, net

-

(430.9)

Restructuring, impairment, and other exit costs

1.2

1.6

Operating profit

$

930.0

$

1,085.6

Net sales for our North America Retail operating units were as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

U.S. Snacks

$

954.5

$

887.2

U.S. Meals & Baking Solutions

941.9

949.2

U.S. Morning Foods

927.8

904.0

Canada

248.8

248.4

Total

$

3,073.0

$

2,988.8

19

Net sales by class of similar products were as follows:

Quarter Ended

In Millions

Aug. 27, 2023

Aug. 28, 2022

Snacks

$

1,136.7

$

1,068.4

Cereal

817.9

814.7

Convenient meals

665.5

679.2

Pet

579.9

580.8

Dough

534.9

464.8

Baking mixes and ingredients

466.5

473.5

Yogurt

368.4

346.0

Super-premium ice cream

224.0

183.5

Other

110.9

106.7

Total

$

4,904.7

$

4,717.6

20

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

INTRODUCTION

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in

conjunction with the MD&A included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 for important

background regarding, among other things, our key business drivers. Significant trademarks and service marks used in our business

are set forth in

italics

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

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. We anticipate input cost

inflation of approximately 5 percent in fiscal 2024 and expect to generate higher levels of Holistic Margin Management (HMM) cost

savings compared to fiscal 2023.

CONSOLIDATED RESULTS OF OPERATIONS

First Quarter Results

In the first quarter of fiscal 2024, net sales and organic net sales increased 4 percent compared to the same period last year. Operating

profit decreased 14 percent to $930 million, primarily driven by a net gain on divestitures in fiscal 2023, higher input costs, 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 and a favorable change to the mark-to-market valuation of certain commodity positions and

grain inventories. Operating profit margin of 19.0 percent decreased 400 basis points. Adjusted operating profit of $899 million

increased 2 percent on a constant-currency basis, primarily driven by favorable net price realization and mix, partially offset by higher

input costs, an increase in SG&A expenses, including increased media and advertising expenses, and a decrease in contributions from

volume growth. Adjusted operating profit margin decreased 40 basis points to 18.3 percent. Diluted earnings per share of $1.14

decreased 16 percent in the first quarter of fiscal 2024. Adjusted diluted earnings per share of $1.09 decreased 1 percent on a constant-

currency basis compared to the first quarter of fiscal 2023. See the “Non-GAAP Measures” section below for a description of our use

of measures not defined by GAAP.

A summary of our consolidated financial results for the first quarter of fiscal 2024 follows:

Quarter Ended Aug. 27, 2023

In millions,

except per share

Quarter Ended

Aug. 27, 2023 vs.

Aug. 28, 2022

Percent

of Net

Sales

Constant-

Currency

Growth (a)

Net sales 

$

4,904.7

4

%

Operating profit

930.0

(14)

%

19.0

%

Net earnings attributable to General Mills

673.5

(18)

%

Diluted earnings per share

$

1.14

(16)

%

Organic net sales growth rate (a)

4

%

Adjusted operating profit (a)

899.0

2

%

18.3

%

2

%

Adjusted diluted earnings per share (a)

$

1.09

(2)

%

(1)

%

(a) See the "Non-GAAP Measures" section below for our use of measures not defined by GAAP.

Consolidated

net sales

 were as follows:

Quarter Ended

Aug. 27, 2023

Aug. 27, 2023 vs. 

Aug. 28, 2022

Aug. 28, 2022

Net sales (in millions)

$

4,904.7

4%

$

4,717.6

Contributions from volume growth (a)

(2)

pts

Net price realization and mix

6

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.

21

Net sales in the first quarter of fiscal 2024 increased 4 percent compared to the same period in fiscal 2023, driven by favorable net

price realization and mix, partially offset by a decrease in contributions from volume growth.

Components of organic net sales growth are shown in the following table: 

Quarter Ended Aug. 27, 2023 vs.

Quarter Ended Aug. 28, 2022

Contributions from organic volume growth (a)

(2)

pts

Organic net price realization and mix

7

pts

Organic net sales growth

4

pts

Foreign currency exchange

Flat

Acquisitions and divestitures

Flat

Net sales growth

4

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 increased 4 percent in the first quarter of fiscal 2024 compared to the same period in fiscal 2023, driven by favorable

organic net price realization and mix, partially offset by a decrease in contributions from organic volume growth .

Cost of sales

decreased $136 million to $3,134 million in the first quarter of fiscal 2024 compared to the same period in fiscal 2023.

The decrease included a $54 million decrease attributable to lower volume and a $150 million increase attributable to product rate and

mix. We recorded a $45 million net decrease in cost of sales related to the mark-to-market valuation of certain commodity positions

and grain inventories in the first quarter of fiscal 2024 compared to a $175 million net increase in the first quarter of fiscal 2023. In the

first quarter of fiscal 2023, we recorded a $21 million charge related to a voluntary recall on certain international

Häagen-Dazs

 ice

cream products. We also recorded $9 million of restructuring charges and $1 million of restructuring initiative project-related costs in

cost of sales in the first quarter of fiscal 2024 compared to $1 million of restructuring charges in the first quarter of fiscal 2023 (please

refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).

SG&A expenses

increased $48 million to $839 million in the first quarter of fiscal 2024, compared to the same period in fiscal 2023,

primarily driven by increased media and advertising expenses. SG&A expenses as a percent of net sales in the first quarter of fiscal

2024 increased 30 basis points compared to the first quarter of fiscal 2023.

Divestitures gain, net

 totaled $431 million in the first quarter of fiscal 2023, primarily related to the sale of our Helper main meals

and Suddenly Salad side dishes business (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this

report). 

Restructuring, impairment, and other exit costs

totaled $1 million in the first quarter of fiscal 2024, compared to $2 million in the

same period last year (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).

Benefit plan non-service income

totaled $17 million in the first quarter of fiscal 2024, compared to $22 million in the same period

last year, primarily reflecting an increase in interest costs, partially offset by lower amortization of losses. 

Interest, net

for the first quarter of fiscal 2024 totaled $117 million, up $29 million from the first quarter of fiscal 2023, primarily

driven by higher interest rates and higher average long-term debt levels.

The

effective tax rate

 for the first quarter of fiscal 2024 was 20.9 percent compared to 21.2 percent for the first quarter of fiscal 2023.

The 0.3 percentage point decrease was primarily due to certain unfavorable tax components related to the divestitures in the first

quarter of fiscal 2023, partially offset by certain nonrecurring discrete tax benefits in the first quarter of fiscal 2023 and unfavorable

earnings mix by jurisdiction in the first quarter of fiscal 2024. Our effective tax rate excluding certain items affecting comparability

was 21.1 percent in the first quarter of fiscal 2024, compared to 19.7 percent in the same period last year (see the “Non-GAAP

Measures” section below for a description of our use of measures not defined by GAAP). The 1.4 percentage point increase was

primarily due to certain nonrecurring discrete tax benefits in the first quarter of fiscal 2023 and unfavorable earnings mix by

jurisdiction in the first quarter of fiscal 2024. 

22

After-tax earnings from joint ventures

 for the first quarter of fiscal 2024

increased to $24 million compared to $20 million in the

same period in fiscal 2023, primarily driven by higher net sales as a result of favorable net price realization and mix at Cereal Partners

Worldwide (CPW) and favorable discrete tax items at CPW, partially offset by higher input costs at CPW and Häagen-Dazs Japan,

Inc. (HDJ). On a constant-currency basis, after-tax earnings from joint ventures increased 26 percent (see the “Non-GAAP Measures”

section below for a description of our use of measures not defined by GAAP). 

The components of our joint ventures’ net sales growth are shown in the following table: 

Quarter Ended Aug. 27, 2023 vs.

Quarter Ended Aug. 28, 2022

CPW

HDJ

Total

Contributions from volume growth (a)

(11)

pts

(5)

pts

Net price realization and mix

19

pts

9

pts

Net sales growth in constant currency

8

pts

4

pts

7

pts

Foreign currency exchange

1

pt

(5)

pts

Flat

Net sales growth

9

pts

(1)

pt

7

pts

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

Average diluted shares outstanding

decreased by 15 million in the first quarter of fiscal 2024 from the same period a year ago

primarily due to share repurchases, partially offset by option exercises. 

SEGMENT OPERATING RESULTS

Our businesses are organized into four operating segments: North America Retail, International, Pet, and North America Foodservice.

Please refer to Note 17 of the Consolidated Financial Statements in Part I, Item 1 of this report for a description of our operating

segments.

North America Retail Segment Results

North America Retail net sales were as follows:

Quarter Ended

Aug. 27,

2023

Aug. 27, 2023 vs

Aug. 28, 2022

Aug. 28,

2022

Net sales (in millions)

$

3,073.0

3

%

$

2,988.8

Contributions from volume growth (a)

(5)

pts

Net price realization and mix

8

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 Retail net sales increased 3 percent in the first quarter of fiscal 2024, compared to the same period in fiscal 2023,

driven by favorable net price realization and mix, partially offset by a decrease in contributions from volume growth.

23

The components of North America Retail organic net sales growth are shown in the following table:

Quarter Ended

Aug. 27, 2023

Contributions from organic volume growth (a)

(4)

pts

Organic net price realization and mix

8

pts

Organic net sales growth

4

pts

Foreign currency exchange

Flat

Divestiture (b)

(1)

pt

Net sales growth

3

pts

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

(b) Divestiture of our Helper main meals and Suddenly Salad side dishes businesses in fiscal 2023. Please see Note 2 to the

 Consolidated Financial Statements in Part I, Item 1 of this report.

North America Retail organic net sales increased 4 percent in the first quarter of fiscal 2024, compared to the same period in fiscal

2023, driven by favorable organic net price realization and mix, partially offset by a decrease in contributions from organic volume

growth.

North America Retail net sales percentage change by operating unit are shown in the following table:

Quarter Ended

Aug. 27, 2023

U.S. Snacks

8

%

U.S. Morning Foods

3

%

Canada (a)

Flat

U.S. Meals & Baking Solutions

(1)

%

Total

3

%

(a) On a constant-currency basis, Canada net sales increased 4 percent in the first quarter of fiscal 2024, compared to the same period

in fiscal 2023. See the "Non-GAAP Measures" section below for our use of this measure not defined by GAAP.

Segment operating profit increased 3 percent to $798 million in the first quarter of fiscal 2024, compared to $778 million in the same

period in fiscal 2023, 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 3 percent on a constant-currency basis in the first quarter of fiscal 2024 compared to the same period in

fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

International Segment Results

International net sales were as follows:

Quarter Ended

Aug. 27,

2023

Aug. 27, 2023 vs

Aug. 28, 2022

Aug. 28,

2022

Net sales (in millions)

$

715.8

10

%

$

652.5

Contributions from volume growth (a)

(5)

pts

Net price realization and mix

13

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.

International net sales increased 10 percent in the first quarter of fiscal 2024, compared to the same period in fiscal 2023 which

included the impact of the voluntary recall on certain international

Häagen-Dazs

 ice cream products, driven by favorable net price

realization and mix and favorable foreign currency exchange, partially offset by a decrease in contributions from volume growth.

24

The components of International organic net sales growth are shown in the following table:

Quarter Ended

Aug. 27, 2023

Contributions from organic volume growth (a)

(5)

pts

Organic net price realization and mix

13

pts

Organic net sales growth

9

pts

Foreign currency exchange

1

pt

Net sales growth

10

pts

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

International organic net sales increased 9 percent in the first quarter of fiscal 2024, compared to the same period in fiscal 2023 which

included the impact of the voluntary recall on certain international

Häagen-Dazs

 ice cream products, driven by favorable organic net

price realization and mix, partially offset by a decrease in contributions from organic volume growth.

Segment operating profit increased 44 percent to $50 million in the first quarter of fiscal 2024, compared to $35 million in the same

period in fiscal 2023, primarily driven by favorable net price realization and mix and the voluntary recall on certain international

Häagen-Dazs

 ice cream products in fiscal 2023, partially offset by higher input costs. Segment operating profit increased 52 percent

on a constant-currency basis in the first quarter of fiscal 2024 compared to the same period in fiscal 2023 (see the “Non-GAAP

Measures” section below for our use of this measure not defined by GAAP).

Pet Segment Results

Pet net sales were as follows:

Quarter Ended

Aug. 27,

2023

Aug. 27, 2023 vs

Aug. 28, 2022

Aug. 28,

2022

Net sales (in millions)

$

579.9

Flat

$

579.9

Contributions from volume growth (a)

(5)

pts

Net price realization and mix

5

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 in the first quarter of fiscal 2024 matched the same period in fiscal 2023, as favorable net price realization and mix was

offset by a decrease in contributions from volume growth.

The components of Pet organic net sales growth are shown in the following table:

Quarter Ended

Aug. 27, 2023

Contributions from organic volume growth (a)

(5)

pts

Organic net price realization and mix

5

pts

Organic net sales growth

Flat

Foreign currency exchange

Flat

Net sales growth

Flat

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

Pet organic net sales in the first quarter of fiscal 2024 matched the same period in fiscal 2023, as favorable organic net price

realization and mix was offset by a decrease in contributions from organic volume growth.

Segment operating profit decreased 10 percent to $111 million in the first quarter of fiscal 2024, compared to $123 million in the same

period in fiscal 2023, primarily driven by higher input costs, a decrease in contributions from volume growth, and an increase in

SG&A expenses, partially offset by favorable net price realization and mix. Segment operating profit decreased 10 percent on a

25

constant-currency basis in the first quarter of fiscal 2024 compared to the same period in fiscal 2023 (see the “Non-GAAP Measures”

section below for our use of this measure not defined by GAAP).

North America Foodservice Segment Results

North America Foodservice net sales were as follows:

Quarter Ended

Aug. 27,

2023

Aug. 27, 2023 vs

Aug. 28, 2022

Aug. 28,

2022

Net sales (in millions)

$

536.0

8

%

$

496.4

Contributions from volume growth (a)

7

pts

Net price realization and mix

1

pt

Foreign currency exchange

Flat

Note: Table may not foot due to rounding.

(a) Measured in tons based on the stated weight of our product shipments.

North America Foodservice net sales increased 8 percent in the first quarter of fiscal 2024, compared to the same period in fiscal 2023,

driven by an increase in contributions from volume growth and favorable net price realization and mix.

The components of North America Foodservice organic net sales growth are shown in the following table:

Quarter Ended

Aug. 27, 2023

Contributions from organic volume growth (a)

4

pts

Organic net price realization and mix

Flat

Organic net sales growth

4

pts

Foreign currency exchange

Flat

Acquisition (b)

4

pts

Net sales growth

8

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 TNT Crust in fiscal 2023. Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

North America Foodservice organic net sales increased 4 percent in the first quarter of fiscal 2024, compared to the same period in

fiscal 2023, driven by an increase in contributions from organic volume growth.

Segment operating profit increased 10 percent to $59 million in the first quarter of fiscal 2024, compared to $54 million in the same

period in fiscal 2023, primarily driven by favorable net price realization and mix, partially offset by higher input costs. Segment

operating profit increased 10 percent on a constant-currency basis in the first quarter of fiscal 2024 compared to the same period in

fiscal 2023 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).

UNALLOCATED CORPORATE ITEMS

Unallocated corporate expenses totaled $87 million in the first quarter of fiscal 2024, compared to $333 million in the same period in

fiscal 2023. In the first quarter of fiscal 2024, we recorded a $45 million net decrease in expense related to the mark-to-market

valuation of certain commodity positions and grain inventories, compared to a $175 million net increase in expense in the same period

last year. We recorded $3 million of net losses related to valuation adjustments on certain corporate investments in the first quarter of

fiscal 2024, compared to $26 million of net losses related to valuation adjustments and the loss on sale of certain corporate

investments in the first quarter of fiscal 2023. In the first quarter of fiscal 2023, we recorded a $22 million charge related to a

voluntary recall on certain international

Häagen-Dazs

 ice cream products. We recorded $9 million of restructuring charges and $1

million of restructuring initiative project-related costs in cost of sales in the first quarter of fiscal 2024, compared to $1 million of

restructuring charges in cost of sales in the same period last year. In addition, we recorded $2 million of integration costs primarily

related to our acquisition of TNT Crust in the first quarter of fiscal 2023. 

26

LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of fiscal 2024, cash provided by operations was $378 million compared to $389 million in the same period last

year. The $11 million decrease was mainly driven by a $248 million change in current assets and liabilities and a $46 million change

in other non-cash items in net earnings, including changes in the valuation of certain corporate investments. These were partially

offset by a $288 million increase in net earnings, excluding the $431 million net divestitures gain in fiscal 2023. The $248 million

change in current assets and liabilities is primarily driven by a $313 million change in the timing of accounts payable.

Cash used by investing activities during the first quarter of fiscal 2024 was $136 million compared to cash provided by investing

activities of $266 million for the same period in fiscal 2023. During the first quarter of the 2023, we completed the sale of the

Helper main meals and Suddenly Salad side dishes business for $607 million cash. In the first quarter of fiscal 2023, we acquired TNT

Crust for $252 million cash, net of cash acquired. In addition, we spent $142 million on purchases of land, buildings, and equipment in

the first quarter of fiscal 2024 compared to $91 million in the same period last year.

Cash used by financing activities during the first quarter of fiscal 2024 was $334 million compared to $609 million of cash used by

financing activities in the same period in fiscal 202 3. We paid $348 million of dividends in the first quarter of fiscal 2024, compared

to $325 million in the same period last year. We paid $500 million for purchases of common stock for treasury in the first quarter of

fiscal 2024, consistent with the same period in fiscal 2023 . In addition, we had $552 million of net debt issuances in the first quarter of

fiscal 2024 compared to $188 million of net debt issuances in the first quarter of fiscal 2023. 

As of August 27, 2023, we had $425 million of cash and cash equivalents in foreign jurisdictions. In anticipation of repatriating funds

from foreign jurisdictions, we record local country withholding taxes on our international earnings, as applicable. Furthermore, we

may repatriate our cash and cash equivalents held by our foreign subsidiaries without such funds being subject to further U.S. income

tax liability. Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in those jurisdictions.

The following table details the fee-paid committed and uncommitted credit lines we had available as of August 27, 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 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. 

To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States

and Europe.

Certain of our long-term debt agreements, our credit facilities, and our noncontrolling interests contain restrictive covenants. As of

August 27, 2023, we were in compliance with all of these covenants. 

We have $1,175 million of long-term debt maturing in the next 12 months that is classified as current, including $400 million of

floating-rate notes due October 17, 2023, €250 million of floating-rate notes due November 10, 2023, and $500 million of 3.65

percent fixed-rate notes due February 15, 2024. 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.

CRITICAL ACCOUNTING ESTIMATES

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in our Annual Report on

Form 10-K for the fiscal year ended May 28, 2023. The accounting policies used in preparing our interim fiscal 2024

Consolidated

Financial Statements are the same as those described in our Form 10-K with the exception of the new accounting requirements

27

adopted in the first quarter of fiscal 2024. Please see Note 1 to the Consolidated Financial Statements in Part I, Item 1 of this report for

additional information.

Our critical accounting estimates are those that have meaningful impact on the reporting of our financial condition and results of

operations. These estimates include our accounting for revenue recognition, valuation of long-lived assets, intangible assets, stock-

based compensation, income taxes, and defined benefit pension, other postretirement benefit, and postemployment benefit plans. The

assumptions and methodologies used in the determination of those estimates as of August 27, 2023, are the same as those described in

our Annual Report on Form 10-K for the fiscal year ended May 28, 2023.

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.

NON-GAAP MEASURES

We have included in this report measures of financial performance that are not defined by GAAP. We believe that these measures

provide useful information to investors, and include these measures in other communications to investors. 

For each of these non-GAAP financial measures, we are providing below a reconciliation of the differences between the non-GAAP

measure and the most directly comparable GAAP measure, an explanation of why we believe the non-GAAP measure provides useful

information to investors, and any additional material purposes for which our management or Board of Directors uses the non-GAAP

measure. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.

Significant Items Impacting Comparability

Several measures below are presented on an adjusted basis. The adjustments are either items resulting from infrequently occurring

events or items that, in management’s judgment, significantly affect the year-to-year assessment of operating results. 

The following are descriptions of significant items impacting comparability of our results. 

Mark-to-market effects

Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please see Note 6 to the

Consolidated Financial Statements in Part I, Item 1 of this report.

Restructuring charges and project-related costs

Restructuring charges and project-related costs for previously announced restructuring actions recorded in fiscal 2024. Restructuring

charges for previously announced restructuring actions recorded in fiscal 2023. Please see Note 3 to the Consolidated Financial

Statements in Part I, Item 1 of this report.

Investment activity, net

Valuation adjustments of certain corporate investments in fiscal 2024. Valuation adjustments and the loss on sale of certain corporate

investments in fiscal 2023. 

Acquisition integration costs

Integration costs primarily resulting from the acquisition of TNT Crust in fiscal 2024 and fiscal 2023. Please see Note 2 to the

Consolidated Financial Statements in Part I, Item 1 of this report.

Product recall

Costs related to the fiscal 2023 voluntary recall of certain international

Häagen-Dazs

 ice cream products. 

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.

Please see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

Transaction costs

Transaction costs primarily related to the sale of our Helper main meals and Suddenly Salad side dishes business in fiscal 2023. Please

see Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.

28

Organic Net Sales Growth Rates

We provide organic net sales growth rates for our consolidated net sales and segment net sales. This measure is used in reporting to

our Board of Directors and executive management and as a component of the measurement of our performance for incentive

compensation purposes. We believe that organic net sales growth rates provide useful information to investors because they provide

transparency to underlying performance in our net sales by excluding the effect that foreign currency exchange rate fluctuations,

acquisitions, divestitures, and a 53

rd

 week, when applicable, have on year-to-year comparability. A reconciliation of these measures to

reported net sales growth rates, the relevant GAAP measures, are included in our Consolidated Results of Operations and Results of

Segment Operations discussions in the MD&A above.

Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit Margin)

We believe this measure provides useful information to investors because it is important for assessing our operating profit margin on a

comparable basis.

Our adjusted operating profit margins are calculated as follows:

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

In Millions

Value

Percent of

Net Sales

Value 

Percent of

Net Sales

Operating profit as reported

$

930.0

19.0

%

$

1,085.6

23.0

%

Mark-to-market effects

(44.9)

(0.9)

%

174.7

3.7

%

Restructuring charges

9.8

0.2

%

2.3

-

%

Investment activity, net

2.9

0.1

%

26.3

0.6

%

Project-related costs

0.8

-

%

-

-

%

Acquisition integration costs

0.2

-

%

1.5

-

%

Product recall

0.2

-

%

21.5

0.5

%

Divestitures gain, net

-

-

%

(430.9)

(9.1)

%

Transaction costs

-

-

%

0.2

-

%

Adjusted operating profit

$

899.0

18.3

%

$

881.2

18.7

%

Note: Table may not foot due to rounding. 

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

29

Adjusted Operating Profit Growth on a Constant-currency Basis

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. The measure is

evaluated on a constant-currency basis by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year

comparability given the volatility in foreign currency exchange rates. 

Our adjusted operating profit growth on a constant-currency basis is calculated as follows:

Quarter Ended

Aug. 27, 2023

Aug. 28, 2022

Change

Operating profit as reported

$

930.0

$

1,085.6

(14)

%

Mark-to-market effects

(44.9)

174.7

Restructuring charges

9.8

2.3

Investment activity, net

2.9

26.3

Project-related costs

0.8

-

Acquisition integration costs

0.2

1.5

Product recall

0.2

21.5

Divestitures gain, net

-

(430.9)

Transaction costs

-

0.2

Adjusted operating profit

$

899.0

$

881.2

2

%

Foreign currency exchange impact

Flat

Adjusted operating profit growth, on a constant-currency basis

2

%

Note: Table may not foot due to rounding.

For more information on the reconciling items, please refer to the Significant Items Impacting Comparability section above.

Adjusted Diluted EPS and Related Constant-currency Growth Rates

This measure is used in reporting to our Board of Directors and executive management. We believe that this measure provides useful

information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year

basis.

The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted EPS and the related constant-currency growth rates follows:

Quarter Ended

Per Share Data

Aug. 27, 2023

Aug. 28, 2022

Change

Diluted earnings per share, as reported

$

1.14

$

1.35

(16)

%

Mark-to-market effects

(0.06)

0.22

Restructuring charges

0.01

-

Investment activity, net

-

0.04

Product recall 

-

0.03

Divestitures gain, net

-

(0.54)

Adjusted diluted earnings per share

$

1.09

$

1.11

(2)

%

Foreign currency exchange impact

(1)

pt

Adjusted diluted earnings per share growth, on a constant-currency basis

(1)

%

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.

30

Constant-currency After-tax Earnings from Joint Ventures Growth Rates 

We believe that this measure provides useful information to investors because it provides transparency to underlying performance of

our joint ventures by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given

volatility in foreign currency exchange markets. 

After-tax earnings from joint ventures growth rates on a constant-currency basis are calculated as follows:

Percentage Change in

After-Tax Earnings from Joint

Ventures as Reported

Impact of Foreign

Currency

Exchange

Percentage Change in After-Tax

Earnings from Joint Ventures

on Constant-Currency Basis

Quarter Ended Aug. 27, 2023

19

%

(7)

pts

26

%

Note: Table may not foot due to rounding.

Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency Basis 

We believe that this measure of our Canada operating unit net sales provides useful information to investors because it provides

transparency to the underlying performance for the Canada operating unit within our North America Retail segment by excluding the

effect that foreign currency exchange rate fluctuations have on year-to-year comparability given volatility in foreign currency

exchange markets.

Net sales growth rates for our Canada operating unit on a constant-currency basis are calculated as follows:

Percentage Change in

Net Sales

as Reported

Impact of Foreign

Currency

Exchange

Percentage Change in

Net Sales on Constant-

Currency Basis

Quarter Ended Aug. 27, 2023

Flat

(4)

pts

4

%

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:

Quarter Ended Aug. 27, 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

3

%

Flat

3

%

International

44

%

(8)

pts

52

%

Pet

(10)

%

Flat

(10)

%

North America Foodservice

10

%

Flat

10

%

Note: Table may not foot due to rounding.

31

Adjusted Effective Income Tax Rates 

We believe this measure provides useful information to investors because it presents the adjusted effective income tax rate on a

comparable year-to-year basis. 

Adjusted effective income tax rates are calculated as follows: 

Quarter Ended 

Aug. 27, 2023

Aug. 28, 2022

In Millions

(Except Per Share Data)

Pretax

Earnings (a)

Income

Taxes

Pretax

Earnings (a)

Income

Taxes

As reported

$

830.0

$

173.2

$

1,019.6

$

216.1

Mark-to-market effects

(44.9)

(10.3)

174.7

40.2

Restructuring charges

9.8

4.7

2.3

0.6

Investment activity, net

2.9

1.0

26.3

0.5

Project-related costs

0.8

0.3

-

-

Acquisition integration costs

0.2